As we all know, the US economy is pretty messed up right now. By cutting the rate, the Fed is only delaying the financial collapse. This move is going to further increase the inflation. In addition, the government continues to spend money it does not have on oversea operation and subsidies. The nation has trillions in debt and lowers the tax at the same time. It is just common sense that US citizens will start to pay all these debts. It is going to be bad for next generation, Very bad. You guys are poor mother****** compare to the Chinese which has trillion in foreign reserve and national surplus. I am a Canadian citizen. Should I be worried about the collapse in US economy? I know it is going to affect me, but by how much? To all the US citizens, how worried are you now?
very
define financial collapse…there is no clear evidence that the aggressive rate cutting is going to create serious inflation…according to the usual indicators, inflation should not be a problem. I felt that inflation would’ve been a problem , but after looking at the stats a bit, i realized that will probably not be the case. c’mon, you don’t think Bernanke has taken Econ 201? China is still poor compared to the US. Reserves mean very little when its paper money that they’re holding onto. IF US goes down, the 70% of their reserves will tumble as well.
FrankArabia Wrote: ------------------------------------------------------- > define financial collapse…there is no clear > evidence that the aggressive rate cutting is going > to create serious inflation…according to the > usual indicators, inflation should not be a > problem. I felt that inflation would’ve been a > problem , but after looking at the stats a bit, i > realized that will probably not be the case. > c’mon, you don’t think Bernanke has taken Econ > 201? > > China is still poor compared to the US. Reserves > mean very little when its paper money that they’re > holding onto. IF US goes down, the 70% of their > reserves will tumble as well. The argument is not that Bernanke is an idiot. However, there is clearly an issue of moral hazard, whereby Bernanke’s incentives may push him to make an ultimately sub-optimal trade-off between growth and inflation. If growth is not equally balanced around trend over time (which is probably 2.25%-ish, given uninspiring US productivity growth), inflation WILL rise by definition. In sum, the danger is that Bernanke gets the economy motoring again, but then has to tighten policy in “non-boom” times to avert a rise in inflation. Given how aggressive Bernanke has been to date, this looks like a sensible thing to worry about.
If we have a recession, we’ll solve it the way we always solve recessions; we’ll start a war. To all the Canadian citizens, how worried are you now?
If we have a recession, Blame Canada!
JoeyDVivre Wrote: ------------------------------------------------------- > If we have a recession, we’ll solve it the way we > always solve recessions; we’ll start a war. To > all the Canadian citizens, how worried are you > now? If I were in Alberta, I’d be more worried LOL. US doesn’t need to fight us for our oil, we just send it willingly, we’re not religous fantics, we value $$$
^ | why would you be more worried living in alberta? i do, and i’m not… we’re predicted to be the only province that maintains high growth in the face of US recession. 4-5% this year, even with current economic conditions.
We’ve had 6 years of economic expansion, which is a pretty darn good record. Recessions happen. The system isn’t going to collapse tomorrow–given 50 years, I’d be worried.
Because if the US got tired of fighting for oil overseas they could dip into supplies closer to home (Alberta). I should be safe in manitoba until the states starts running out of fresh water…
doworkson Wrote: ------------------------------------------------------- > Because if the US got tired of fighting for oil > overseas they could dip into supplies closer to > home (Alberta). I should be safe in manitoba > until the states starts running out of fresh > water… thats absolute nonsense. yes we can all joke about the US coming in and taking canadian oil…but joking is all it is.
jeff_s Wrote: ------------------------------------------------------- > ^ > | > why would you be more worried living in alberta? > i do, and i’m not… > > we’re predicted to be the only province that > maintains high growth in the face of US recession. > 4-5% this year, even with current economic > conditions. jeff, I was being sarcastic. I may be moving to Alberta very soon actually…
Etienne Wrote: ------------------------------------------------------- > FrankArabia Wrote: > -------------------------------------------------- > ----- > > define financial collapse…there is no > clear > > evidence that the aggressive rate cutting is > going > > to create serious inflation…according to > the > > usual indicators, inflation should not be a > > problem. I felt that inflation would’ve been a > > problem , but after looking at the stats a bit, > i > > realized that will probably not be the case. > > c’mon, you don’t think Bernanke has taken Econ > > 201? > > > > China is still poor compared to the US. > Reserves > > mean very little when its paper money that > they’re > > holding onto. IF US goes down, the 70% of their > > reserves will tumble as well. > > > The argument is not that Bernanke is an idiot. > However, there is clearly an issue of moral > hazard, whereby Bernanke’s incentives may push him > to make an ultimately sub-optimal trade-off > between growth and inflation. If growth is not > equally balanced around trend over time (which is > probably 2.25%-ish, given uninspiring US > productivity growth), inflation WILL rise by > definition. In sum, the danger is that Bernanke > gets the economy motoring again, but then has to > tighten policy in “non-boom” times to avert a rise > in inflation. > > Given how aggressive Bernanke has been to date, > this looks like a sensible thing to worry about. inflation only arises by definition through MV=PQ. This definition however is brief and incomplete as is most macro models. Slashing interest rates does not necessarily imply inflation. Japan for instance slash interest rates and they suffered from deflation. I believe it depends on the fundamentals of the economy, and the US is not exhibiting the qualities that suggest aggressive rate cutting will cause “serious” or double digit inflation.
CFA_Halifax Wrote: ------------------------------------------------------- > jeff_s Wrote: > -------------------------------------------------- > ----- > > ^ > > | > > why would you be more worried living in alberta? > > > i do, and i’m not… > > > > we’re predicted to be the only province that > > maintains high growth in the face of US > recession. > > 4-5% this year, even with current economic > > conditions. > > jeff, I was being sarcastic. I may be moving to > Alberta very soon actually… ahh sorry, didn’t pick that up…haven’t had my caffine yet this monday morning.
jeff_s Wrote: ------------------------------------------------------- > CFA_Halifax Wrote: > -------------------------------------------------- > ----- > > jeff_s Wrote: > > > -------------------------------------------------- > > > ----- > > > ^ > > > | > > > why would you be more worried living in > alberta? > > > > > i do, and i’m not… > > > > > > we’re predicted to be the only province that > > > maintains high growth in the face of US > > recession. > > > 4-5% this year, even with current economic > > > conditions. > > > > jeff, I was being sarcastic. I may be moving > to > > Alberta very soon actually… > > > > ahh sorry, didn’t pick that up…haven’t had my > caffine yet this monday morning. No worries pal. If you don’t mind my asking what are you doing in Alberta? Cow-town?
ya i’m in cowtown. corp finance analyst for an O&G.
jeff_s Wrote: ------------------------------------------------------- > ya i’m in cowtown. corp finance analyst for an > O&G. Cool, that’s what I looking/hoping to do.
The average recession lasts about 9 months - painful maybe, but they end and the cycle begins again - thanks to the great moderation recessions have become milder and infrequent, but they are bound to happen. This particular slowdown/recession is a little complicated in that the normal avenues for monetary policy may not be as responsive to stimulus (res & non-res investment, credit channels) - so maybe its a bit deeper and a little more drawn out, but nothing to panic over long-term.
Yeah I mean I think that the street was selling a lot of tails about a triple pronged thesis predicated on the following: 1. The US Fed would help avert a recession. 2. If a recession were unavertable [technical term] that the rest of the world would be afflicted as well. 3. That the credit crisses was confined to areas resembling a places like where the hit Sitcom “The Trailer Park Boys” [now a popular movie] was filmed. When none of that happened, the markets [globally] gave back…a lot. Moving forward I think the worst is probably, probably behind us and I think what we will see is a lot of+200/-200 days on the Dow and TSX until things simmer down [i.e. Fed policy bites in an George Bush checks out]. But it’s tempting. Even today I was taking a look at Bear Stearns. I mean Jimmy Cayne still owns like what, $600 million worth and - I would assume - he knows more about whats going on than I do. Willy
Don’t forget that Joe Lewis bought $800 million plus in Bear Stearns stock not too long ago.