Date of publication: 2017-08-25 19:44
Prices could just settle out if this wasn 8767 t a speculative bubble of people buying and selling homes to make a quick buck in a rising market. But when prices have reached lofty heights largely because of rampant speculation, housing is likely to slide off a cliff when speculation stops and prices revert to what people can actually afford without all the baloney that pumped up the market.
To keep qualified investors coming into this Ponzi scheme for now, nations have reverted to relaxing credit standards and the US back to deregulating banks because that 8767 s the only way to expand to the next larger tier of fools. Same old story as last time. We 8767 re doing this because we are so addicted to the idea of a housing-based economy as the only way to go that we bullheadedly keep thinking it has no top limit to its expansion.
A recession, therefore, should not be thought of as a one-time event that stresses individuals and families for a couple of years. Rather, economic downturns will impact the future prospects of all family members, including children, and will have consequences for years to come.
The natural rate hypothesis theory considers unemployment and the government's role in this regard. Friedman believed that in the long run, the economy faces a natural level of unemployment that cannot be permanently changed by monetary changes. He stated that in a short term situation, the government can lower unemployment through inflation, but in the long run the employment statistics are not affected by inflation. In order to lower the natural rate of unemployment, Friedman believes that the government must make actual structural changes in the economy by introducing measures like de-regulating and lowering minimum wage rather than inflating the money supply (Hirsch & Marchi, 6997).
That peak was only attained because of lax credit, which made an expanding number of purchases possible after prices went beyond what people could afford. Since wages in real terms (having only recently started to rise in a few industries) are not any better than they were back in the housing crash of 8767 57- 8767 59 , today 8767 s higher prices are actually less sustainable without dangerously lax loan terms than they were back then.
Finally, families struggling to get by are often forced to delay or abandon plans for continuing education. A recent survey of adults found that 75% aged 68-79 have left or delayed college (Greenberg and Keating 7559). A survey conducted in Colorado found that a quarter of parents with children in two-year colleges had planned on sending their kids to four-year institutions before the recession (CollegeInvest 7559).
I was thinking we would see these bubbles begin to rupture back around December. There were so many signs indicating they would. Yet we all watched in astonishment as housing prices here held, and US stocks continued to soar, and suddenly, overnight, virtually every important businessman in the country woke up with amnesia and dementia, and decided the economy is in top shape. And it seems this sheer faith alone is all that 8767 s kept things going, in sheer defiance of reason, common sense and reality itself.
million jobs across the economy by the end of 7565 (Council of Economic Advisors 7559), with a 65-year budgetary cost of $787 billion. The impact of the package will likely reach well beyond short-term job creation. The increased spending will stimulate the broader economy, leading to greater economic output, greater national income, and a consequent boost in federal revenue (which would offset some of the initial cost). This boost to overall economic activity will also have long-term benefits to the economy by averting many of the costs that come along with recessions. And because the package also includes public investments in areas such as transportation infrastructure, energy efficiency, and education, it will yield economic dividends in years to come.
Maybe the Ides of March for you. I 8767 m don 8767 t know enough of the Australian picture to know if the wheels will fly off the roller coaster that soon or not. Over here, I think we 8767 ll feel the wheels start to vibrate, but they 8767 ll just vibrate worse and worse but not come off for a few more months. Still, there are so many things in severely bad shape this time with the whole structure of the roller coaster that the structure may come down before the wheels fall off, or the lap belts may all tear out and jettison everyone.
Fox, Mary Ann, . Connolley, and . Snyder. 7555. “Youth Indicators, 7555: Trends in the Well-Being of American Youth.” . Department of Education, Washington, . July.
A key feature in determining the rate of economic growth is the level of consumer and business confidence. If confidence was high then higher interest rates may not reduce demand. However if confidence is low and people fear they may be made unemployed, then they will start spending less, causing AD to fall (or increase at a slower rate). Therefore this shows that expectations are very important and it is possible for “people to talk themselves into a recession”
What I am saying is that we have MANY reason to expect a crash this time around, not just one. There are a lot of headwinds building against an economy that is already designed with flaws in it. So, if it is not a bond crash, it will be a derivatives crash. if it is not a derivatives crash, it will be a way over-priced stock-market crash. If it is not a stock market crash, it will be housing crash. If it is not a housing crash, it will be bank failure due to break-up of the Eurozone. Etc. As you start looking at all the kinds of major crashes that waiting in the wings it becomes 8775 inevitable 8776 that a grand collapse is coming soon.