Great Recession: Are War Spending And Wealth Concentration To Blame?

[Magibeg]

"A superficial analysis of the recession and the global financial crash, with their long lasting effects on the world economy, put the blame on the burst of the US real estate market bubble. However, some much bigger forces and overall budget trends have being at play for 30 years within the US economy. In the recession that started in December 2007, the burst of the real estate bubble was more a symptom than the root of the systemic problems."

http://newsjunkiepost.com/2010/09/03/great-recession-are-war-spending-and-wealth-concentration-to-blame/

[entropy13]

I don't really know about the war spending bit, but the wealth concentration part is a possibility.

[DaMulta]

War does create jobs, and ending this war will not stop the funds. It will just in return be turned into research for other weapons. Thus not stopping the flow of money into the US Military force. If anything ending the war will just make us more powerful, but we won't have the open field to try out the new toys till the next big force to be deployed.

Remember with the war starting up, we did shut down a record amount of defense bases. Thus we were moving our money into the war project.

[erocker]

Government spending aside, people were/are spending more than they can afford. I blame credit cards for much of it. Nobody saves anymore.

[twilyth]

The real estate bubble was created by several factors including an aversion to stocks due to the dot com bubble in 2000 and govt programs to increase home ownership.

The problem was the securitization of mortgage loans. Thousands of loans would be packaged together and sold as CDO's (collateralized debt obligations). These CDO's would then become the basis for other financial products like derivatives where people would bet on whether or not the CDO's would pay off. In essence they were a sort of insurance on the investments.

The CDO's would then become collateral for other financial instruments.

Even this wouldn't have been a problem except for the fact that these CDO's were almost always given the highest quality rating by the rating agencies like Moody's, S&P and Finch. That was because mortgages historically were very safe investments. But the official programs designed to increase home ownership meant that many loans were virtually fraudulent. Normally you would have to provide proof of employment and income to qualify. But so-called Ninja loans (no income, no job) became common and even with standard underwriting, people were qualified at "teaser rates" that increased, often dramatically, after the first year.

So the securities that were AAA rated were in fact often junk. Once that became apparent, there was a cascade effect which resulted in virtual seizure of the credit markets. That started with Lehman and Bear Sterns and then radiated to the financial markets as a whole.

That's the reason you keep hearing terms like overleveraged and deleveraging. For every actual dollar in the economy, hundreds of new dollars were created. This was done in large part via mortgages and CDO's. So it wasn't just the fact that so many mortgages were bad but the fact that so many other financial products were derived from them. It was as one blogger puts it, Jenga finance.

[FordGT90Concept]

"A superficial analysis of the recession and the global financial crash, with their long lasting effects on the world economy, put the blame on the burst of the US real estate market bubble. However, some much bigger forces and overall budget trends have being at play for 30 years within the US economy. In the recession that started in December 2007, the burst of the real estate bubble was more a symptom than the root of the systemic problems."

http://newsjunkiepost.com/2010/09/03/great-recession-are-war-spending-and-wealth-concentration-to-blame/
Completely disagree. The mortgage bubble burst alone caused the economy to shrink by over $3 trillion in a matter of months. Couple that with around $2 trillion in goverment panic spending and the bubble caused a net loss of somewhere in the neighborhood of $5 trillion. $5 trillion more than covers the cost of every war since 1980.


Government spending aside, people were/are spending more than they can afford. I blame credit cards for much of it. Nobody saves anymore.
They are now. XD

[Wile E]

Government spending aside, people were/are spending more than they can afford. I blame credit cards for much of it. Nobody saves anymore.

Kind of on the same lines, what ever happened to layaway? Everybody wants you to get their store Credit cards anymore and did away with layaway. I want layaway back. I'm fine with not getting my shit until it's paid off, at least I have the option of canceling and not effecting my credit.

[FordGT90Concept]

1) People want the product now, not later.
2) Stores have no interest on holding a product for someone for more than a day--they want it on the shelf where they can get a return on investment faster.
3) Businesses want money now and don't want to fiddle with installment plans and the like.

Credit takes the burden off the store and places it on a bank which naturally deals with loaning money. Some businesses have started offering credit cards in order to take the "fee" they would have got from layaway without the drawbacks of dealing with a layaway.

In an economy where warehouses don't exist and there is a great need to move product quickly, there simply isn't room for layaway anymore.

If you don't need your "shit until it is paid off," simply don't buy it until you have the money. There's no reason to inconvinence the store. Cancelling effects your reputation with the store.

[Wile E]

I could give a shit less about my reputation with a store.

And layaway is better for popular items at around Xmas time than just saving up the money. It reserves you a unit.

I don't care about it from the perspective of the store. I already know it's all about the bottom line for them. I'm talking about it from a consumer's perspective. Layaway is better than in-store credit cards.

And due to the economy, it's making a come back. banks and CC companies aren't quite as willing to give out cards anymore, so the stores just lose the sales altogether, instead of shifting it to a CC. Kmart has already brought it back. I bet more are to follow. It makes me happy, because I don't like CCs. CC companies are some of the most bastard, cutthroat corps out there.

[MT Alex]

1)Cancelling effects your reputation with the store.

No it doesn't. And if it did, who cares? I put a lot of GI Joe items on layaway as a youngster. I don't think K-Mart held it against me that I gave up payments on the USS Flag.

[FordGT90Concept]

You backed out of an agreement. All that time that product could have been on the shelf and sold, it was not.


CC companies are some of the most bastard, cutthroat corps out there.
Only if you don't pay up and on time. I do both and they are paying me (through rewards) to conduct business through them.

[Fourstaff]

I think the reason is that there were plenty of idiots last decade who spent all their money they are going to earn this decade, so they have no more money to spend this decade. In my opinion the world economy can only grow at a pace of 2.7% a year long term, and it seems that the last decade averaged more than that (excluding the financial crash) so we are paying for it this time.

[yogurt_21]

I blame the I wants. Always looking for something newer and cooler while not being able to pay for what they have. So greedy, so stupid, bunch of jerks that ruined everything.







.....Dang I really want a new cpu.

[Deusxmachina]

That's the reason you keep hearing terms like overleveraged and deleveraging. For every actual dollar in the economy, hundreds of new dollars were created. This was done in large part via mortgages and CDO's. So it wasn't just the fact that so many mortgages were bad but the fact that so many other financial products were derived from them. It was as one blogger puts it, Jenga finance.

Ah, good ol' fractional reserve banking. Otherwise known as "counterfeiting." Strange how some people go to jail for counterfeiting and some don't.

The media and whoever talk about people's lack of savings. But the government doesn't want them to save. It wants them to spend. Americans have little reason to save right now. What do they get in return for it? 1% interest on their money? Should they put it in a C.O.D.? (Certificate Of Depreciation.)

Loose credit and excessive spending got us into this, so of course the government's solution to the problem is, um, more loose credit and more spending. (poop)

I think the reason is that there were plenty of idiots last decade who spent all their money they are going to earn this decade, so they have no more money to spend this decade.

Don't forget the retiring babyboomers who will no longer be spending like they did and will instead be collecting their fat pensions and social security and whatever else they voted for themselves over the years.

[Wile E]

You backed out of an agreement. All that time that product could have been on the shelf and sold, it was not.And yet, none of this affects being able to layaway again, nor goes on any kind of credit report. AKA:Reputation unaffected.
Only if you don't pay up and on time. I do both and they are paying me (through rewards) to conduct business through them.You pay more in fees and interest than you make back. And go ahead and be late on a single payment, and see what happens. They double your interest on the spot. Besides, this was more in reference to store specific credit cards which offer even less incentives and yet higher interest rates than your standard Visa or Mastercard.

[FordGT90Concept]

Um, stores often keep a list of people not to do business with. Fail a layaway enough, you'll probably get on that list and won't be able to buy anything unless you pay on the spot.


Good thing I never buy something I don't already have the money to pay for. Like I said, they never got a cent out of me but I probably got over $100 out of them so far.

And yes, it is a "store specific credit card." In fact, all of mine, except one, were "store specific." Interest rates, fees, etc. were virtually always the same for me, store or bank card.

[DrPepper]

There's nothing wrong with credit companies. The majority of people who use them just don't save their money property = their fault and they wouldn't give the money back if credit companies weren't so ruthless about it.

[Deusxmachina]

You pay more in fees and interest than you make back. And go ahead and be late on a single payment, and see what happens. They double your interest on the spot. Besides, this was more in reference to store specific credit cards which offer even less incentives and yet higher interest rates than your standard Visa or Mastercard.

So I had a credit card I hadn't used in a while and figured I'd use it so they don't close it. I call up to activate it, and customer service tries to get me to sign up for their "service" where they will pay your minimum balance if you lose your job or are in the hospital. I knew it was a crummy deal, but then they offered me free money just to try it. "Free money? And it doesn't have a monthly fee if there's no balance or anything? Ok."

Then it turns out another card of mine that I never use is also now through them. Maybe they bought the previous company with TARP money. Anywho, they say I can get free money to try the plan on that card, too. "Free money? Ok."

So I buy something small with each card to get the free money, per the terms. No surprise when the bills show up that the "protection" program goes into effect even if you are still in the grace period for the purchases. I wouldn't be charged any normal interest if I pay it off when I get the bill, but the "protection" plan kicks in immediately. It's something like 80 cents for every $100. So if I buy $1000 in a month but paid it off right away, I'd still be charged $8.

The even better part is the "protection" only pays the Minimum Due. What's the minimum payment due on $1000? $20? lol. Heck, let's say it's $50. So someone would be paying $8 per month per thousand to have $50 per thousand paid if they lose their job or are in the hospital. Good deal if you lose your job or go to the hospital a lot And carry a balance And wouldn't be able to pay the minimum, I guess.

It all just amused me is all.

[CyberDruid]

So, spending a Trillion dollars on war funded by loans from Communist China did not hurt the economy? Whu? Hunh? The hell is wrong with your brain?

You realize that schools are shutting down programs and firing good teachers for the want of a few million dollars here in the USA but we lost track of BILLIONS of dollars in cash sent on PALLETS to Iraq? Literally Forklifts carrying huge piles of US currency...and no accounting for it.

You think Government corruption stops at the US border? You think the fat cats and theives don't steal War Money? The Iraq War has to rank #1 for why our economy is in the dumper today. You can't borrow and throw money away without it effecting your economy.

Sure there is some "business" stimulated by killing 20-30 thousand innoncent bystanders to shore up our untenable position there...business for asshole companies like Haliburton and BlackWater that hide the profits offshore and in shells so as to avoid paying taxes back into the system. But no stimulation of real businesses that matter to normal people.

The rich got richer and the poor got poorer...what's so fucking mysterious about that? It's part of a plan to stratify the globe into starving peons and incredibly rich and powerful landed gentry. How can you feel entitled and elite if some middle class slob can also own the same nice things you do? It's not enough to be comfortably rich...you need everyone else to be miserable and poor to really enjoy it.

[Wile E]

Um, stores often keep a list of people not to do business with. Fail a layaway enough, you'll probably get on that list and won't be able to buy anything unless you pay on the spot.


Good thing I never buy something I don't already have the money to pay for. Like I said, they never got a cent out of me but I probably got over $100 out of them so far.

And yes, it is a "store specific credit card." In fact, all of mine, except one, were "store specific." Interest rates, fees, etc. were virtually always the same for me, store or bank card.
That has never happened to anyone I know, ever, in my entire life. They keep those lists based on theft and scammers, not layaway cancelers. lol.


As for your cards, you either get some shitty bank interest rates, or really good store ones. Store cards are always 18%+ for us, whereas our highest bank Visa/MC is around 11% (well, now it's over 20% because we forgot to redo our autopayment when we switched bank accounts, and were 3 days late on a payment. :( )

[yogurt_21]

there is certainly apoint that credit card companies aren't necessarily the worst out there. miss a payment sure they double the interest but they can be a safety net when something goes wrong and you don't have the cash on hand. Trouble is for paycheck to paycheck people, the odds aren't in our favor for ever having the cash on hand. lol