Economy ???

[Genesis]

Its ending now.

The President is not the solution. I wish it was that simple. Its not.

The problem is consumption beyond our means, which means a dearth of investment.

We have partied like its 1999, withdrawing over six TRILLION in home "equity", and spent it on plasma TVs and boats. Unfortunately in the process we bid up houses to unaffordable levels, and now that pyramid has collapsed. The "wealth" that was spent was a phantom; real wealth cannot grow faster than GDP. It is mathematically impossible.

The debt, however, will not go away.

It also won't be hyperinflated out, despite the beliefs of many.

We are in for a long, nasty recession and potential deflationary collapse. Think Japan (20 years worth!) or our own version, the 1930s.

If you are in debt, get out - now. Clean up your personal balance sheet.

Hide if you're in the market and cannot be active in it daily - believing you can "trade" a long bear easily is simply wrong - you will get CRUSHED. Trading bear markets is one of the toughest things you can do. If you're not up for it, bail out to short-term Treasuries - return OF capital is more important than return ON capital. "Buy the dips" is, at this juncture and with these valuations, stupid. We are at a cyclical peak in earnings - when "E" falls, what happens to P/E and then in response, prices? Yep.

 

[Passages]

Well, I'm not so sure North America will be a reflection of South America in 10 years, but I would not be surprised to see the American standard of living in 2020 to be more like it was in the 1950's with both spouses working to make ends meet.

I find myself checking on Pascoe's new blog as well as Genesis financial blog daily. Two guys who live within a few miles of each other, write well thought out perspectives and both share a grim view of the economic future.

Since this is a boating forum, I'll limit my beliefs to the future of that avocation. First, powerboating has been around as long as there have been internal combustion engines. It has weathered two world wars, a great depression an oil embargo and to many economic ups and downs to mention.

There are those of us with an inherient predisposition to be passionate about waterborne recreation. It's IN us and we need a connection to the water to maintain a healthy emotional state. For these people (me included) , it is unthinkable to give up boating in favor of joining the masses for a day at a public beach.

I don't believe $4/gallon fuel or tight credit will automatically result in the death of powerboating as we know it. One only has to look at countries where fuel is double what we pay to realize the folks still go out on the water.

My critics may say - 'Come on Jim, Average Joe can't dump $1000 in fuel to go out fishing or spend a weekend at Block Island." Yes, that's true. What Average Joe can do is change his boating patterns. In the future, I envision larger boats to be used as a mothership spending significantly more time tied to the dock. This will be your summer cottage and carefully selecting a marina with shoreside ammenities to your liking will be that much more critical. Tied along side your mothership will be your smaller boat capable of acting as tender, fish or skiboat most likely powered by a single 4 stroke outboard.

This does not mean the big boat will remain permanently tied to the dock. Though there will be less frequent day trips, you can still used it for longer destination trips with the family. If it cost $1000 in fuel for a week or two visiting the islands with the family - so what? You'd easily spend that on plane tickets and lodging elsewhere.

While it may be true there will need to be some adjustment in HOW we use our boats, it's my belief that reports of the demise of powerboating are premature.

BTW- How many boats were present at CDR this year?

 

[Boss Lady]

if you had an annual budget of $5,000 for fuel. Then you still have the same budget, just that it won't buy as many gallons of fuel which equals less cruising time, or find some buddies who will pitch in and help with fuel costs.

Fuel costs will reshape the frequency and manner in which we use our boats. It really doesn't affect the dock queens, since they never went anywhere even when fuel was $1.00 a gallon.

 

[bobk]

There was a recent comentary that oil at $100/bbl is about the same, inflation adjusted, to $38/bbl in the early 1980's. I bought my first trawler at that time and never looked back. I'm running the 48MY as a trawler, and yes it takes more $/mile and gallons/mile, but it is a heck of a lot more boat too. I'm fine with that while running better than 3000 miles per year now.

 

[the kuz]

Most folks who see a future of gloom and doom are looking at the economy in a static not dynamic model. They are missing something very important. We are living through a time of productivity increases fueled by technology (especially information technology) the likes of which the world has never before seen. Future generations will look back at the late 1900s/early 2000s the way we look at the industrial revolution and the impact of the switch from an agrcultural to mechanized/industrial economy. More goods and services produced by less labor/capital equals lower prices and greater real wealth for the world wide population as a whole. The rising tide of productivity truely lifts all boats. Wealth and prosperity in other parts of the world is a good thing that will eventually lead to increased demand and new/expanded markets for US goods and services as long as they remain among the best in the world. OBTW cheap labor is not what creates an advatage in producing/marketing high tech products.

Our standard of living today compared to 1950 (if you can remember it & I can) is spectacular. Most of the folks we call "poor" today exceed the material standard of living enjoyed by the middle and upper middle class of 1950. Back then only the wealthy had more than one car (many lower/middle income folks had none). The "poor" certainly did not live in air conditioning, or have mutiple phones, TVs, music/comunication devices, etc. (anyone remember partyline telephone service?). Look at the number of residential square feet per person in the average US household today and compare it to 1950 or for that matter any other country in the world. There was a time in this country when some folks actually went hungry, now our problem is the obese (including many of the "poor"). Anyone (unless physically or mentally impaired) can earn enough money in this economy to live better than most folks did in the 1950s and market corrections in real estate/financial markets are not going to change that. If you want to see poor, visit a real 3rd world country like Afganistan or parts of the African continent. No one here lives like that.

Our economy continues to expand and despite what most people believe is not even in recession, never mind a 1930s type depression. Given the productivity driven growth rate, I'm not sure we will see any cylical recession (2 consecutive quarters of negative growth) anytime soon. The concerns raised on this thread will certainly slow down/adversly impact economic growth rates, but what will be the net result given built in productivity gains? Perhaps just a slower rate of growth?

Regards, Bob (bullish on America) K

 

[krush]

This economy has me doing something my friends that graduated in the past 5 years never did....considering the future of companies in which I am trying to get a job.

As much as I hate the government, I'm leaning towards companies that have secure (gov) contracts that will at least survive the next 2-4 years. If all goes well, it looks like I may be doing commisioning of HVAC at the Pentagon...the contract still has ~3 years left.

My friend is getting her commision in the Navy and is going to be in the civil engineer corps (seabes) for 4 years. I think she made a wise decision.

Lots of engineering grads are going to be in for a HUGE surprise. Engineering students have been spoiled for the past 15 years with the ease of getting entry level jobs.

So far, it looks like all the companies don't even see what is ahead. When I ask about the future and the economy, the people spit back "ALL IS WELL, ECONOMY IS GROWING...blah blah blah". Somebody is in for a surprise....just calling it from "the front lines".

 

[krush]

Our economy continues to expand and despite what most people believe is not even in recession, never mind a 1930s type depression. Given the productivity driven growth rate, I'm not sure we will see any cylical recession (2 consecutive quarters of negative growth) anytime soon. The concerns raised on this thread will certainly slow down/adversly impact economic growth rates, but what will be the net result given built in productivity gains? Perhaps just a slower rate of growth?

Regards, Bob (bullish on America) K

50 years ago, how many mom's stayed at home--how many can AFFORD to do that now? How many Americans didn't have to worry about healthcare? Was there as much crime?

I think blue collar workers lived better 50 years ago than they do now, but I'm only 23 so can't speak from experience.

The middle class is being squeezed hard! Taxes and welfare hit the middle class HARD.

 

[SKYCHENEY]

I hope we do weed out a few more boaters. That will give me more room out there and I won't have to call ahead to reserve a slip. Bring it on!

 

[the kuz]

Great reply Sky! Wish I had thought of that, would not have posted the rose colored glasses. Regards, Bob K

 

[Westfield 11]

50 years ago, how many mom's stayed at home--how many can AFFORD to do that now? How many Americans didn't have to worry about healthcare? Was there as much crime?

I think blue collar workers lived better 50 years ago than they do now, but I'm only 23 so can't speak from experience.

The middle class is being squeezed hard! Taxes and welfare hit the middle class HARD.

I am sure that the simultaneous decline in union membership while this was occuring was just a coincidence..... American workers still can continue to count on the bosses looking out for them can't they?

 

[Passages]

OK, come on out. Everything is safe. Fed just dropped the rate, new oil discovered off Brazil, Oil is down to low $90's and the DOW is up 500 points in 2 days.
.
.
.
.
.
(waiting for Genesis to come roaring back with WHY none of the above is sustainable)

 

[Boatsb]

I am sure that the simultaneous decline in union membership while this was occuring was just a coincidence..... American workers still can continue to count on the bosses looking out for them can't they?

That just maxed out the sarcasm meter.

 

[krush]

I am sure that the simultaneous decline in union membership while this was occuring was just a coincidence..... American workers still can continue to count on the bosses looking out for them can't they?

But of course! I see no reason why a forklift driver should not make more money than me after I spent lots of time/money/and energy to become an engineer.

Don't forget those union guys in which their job was to pick up and move boxes...and only that...and nobody else can do their job.

America is lucky engineers never formed a union LOL

 

[Brian Degulis]

50 years ago, how many mom's stayed at home--how many can AFFORD to do that now? How many Americans didn't have to worry about healthcare? Was there as much crime?

I think blue collar workers lived better 50 years ago than they do now, but I'm only 23 so can't speak from experience.

The middle class is being squeezed hard! Taxes and welfare hit the middle
class HARD.

Oh come on!!!! your not sugesting people lived better 50 years ago are you? How many families had 2 cars hell some didn't have one. And the one they had was probably around 10 years old. How many had cable TV and flat screen tvs and dvds and vcrs and computors. And a million and one other conviences. Sure health care wasn't the problem it is today mostly because you just died of things that can be cured or treated today. Now I can't go back 50 years but I can speak for around 1970 and nobody is going to convince me life was better then. And sure you can say that it's just because of easy credit but that's not the whole truth. As much as some may hate to admit it and as much as it pisses off the forcaters of dome (they where around in the 70s to) Life in this country gets better and better as the years roll on. It always has and hopefully it always will I believe it always will. Dammit we are Americans and it's no acident that we are the richest most powerfull nation in the world and as Americans we enjoy the best standard of living in the world. All this from such a young country It's no acident it's the American way and it's not as fragile as some may think.

Brian

 

[krush]

Brian,

How many people had debt up to their eyeballs today to get those tv's, two cars, huge house, skin-i-max, and satellite dishes?

We have many advantages today and the "easy life" has lead to complacency...that is my biggest fear. I think my generation is going to be left with a HUGE mess (cough cough SS, medicare, Gov debt).

A carpenter could live very comfortably 50 years ago, right? What about today?

There are only so many cush cush gov jobs to go around.

I'll survive no matter what, I have plenty of skills. The kids that spent 150k on a communications or political science degree....haha not so much!

 

[Westfield 11]

America is lucky engineers never formed a union LOL

They did, at least the Aero-engineers @ Boeing and McDonnell-Douglas. It was called a professional assoc. but it negotiated wages and conditions in behalf of the engineers/workers. Sounds like a union to me.......

Due to the "professionalism" of the members, they refused to ever take any job action in their behalf, so the companies just dictated terms to them, Thus we have forklift drivers who make more than degreed engineers. The big problem was that the engineers settled for an overtime rate of base pay + $5/hr, while the lower class workers got time and a half. Over a year it adds up!!! On hourly rate the engineers were way ahead though, and if we didn't get OT, they had a bigger weekly paycheck. Of course, we always got all the OT we wanted.....

 

[Finalee]

At my Marina we are seeing more boaters. Its the over 50 and over working group. We all show off our carpentry, plumbing, mechanical and electrical skills as often as possible.

 

[Trojan]

I think the 70's and 80's were the the best. I also think the good times are gone. I lived them they were great. To survive in the future you will need to rely on some real good skills. Kursh I think you will survive, you have a lot going for you. I think everyone can make it. But your life style financially will change drastically. If your well off and have a protected income you will do fine. If your on the financial edge your going to be in trouble. Anyone just starting off is going to have a real ruff start. Good by toys. Your going to need every penny to survive. Your going to see the 50's type living return. People are going to need real friends. All types of entertainment will change. Hell maybe bowling will come back, Sunday drives. Who knows, We cannot afford to have another war. There is not enough machines of any type left to supply the troops with equipment. I just hope that history does not repeat it's self. Every time there was a major down turn in the nation. Up popped a war. I wish I had a plan. Krush, the carpenters are getting hard pressed, The only jobs left are finish up work. Very little is being built new now. The blue collar workers did have it good 40 years ago. I was one. The Unions were and are the best thing going for the worker. But with the advent of the wars and the over payment on government contracts. There was to much free money and the unions took advantage of that. As I said before the free trade has got to stop. Just look at the amount of loaded incoming ships setting in the Calf. harbors. How many are leaving loaded? Whats the ratio? Quote: I'm glad we have the dollar stores. I don't have to dress up like when you go to WalMart. I rest my case.

BILL

BILL

 

[Brian Degulis]

Brian,

How many people had debt up to their eyeballs today to get those tv's, two cars, huge house, skin-i-max, and satellite dishes?

We have many advantages today and the "easy life" has lead to complacency...that is my biggest fear. I think my generation is going to be left with a HUGE mess (cough cough SS, medicare, Gov debt).

A carpenter could live very comfortably 50 years ago, right? What about today?

There are only so many cush cush gov jobs to go around.

I'll survive no matter what, I have plenty of skills. The kids that spent 150k on a communications or political science degree....haha not so much!

All this stuff was said in 1970 also. The carpenter you speak of living comfortably using his skills 50 years ago. If we where to take his life as it was 50 years ago and fast forward it to today his standard of living would be considered horrible by todays standards. Can an average carpenter make a great living today probably not. But how many people were making a living in the computer or electronics industry 50 years ago none. You can't take a few things and use them to forcast doom you have to look at the whole picture. Do people have to much personal debt today sure but like everthing else it will hit critical mass and there will be a corection. Maybe even a recession but keep in mind as Americans even in times of a poor economy or recession we are still living better than most of the world.

Stop and think for a moment 6 years ago if you were asked what the efect of $3.50 a gallon gasoline would be what would you have said? I'm guessing you would have said that it will devastate the economy well here it is and consumption has hardly gone down at all. And what will happen next is what always happens. Solving the problem will open the door to all sorts of new opourtunity and industry. Some will fall some will rise nothing more than a slight change in course and when it's all done we will probably be living a little better than we were before.

Brian

 

[yachtsmanbill]

I agree Bill. Up here there are shipping container "farms" with those things stacked 10 high and go for blocks and blocks. Chicago used to be an industrial hub, but all the lead painted dog toys are jamming up our roads!
I hope I live long enough to finish the sub and peel out for Havana! Rum drinks with pretty little umbrellas! How do you get those damn smilies to work??? ;-) ws