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You are putting words in my mouth I didn't say. I am in the same position as you: zero debt (no mortgage or car payment even), almost all cash or precious metal

You are putting words in my mouth I didn't say. I am in the same position as you: zero debt (no mortgage or car payment even), almost all cash or precious metals and renting my home. So this panic doesn't mean anything personally in terms of drop in assets. But I do see a fall in my income, so I am tightening my belt - by which I mean things like eating out less, stretching out that laptop for another few months, buying fewer non-essentials, less expensive vacations and so on. That is all I am advocating. It is a rational, non-panicky response to some fairly dire economic circumstances ahead. If you question whether the economic circumstances will become dire, well, bookmark this thread, come back in 1 year, 2 years and 5 years.

fallentimes 18y ago
"It is not merely a financial crisis. It is a fundamental economic crisis. The last two weeks brought the crisis to full focus, but we have been building up to it for several years." "It is a rational, non-panicky response to some fairly dire economic circumstances ahead" ??? And this is the second time you've posted the same thing: http://news.ycombinator.com/item?id=330134 http://news.ycombinator.com/item?id=330134 Almost all the stats & blanket statements you used are uncited, made up, misapplied or wrong. Maxklein is dead on. And if you are right, we get to see him eat his hat. Fun! Bookmarked.
- startingup 18y ago
  None of the figures (debt to GDP, savings rate etc) I cited are controversial. Lots of people have been talking about those figures for many, many years, that's why I left out citations. Just to cite a recent example, the Sequoia presentation has all of these and more, in gory detail. Of course, you can interpret that data whichever way you want, but the data itself is clear. You can find the presentation, for example, at: http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint http://www.slideshare.net/eldon/sequoia-capital-on-startups-... A couple of common objections to my line of argument are: a) debt to GDP is just an accounting number or paper ("we owe it to ourselves" - in a global sense) and we can adjust that without much consequence to the real world. Response: Given that current incomes are not able to service the debt, the debt needs to be written down. As that debt gets written down (for example, if GM or Ford were to file for bankruptcy), there will be economic consequences like lay-offs. Those economic consequences are another way of saying that the projects that the debt financed were unviable and therefore have to be terminated. Those layoffs will cause further debt erosion - those laid-off workers default on their credit card payments, for example. So there are real economic effects to that accounting fiction. Even the dot-com bubble needed several years to be worked out. This is a far bigger bubble. b) The US savings rate is underestimated. The savings rate underestimation argument actually used to cite rising asset values, particularly housing, not being counted in savings. Falling asset values kills that argument.
  - fallentimes 18y ago
    b) I didn't say anything about real estate. 401k + Roth kill that argument.
jmtame 18y ago
startingup, I am very relieved to see another person waking up to the reality of the sitaution. I'm glad you are voicing your concern, I'm really concerned about how comfortable we've grown with the concept of debt. It's a dangerous position to be in, with the Federal Reserve owning as much assets as they do (and they will continue to purchase more, as the Bailout gave them the powers to do so).
tdavis 18y ago
I want whatever drugs you are on. Read your post. You said it's time to be fearful. That we should be really afraid. That a lot of people are panicking and maybe it's time to join them. I'm paraphrasing, but it's in black and white (well, gray and other gray). Then you come back with this. Essentially, "I'm making less money, so I need to spend less money." So, either you don't believe your own words ("rational, non-panicky response" != "we should be really afraid") or you really believe that a slight decrease in your income warrants advocating dangerous responses like mass-fear and panic. Presumably, you live in America. This means that by the mere fact of where you were birthed you have been given, free of charge, essentially all the opportunities that this life holds for a human being. I know first hand how horrible life can be for people not handed what we have been. Your inability to financially continue eating steak dinners every night is so far removed from the constant suffering and strife that you could be experiencing that your entire current view is laughable. If you were living on the streets you'd have it better than hundreds of millions of people in this world. So, no, it's not time to panic. It's not time to be afraid. It's time to survey the landscape, take in the changes, and roll with them. It's time to stop talking about this bullshit. Weather the storm, take advantage of other peoples' fears, and come out on top. It's time to do the same thing any smart, rational, successful person with the right perspective would do. And, no, I will not bookmark this thread. I don't want to be further reminded of just how much people like you take for granted and what you think we should do when life throws us a little curveball.
- startingup 18y ago
  You are making baseless assumptions. I was born in a very poor country, to parents neither of whom could afford to finish high school. My worldview was shaped by a world where debt was just not an option (think loan sharks & 300%+ annual interest rates when inflation was in the 10% annual range) and mortgages simply didn't exist. If you got into debt that you couldn't repay, you got thugs at the door to collect. So I am already used to much worse circumstances than the worst that is likely ahead in America. Having said that, what lies ahead for America is going to be very painful economically, even more so because Americans by and large have no recent memory of such economic pain, so lack the "inoculation" that lesser societies have built up due to periodic crises. Deep structural changes are inevitable - and such changes in the economy end up having profound cultural and social impact, some of which is unpredictable. I would personally do fine both because my personal balance sheet is in fine shape and because I have a lot of inoculation. Can you say that about the average American? These are the things I said we should be afraid of.

fallentimes 18y ago

"It is not merely a financial crisis. It is a fundamental economic crisis. The last two weeks brought the crisis to full focus, but we have been building up to it for several years." "It is a rational, non-panicky response to some fairly dire economic circumstances ahead" ??? And this is the second time you've posted the same thing: http://news.ycombinator.com/item?id=330134 http://news.ycombinator.com/item?id=330134 Almost all the stats & blanket statements you used are uncited, made up, misapplied or wrong. Maxklein is dead on. And if you are right, we get to see him eat his hat. Fun! Bookmarked.

startingup 18y ago
None of the figures (debt to GDP, savings rate etc) I cited are controversial. Lots of people have been talking about those figures for many, many years, that's why I left out citations. Just to cite a recent example, the Sequoia presentation has all of these and more, in gory detail. Of course, you can interpret that data whichever way you want, but the data itself is clear. You can find the presentation, for example, at: http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation?type=powerpoint http://www.slideshare.net/eldon/sequoia-capital-on-startups-... A couple of common objections to my line of argument are: a) debt to GDP is just an accounting number or paper ("we owe it to ourselves" - in a global sense) and we can adjust that without much consequence to the real world. Response: Given that current incomes are not able to service the debt, the debt needs to be written down. As that debt gets written down (for example, if GM or Ford were to file for bankruptcy), there will be economic consequences like lay-offs. Those economic consequences are another way of saying that the projects that the debt financed were unviable and therefore have to be terminated. Those layoffs will cause further debt erosion - those laid-off workers default on their credit card payments, for example. So there are real economic effects to that accounting fiction. Even the dot-com bubble needed several years to be worked out. This is a far bigger bubble. b) The US savings rate is underestimated. The savings rate underestimation argument actually used to cite rising asset values, particularly housing, not being counted in savings. Falling asset values kills that argument.
- fallentimes 18y ago
  b) I didn't say anything about real estate. 401k + Roth kill that argument.

jmtame 18y ago

startingup, I am very relieved to see another person waking up to the reality of the sitaution. I'm glad you are voicing your concern, I'm really concerned about how comfortable we've grown with the concept of debt. It's a dangerous position to be in, with the Federal Reserve owning as much assets as they do (and they will continue to purchase more, as the Bailout gave them the powers to do so).

tdavis 18y ago

I want whatever drugs you are on. Read your post. You said it's time to be fearful. That we should be really afraid. That a lot of people are panicking and maybe it's time to join them. I'm paraphrasing, but it's in black and white (well, gray and other gray). Then you come back with this. Essentially, "I'm making less money, so I need to spend less money." So, either you don't believe your own words ("rational, non-panicky response" != "we should be really afraid") or you really believe that a slight decrease in your income warrants advocating dangerous responses like mass-fear and panic. Presumably, you live in America. This means that by the mere fact of where you were birthed you have been given, free of charge, essentially all the opportunities that this life holds for a human being. I know first hand how horrible life can be for people not handed what we have been. Your inability to financially continue eating steak dinners every night is so far removed from the constant suffering and strife that you could be experiencing that your entire current view is laughable. If you were living on the streets you'd have it better than hundreds of millions of people in this world. So, no, it's not time to panic. It's not time to be afraid. It's time to survey the landscape, take in the changes, and roll with them. It's time to stop talking about this bullshit. Weather the storm, take advantage of other peoples' fears, and come out on top. It's time to do the same thing any smart, rational, successful person with the right perspective would do. And, no, I will not bookmark this thread. I don't want to be further reminded of just how much people like you take for granted and what you think we should do when life throws us a little curveball.

startingup 18y ago
You are making baseless assumptions. I was born in a very poor country, to parents neither of whom could afford to finish high school. My worldview was shaped by a world where debt was just not an option (think loan sharks & 300%+ annual interest rates when inflation was in the 10% annual range) and mortgages simply didn't exist. If you got into debt that you couldn't repay, you got thugs at the door to collect. So I am already used to much worse circumstances than the worst that is likely ahead in America. Having said that, what lies ahead for America is going to be very painful economically, even more so because Americans by and large have no recent memory of such economic pain, so lack the "inoculation" that lesser societies have built up due to periodic crises. Deep structural changes are inevitable - and such changes in the economy end up having profound cultural and social impact, some of which is unpredictable. I would personally do fine both because my personal balance sheet is in fine shape and because I have a lot of inoculation. Can you say that about the average American? These are the things I said we should be afraid of.