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To be clear, we just went through a Panic. This is what happens. We recovered from the Panic and now we are going through a Recession. There's no collapse as

To be clear, we just went through a Panic. This is what happens. We recovered from the Panic and now we are going through a Recession. There's no collapse as far as I can see but like any panic, it sure felt like we were close to a collapse. State governments were completely unable to cope with the sudden, significant decrease in funds: California and NY are in big trouble. But it's not a collapse. People should start reading about the other major panics that the US experienced instead of just reacting to the current one. Turns out it's not as bad as what we went through before. But it is bad. The Housing Bubble will unfortunately go down in history with Tulipmania, the South Sea Bubble, and the the Great Panic of 1873. We'll recover but unfortunately, it's going to be slow treading and state services will be cut significantly even while federal services will likely expand.

robotrout 17y ago
I wish I shared your optimism that we will recover. As the saying goes, "We'll survive by doing each others laundry". That saying, of course, is meant to be a joke. The US can't just do it's own laundry to survive. We can't just sell latte's to each other, either. We have to actually produce more than we consume. So, we either have to produce a lot more, or consume a lot less. I don't see us producing more, do you? I used to comfort myself that we had evolved as a nation, from doers into investors, and that we still brought value to the world by providing the capital needed for the rest of the world to grow, and so we were indeed, earning our bread. My faith in this viewpoint has been shaken, however. All is not bread and circuses for non-US folks either. If the US consumer quits buying, I think that's a big deal to everybody.
- larryfreeman 17y ago
  We've been through much worse than this. The economy is complex enough and our entrepreneurs talented enough that we will rise above this. The economy gets better under two circumstances in my view: (1) Large opportunities are available for businesses to invest and make money. (2) People start spending money again because consumer confidence improves. BTW, the goal is not to produce more than we consume. That, in my view, is a formula for failure. The goal is to create a more stable supply and demand curve. If consumers don't spend enough money, then the problems get worse as a business's gross revenue decreases. If we stop panicking, spend their money, stop with the bail outs, provide tax incentives for entrepeneurs, and most importantly, provide an opportunity for business to make money as well as compete with existing giants, then the recession will start easing into recovery.
  - stuffthatmatter 17y ago
    Ah yes, the American optimism. Obama's hopism. (1) Large opportunities are available for businesses to invest and make money. - where? VCs obviously don't think so. VC down 50% http://www.techcrunch.com/2009/04/17/venture-capital-down-50-it%E2%80%99s-not-just-the-recession-folks/ http://www.techcrunch.com/2009/04/17/venture-capital-down-50... (2) People start spending money again because consumer confidence improves. - How? They have no savings, and their credit's being pulled.
    - dan_the_welder 17y ago
      What percentage of the economy is VC funded?
- eru 17y ago
  America - on aggregate - is not an investor, but an investee. Look at the capital inflows. (However America may provide a service as the world's speculator, if you meant that. (No negative connotations implied.))
- rbanffy 17y ago
  "We have to actually produce more than we consume." You know that this is not sustainable if you look beyond US's borders. It's a big planet and someone will have to produce less than they consume or this won't really work. "we had evolved as a nation, from doers into investors" This is not what I would call evolution. "If the US consumer quits buying, I think that's a big deal to everybody." It is, but it's not as big a deal as it would be a couple decades ago. We (as in "mankind" - I don't live in the US) will survive. In the end, this adjustment may even prove helpful. At least, that could be the viewpoint of those who survive us ;-)
  - robotrout 17y ago
    Wow, that's quite a lot of one-liner rebuttals ya got there. I'm not sure what to do with such, ummm, condensed wisdom... You say that it's a big planet, and someone will have to produce less than they consume. Sure, for an instant. That's why God invented Capacitors, Inductors, and Bank Ledgers. To smooth over the instantaneous fluctuations in the system. However, long term, the capacitor needs replenishing. Long term, a nation better produce more than it consumes, to make up for the times it produces less, and for the inefficiencies in the system. This is a conservation of energy mindset that I often apply to economics. Adam Smith tells me that it's not a zero sum game, and that you and I can trade, and both come out better for it. This does violate my conservation of energy model, to some degree. However, I still maintain that I better produce something, and what I produce, I better not use all of it, as I need some of it to trade with you. You say evolution from doers to investors is not evolution. I say it is. I can bake a pie, or I can finance a 200 chef pastry kitchen. You're saying I've serviced humanity less by creating the kitchen than I did by baking the pie? If you think that, you can't be reasoned with. You assure me that mankind will survive. Thanks. I never doubted it. What does that have to do with anything at all?
    - rbanffy 17y ago
      "Wow, that's quite a lot of one-liner rebuttals ya got there. I'm not sure what to do with such, ummm, condensed wisdom..." Mobile phones work miracles on conciseness. "I better not use all of it, as I need some of it to trade with you." This is not what I meant. If you base your economy on producing more than you consume, you end up risking having nobody to buy your goods because everybody got somewhat self-sufficient or got their supplies someplace else. It's nothing but smart to be as self-sufficient as possible. The strategic dilemma between being a doer and an investor is that, despite the illusion it's the other way around, the investor is actually serving the doer. You see - your kitchen is valuable as long as you have people wanting to cook, but absolutely useless if you have people who want to fix cars. Investment capital is a very useful tool, but it's only part of the machinery - it only smooths out some fluctuations that allow some companies to get started. Converting your whole economy from 100% doers into 100% investors is suicidal.

robotrout 17y ago

I wish I shared your optimism that we will recover. As the saying goes, "We'll survive by doing each others laundry". That saying, of course, is meant to be a joke. The US can't just do it's own laundry to survive. We can't just sell latte's to each other, either. We have to actually produce more than we consume. So, we either have to produce a lot more, or consume a lot less. I don't see us producing more, do you? I used to comfort myself that we had evolved as a nation, from doers into investors, and that we still brought value to the world by providing the capital needed for the rest of the world to grow, and so we were indeed, earning our bread. My faith in this viewpoint has been shaken, however. All is not bread and circuses for non-US folks either. If the US consumer quits buying, I think that's a big deal to everybody.

larryfreeman 17y ago
We've been through much worse than this. The economy is complex enough and our entrepreneurs talented enough that we will rise above this. The economy gets better under two circumstances in my view: (1) Large opportunities are available for businesses to invest and make money. (2) People start spending money again because consumer confidence improves. BTW, the goal is not to produce more than we consume. That, in my view, is a formula for failure. The goal is to create a more stable supply and demand curve. If consumers don't spend enough money, then the problems get worse as a business's gross revenue decreases. If we stop panicking, spend their money, stop with the bail outs, provide tax incentives for entrepeneurs, and most importantly, provide an opportunity for business to make money as well as compete with existing giants, then the recession will start easing into recovery.
- stuffthatmatter 17y ago
  Ah yes, the American optimism. Obama's hopism. (1) Large opportunities are available for businesses to invest and make money. - where? VCs obviously don't think so. VC down 50% http://www.techcrunch.com/2009/04/17/venture-capital-down-50-it%E2%80%99s-not-just-the-recession-folks/ http://www.techcrunch.com/2009/04/17/venture-capital-down-50... (2) People start spending money again because consumer confidence improves. - How? They have no savings, and their credit's being pulled.
  - dan_the_welder 17y ago
    What percentage of the economy is VC funded?
eru 17y ago
America - on aggregate - is not an investor, but an investee. Look at the capital inflows. (However America may provide a service as the world's speculator, if you meant that. (No negative connotations implied.))
rbanffy 17y ago
"We have to actually produce more than we consume." You know that this is not sustainable if you look beyond US's borders. It's a big planet and someone will have to produce less than they consume or this won't really work. "we had evolved as a nation, from doers into investors" This is not what I would call evolution. "If the US consumer quits buying, I think that's a big deal to everybody." It is, but it's not as big a deal as it would be a couple decades ago. We (as in "mankind" - I don't live in the US) will survive. In the end, this adjustment may even prove helpful. At least, that could be the viewpoint of those who survive us ;-)
- robotrout 17y ago
  Wow, that's quite a lot of one-liner rebuttals ya got there. I'm not sure what to do with such, ummm, condensed wisdom... You say that it's a big planet, and someone will have to produce less than they consume. Sure, for an instant. That's why God invented Capacitors, Inductors, and Bank Ledgers. To smooth over the instantaneous fluctuations in the system. However, long term, the capacitor needs replenishing. Long term, a nation better produce more than it consumes, to make up for the times it produces less, and for the inefficiencies in the system. This is a conservation of energy mindset that I often apply to economics. Adam Smith tells me that it's not a zero sum game, and that you and I can trade, and both come out better for it. This does violate my conservation of energy model, to some degree. However, I still maintain that I better produce something, and what I produce, I better not use all of it, as I need some of it to trade with you. You say evolution from doers to investors is not evolution. I say it is. I can bake a pie, or I can finance a 200 chef pastry kitchen. You're saying I've serviced humanity less by creating the kitchen than I did by baking the pie? If you think that, you can't be reasoned with. You assure me that mankind will survive. Thanks. I never doubted it. What does that have to do with anything at all?
  - rbanffy 17y ago
    "Wow, that's quite a lot of one-liner rebuttals ya got there. I'm not sure what to do with such, ummm, condensed wisdom..." Mobile phones work miracles on conciseness. "I better not use all of it, as I need some of it to trade with you." This is not what I meant. If you base your economy on producing more than you consume, you end up risking having nobody to buy your goods because everybody got somewhat self-sufficient or got their supplies someplace else. It's nothing but smart to be as self-sufficient as possible. The strategic dilemma between being a doer and an investor is that, despite the illusion it's the other way around, the investor is actually serving the doer. You see - your kitchen is valuable as long as you have people wanting to cook, but absolutely useless if you have people who want to fix cars. Investment capital is a very useful tool, but it's only part of the machinery - it only smooths out some fluctuations that allow some companies to get started. Converting your whole economy from 100% doers into 100% investors is suicidal.