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Thread: The R Word

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    In the right lane gerv's Avatar
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    The R Word

    Seems like every television economist these days is talking recession. If we make another quarter of "slow growth", it will be official too. But whatever happens, you can plan on a year of bad economic news and likely much tightening of belts in the US.

    Do you have some resources that would help you sail through some tough times?

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    Instigator at best kjohnnytarr's Avatar
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    Eh...most of what they call the economy is based on things you don't actually need.
    Quote Originally Posted by JoshFrank View Post
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    Senior Member wahoonc's Avatar
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    Quote Originally Posted by kjohnnytarr View Post
    Eh...most of what they call the economy is based on things you don't actually need.
    B-I-N-G-O! That has been the whole problem for quite a while.

    As far as tips...stay out of debt, save money and don't spend what you ain't got!

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    Quote Originally Posted by kjohnnytarr View Post
    Eh...most of what they call the economy is based on things you don't actually need.

    You mean stuff like jobs, housing and food?

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    Senior Member Smallwheels's Avatar
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    The recession started years ago. The prices of food, fuel, and utility costs are not counted in the governments calculations of inflation. They do this so they can lie to the citizens and give a false impression that they are doing a good job.

    I buy the least expensive foods most of the time because I prefer less processed items. Three years ago I could buy bananas for 39 cents per pound. Now the cheapest I can find cost 54 cents per pound. +38%

    A loaf of the store brand whole wheat bread was 89 cents three years ago. Now it sells for $1.26. +42%

    Regular gasoline was $1.50 per gallon three years ago. Today it is $3.12. +208%

    One gallon of 100% grape juice was $2.95 now it sells for $4.25. +44%

    Ground beef cost $1.49 per pound about three years ago and now I pay $3.11. +209%

    Though the price of cars only goes up a couple hundred dollars each year that doesn't make much of a difference to people who are without cars. Food and energy costs are more important to me.

    If you have a 401K or IRA invested in a mutual fund, you should check to see where those funds are allocated. If they're spread out into banks and mortgage companies you should reallocate them to a commodities sector before you lose everything.
    Smallwheels

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    not a role model JeffS's Avatar
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    Excellent post smallwheels.

    If your income has even kept pace with your expenditures over the last five years you are truly in the minority.

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    Dare to be weird!
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    Lately, American consumption of goods and services has been powered by cheap credit and cheap energy. We've certainly bumped up against our national credit limit and we've arguably run into a shortage of cheap energy. The upcoming recession will reduce American consumption by an amount that brings it back in line with our national income and the credit and energy constraints.

    What's not yet settled is who has to reduce their consumption of goods and services, and by how much. When for example the Federal Reserve intervenes with an extraordinary cut in the federal funds rate, it shifts the economic losses from one group of people to another in a complicated and somewhat unpredictable way. All the economic players will position themselves as best they can with tactical investment moves and attempts to influence government policy. What's going on right now is the world's highest stakes poker game.

    From the car free living point of view, the less you are personally dependent on cheap energy and cheap credit the better off you will be.

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    Quote Originally Posted by kjohnnytarr View Post
    Eh...most of what they call the economy is based on things you don't actually need.
    ...Like jobs?
    If you're not part of the solution, you're part of the precipitate.

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    Pedaled too far. Artkansas's Avatar
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    People are just discovering that we can't keep funneling so much money to the rich and the military and maintain a balanced budget. Funny, we were warned about it in 1961 by President Eisenhower. You can bet that those in power still aren't listening.

    The proposed cures for this recession are like curing a junkie by giving him more heroin. He'll feel better for a while, but the fundamental problems remain or are worsened.

    I'm just happy that I've gotten out of debt, have some money saved, a cheap apartment and don't support a car.

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    Quote Originally Posted by Smallwheels View Post
    I buy the least expensive foods most of the time because I prefer less processed items. Three years ago I could buy bananas for 39 cents per pound. Now the cheapest I can find cost 54 cents per pound. +38%

    A loaf of the store brand whole wheat bread was 89 cents three years ago. Now it sells for $1.26. +42%

    Regular gasoline was $1.50 per gallon three years ago. Today it is $3.12. +208%

    One gallon of 100% grape juice was $2.95 now it sells for $4.25. +44%

    Ground beef cost $1.49 per pound about three years ago and now I pay $3.11. +209%
    .
    Ouch, Smallwheels where do you live? The old prices are about on par with what I am still paying in Houston at Kroger's. Excluding gas of course. Not sure about grape juice, I buy frozen conentrate grape(easier to transport) for about $1-1.69 depending if I get generic or name brand.

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    Senior Member acroy's Avatar
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    Quote Originally Posted by kjohnnytarr View Post
    Eh...most of what they call the economy is based on things you don't actually need.
    WAP!

    I liked that. great point. I've convinced myself I "need" a lot of things air conditioning, a nice little house, the phone, computer, stereo... etc etc.

    Unfortunatly, if very many folks decided they didn't "need" so much, my job would be in danger. then i would not be happy.

    Thing to remeber about this "recession" is that it's (so far) only financial institutions that have gotten themselves in trouble. they are greedy by nature and are 'paying the piper" for lousy investments over the last few years. All the big industries are just fine. Take a look at the companies that make up the Dow Jones 30: only 4 are tied to the financial sector. the other 26 are doin just fine.

    the global economy is in fact just fine. I sure hope panic over one sector does not drag us down into a real recession for no good reason!
    beer-bottle target

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    Quote Originally Posted by CrimsonEclipse View Post
    More like McMansions, Land Yachts, and imported foods and services.

    CE
    Uhh yea sure--because recessions only affect people who live frivolously.....
    ~

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    Quote Originally Posted by Smallwheels View Post
    The recession started years ago.
    Yea, like back when Nixon closed the gold window.
    Quote Originally Posted by Smallwheels View Post
    The prices of food, fuel, and utility costs are not counted in the governments calculations of inflation. They do this so they can lie to the citizens and give a false impression that they are doing a good job.
    Exactly.
    I ran across an economic blog post somewhere that had a chart--if the US was still figuring inflation the way they did in 1983, then the rate would be TWICE as high--over 8%, instead of the 4% that the government now claims.

    The economy is going to be THE issue in this election, with the Iraq war a minor second.

    After election day I'd bet gas prices will go up real quick, and we (in the US) are going to see a lot more people bicycling--but they aren't going to be happy about it......
    ~

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    Sophomoric Member Roody's Avatar
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    Quote Originally Posted by acroy View Post

    Unfortunatly, if very many folks decided they didn't "need" so much, my job would be in danger. then i would not be happy.
    It's very likely that as gas prices go up, people will decide that what they really "need" is gasoline (and heating oil), and will buy those items instead of whateve you make at your job.

    Quote Originally Posted by acroy View Post
    Thing to remeber about this "recession" is that it's (so far) only financial institutions that have gotten themselves in trouble. they are greedy by nature and are 'paying the piper" for lousy investments over the last few years. All the big industries are just fine. Take a look at the companies that make up the Dow Jones 30: only 4 are tied to the financial sector. the other 26 are doin just fine.

    the global economy is in fact just fine. I sure hope panic over one sector does not drag us down into a real recession for no good reason!
    It sounds like you're reading last week's financial pages. Every stock market in the world lost 5 % or more of value on Monday, although many made a partial recovery yesterday. The economy has become the biggest issue in the Presidential race, which a couple weeks ago focused on the war. High food prices are hitting the developing world much more than us. People are hurting especially because of food oil prices. A lot of food oil (7 %, IIRC) is being used for biofuel now, increasing demand. Oil is a major source of calories for billions of poor people. And of course it's costing more to transport all food, and that cost is ultimately paid by consumers.


    "Think Outside the Cage"

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    Quote Originally Posted by acroy View Post
    Thing to remeber about this "recession" is that it's (so far) only financial institutions that have gotten themselves in trouble. they are greedy by nature and are 'paying the piper" for lousy investments over the last few years. All the big industries are just fine. Take a look at the companies that make up the Dow Jones 30: only 4 are tied to the financial sector. the other 26 are doin just fine.

    the global economy is in fact just fine. I sure hope panic over one sector does not drag us down into a real recession for no good reason!
    My understanding was that the definition of a recession was six months of a shrinking economy. While the rate of growth of our economy is at it's lowest point in decades, we have not yet had even one month with a shrinking economy since 2001-2002 (except in a handful of states, and their economies have been in trouble for awhile). My impression is that what we are seeing is a global market correction directly related to the large amount of cheap cash that became available when some global financial institutions seriously dropped the ball in their cost-risk-pricing formulas. Couple this with a news media always looking for the "new thing to fear" and a lame duck president looking to leave with the same budget crippling tax breaks he entered with and we have the hype of a recession.

    Given the rate of increase in energy costs, the ever growing budget deficit, and the Feds willingness to throw caution to the wind and cut the bottom out of the prime rate, I'm more worried about inflation. But inflation doesn't make a good story because people would have to admit that energy prices have reached the point where they need to find ways to cut back on driving, heating, and cooling.

    Either way I think one great way to recession/inflation proof your family is to ditch or at least limit the use of your car. The second thing is to make sure you have savings to protect you from a job loss. A fair chunk of my savings are in an inflation protected mutual fund, although it remains to be seen how good that inflation protection is...

    Of course I'm no economist and ymmv.

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    Senior Member acroy's Avatar
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    Quote Originally Posted by Roody View Post
    It's very likely that as gas prices go up, people will decide that what they really "need" is gasoline (and heating oil), and will buy those items instead of whateve you make at your job.

    It sounds like you're reading last week's financial pages. Every stock market in the world lost 5 % or more of value on Monday, although many made a partial recovery yesterday. The economy has become the biggest issue in the Presidential race, which a couple weeks ago focused on the war. High food prices are hitting the developing world much more than us. People are hurting especially because of food oil prices. A lot of food oil (7 %, IIRC) is being used for biofuel now, increasing demand. Oil is a major source of calories for billions of poor people. And of course it's costing more to transport all food, and that cost is ultimately paid by consumers.
    actually I work (indirectly) in the food industy, and we all like to eat, so here's hoping that even IF a recession hits, I still bring home the paycheck

    On the financial side: to my knowledge, nothing has changed significantly in the last year or so other than that a) overpriced real estate sold to folks with poor credit is correcting and b) (in a related move) financial companies overexposed to poor debt are suffering. woop dee do. The pin-striped-suit set might have to switch from real Cubans to the fakes. cry me a river

    Yep the dollar is weak, lots of supposed reasons for that, choose whichever sounds good to you. but even the dollar has been staging a recovery since Nov last year.

    Food - we have too much anyway. too many fat people. Turn all the grains into oil, burn the oil in cars, put the world on a diet. It'll be good for them (tounge firmly in cheek).

    The economy is now a big issue in the race cause it's an easy excuse to sling mud around & getting a lot of press recently. A volitile market does not a recession make.

    I am very dissapointed in the Fed cutting rates... Inflation is just a fancy word for TAX. this TAX is what is paying off the bad bets the financial companies have made over the last few years, at the average citizen's expense. Ah well, I'm used to paying for crap that I'll never get any use out of like Medicaid, Social Security, etc. Bring it on
    beer-bottle target

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    Senior Member acroy's Avatar
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    Quote Originally Posted by bike2math View Post
    My understanding .......

    Of course I'm no economist and ymmv.
    All good stuff and I'm right there with you bike2math, except on the tax breaks, which I think are always a good thing. I personally spend more on taxes than anything else. but spending cuts need to go with tax breaks, otherwise it just puts off the pain
    beer-bottle target

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    In the right lane gerv's Avatar
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    Quote Originally Posted by Platy View Post
    Lately, American consumption of goods and services has been powered by cheap credit and cheap energy. We've certainly bumped up against our national credit limit and we've arguably run into a shortage of cheap energy. The upcoming recession will reduce American consumption by an amount that brings it back in line with our national income and the credit and energy constraints.
    For most individuals and probably most communities, there is a way to respond to an emergency situation like a recession. Yes, it is necessary to cut back on cheap energy and credit.

    A possible way to do this is to look at all the resources you have available. An obvious one for most readers here is to keep using the bicycle as a means of transportation.

    However, it may also be a time for looking into other cost-cutting measures. Trying to keep the utility bill down. Getting rid of the cell phone. Growing your own potatoes instead of buying them. Trading services with someone else.

    Of course, all of this presumes you still have a job or at least some small, steady income.

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    Quote Originally Posted by acroy View Post
    WAP!

    I liked that. great point. I've convinced myself I "need" a lot of things air conditioning, a nice little house, the phone, computer, stereo... etc etc.

    Unfortunatly, if very many folks decided they didn't "need" so much, my job would be in danger. then i would not be happy.
    Think I have said this before, but we can all work less hours (i.e. more play (bicycling!!!!)) because we don't have to buy as much unneeded junk. If you cut out all of the superfluous crap purchases (cars, nick nacks, igizmos, salad shooters, etc.) we can actually work less, which means we can bicycle more!!!!!

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    Quote Originally Posted by Doug5150 View Post
    The economy is going to be THE issue in this election, with the Iraq war a minor second.


    ~
    Most people don't know they are both related. We're in a recession right now because the federal reserve dropped interest rates to historic levels to keep us out of a recession since out government was spending billions for the war. This caused the real estate boom with every one buying homes they could not afford but now that it imploaded, the federal reserve is right back to lowering interest rates to prop up the economy. This time, it's not going to work. We're about to go into a deep recession.

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    Quote Originally Posted by Artkansas View Post
    .

    I'm just happy that I've gotten out of debt, have some money saved, a cheap apartment and don't support a car.
    You sound like me! ;-)

    Unlike the last recession, I have a much better job, cheap apartment, 4 years of rent saved and don't support a car. Bring on the recession. Thanks to being carfree, I'm ready!

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    Quote Originally Posted by Dahon.Steve View Post
    Most people don't know they are both related.
    I get this feeling that its like during the 1970s. Didn't we go way into debt over a war and then got stagflation right after oil prices went up? As I recall a lot of people in my town started getting around by bike back then. Is it a pattern?

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    Senior Member acroy's Avatar
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    where the $$ goes:



    what makes me depressed is there's over $30,000 of national debt for every one of the 300+ million americans. Scary.
    beer-bottle target

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    Senior Member hotbike's Avatar
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    Quote Originally Posted by thelung View Post
    ********?
    I think the R word is "Recession", in this case.

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