Bush assures Americans that U.S. economy will 'pull through'

With sound policies in Washington

The thing is, Washington is now bailing out everything in sight. [T]he reasoning behind this rescue effort...sounded no different from that offered in defense of many a bailout in Japan and Europe:

The mortgage giants were too big to be allowed to fail.

Big indeed. Together, Fannie and Freddie own or guarantee nearly half of the nation’s $12 trillion worth of home mortgages. If they collapse, so may the whole system of finance for American housing, threatening a most unfortunate string of events: First, an already plummeting real estate market might crater. Then the banks that have sunk capital into American homes would slip deeper into trouble. And the virus might spread globally.

The central banks of China and Japan are on the hook for hundreds of billions of dollars worth of Fannie’s and Freddie’s bonds — debts they took on assuming that the two companies enjoyed the backing of the American government, argues Brad Setser, an economist at the Council on Foreign Relations.

http://www.nytimes.com/2008/07/20/weekinreview/20goodman.html?em&ex=1216612800&en=53cdb0335eeb7eb1&ei=5087%0A

It always has and it always will.

Yeah, but we've never been so deep in hock nor has so much of that debt been held by foreigners. Some don't worry; the Japanese and now the Chinese have grown rich selling us stuff so they will continue to buy our debt to enable us to continue purchasing their goods. Can this arrangement go on forever, however?

YEah as soon as the idiot in charge is out. I guarantee a 6 year old could have done better job than dubya.

But Im sure it will take at least two years.

The American economy is fine.

If you're gamblin' in certain stocks, well that's what you're doin' is that... gamblin'.

People who borrow more than they can afford at very high interest rates than they could ever afford to pay off, of course get into trouble. The "I want it now" Syndrome is know to take no prisoners sometimes.

The Euros wish their economy and gas prices were so good.

Domo.

USAR

Well, once it became apparent that the cost of occupying Iraq would exceed the USD 50 billion GWB publicly predicted in the run-up to March 2003 and that Iraqi oil wouldn't "pay for everything," he was content to proclaim the bubble-drive economy was great so nobody would question the ever escalating costs of Iraq and how they were adding to our national debt.

Madam, there has always been a National Debt and there will always be a National Debt.

So what. Life goes on as usual. Decade after decade after...

Don't worry; be happier.

USAR

US economy is doing what it has done since 1940s.

It will get back up, via new american/global ingenuity in business, and with more popular new administrators.

Oil prices has gone down from USD 140 to USD 128. The dow is going up again,so are global nations economies, in small rises.

There is good sign that oil price can go down. Real estates bubbles, also need realistic change to adapt to new realities.

Fannie/freddie needs to improve management and boost finance via more mergers with fund sources and government funds.

There is global oil reserves that will last for 10-180 years in world nations, that needs to change to cash dollars in next 180 years.

Economic hopes, spring eternal.

Many problems need to be overcome to build back confidence and hope. Low confidence builds global bearish moves, confidence builds global bullish economy.

Trillions get made or lost,it is the way of the global fast cashless electronic money moves, in 2000s, in a annual global economy of 60-70 trillions.

The most ingenius trading nations/companies in borderless trade, will only continue to be better.

Betzee, also says right things about the plaguing problems which needs to be worked on, by business managers,next administration, Obama or Mccain or Others.

Just a few generations ago we were a frugal nation. Living within your means was considered honorable, while being up to your ears in debt was shameful. Boy has that changed; credit cards are now hawked at everyone with a pulse.

Part of the reason for this expansion of the credit market is the means by which lenders achieve profitability has changed. In the past, actually being repaid by borrowers was crucial for a lender to stay afloat. Now, because so much consumer debt is packaged into securities and then sold to investors (many of them foreign), actual repayment of the loans becomes secondary to the fees and charges generated when loans are made (or mortgages refinanced). I can remember receiving three telephone solicitations in a single day asking if I wanted to refinance my mortgage. I don't even have one...

Betzee, also says right things about the plaguing problems which needs to be worked on, by business managers,next administration, Obama or Mccain or Others.

Many of those in foreclosure will cheerfully admit they overstated their incomes on the loan application. No doubt this was true in the past as well. But the incentives for lenders changed (as I outlined above).

There is good sign that oil price can go down.

The thing about speculation is that it gets you where the price will end up quicker. Speculators drive prices up but they pull out and cause the market to fall fast as well.

The other day McCain proposed an extended federal tax gas holiday. That's a terrible idea; it will increase demand and speculators will drive the price right back up. The only difference is that Uncle Sam, already heavily in debt, will lose his cut.

http://www.theonion.com/content/video/bush_tours_america_to_survey

It’s a little dangerous today to talk about the American economy as though it were a thing isolated from the other economies of the world. The mortgage sitution in Europe is in ruins & part of the reason for this is that many of the banks off-set their loans with US banks & finance houses. But that ripple effect will go both ways, getting the US back on it’s feet will mean having to also get Europe back on it’s feet & that isn’t one country with one way of doing things. Even under the EU there are differing ways of dealing with the current problem & which will or not work out? I think that it will take a minimum of five years before we even see which way the wind is going to blow, & that is going to be a long time for the little people that are trying to pay a mortgage.

“This is a nation that has faced tough challenges in the past and overcome them, and we will do so again,”

Yes, we will. I believe this. In fact, I believe we've been trying to do this for years, but we couldn't because of the spectacular idiocy of our leaders.

“With sound policies in Washington and the ingenuity of our citizens, our economy will emerge from this period stronger and better than before.”

See what I mean? "Sound policies from Washington?" When ya gonna start with that, George?

Just spent some glorious time in the states... trust me the average American continues to go about his/her daily life with nary the hype and tragedy insinuated here at JT. By reading all these gloom and doom stories on the net I expected to find Americans awash in angst and fear over their futures... bah ! People were too busy enjoying all the free things life in the US has to offer. Coupons, "buy one get one free" ! Discounted items at 70% ! Tightwad Tuesday events ! Free concerts ! Etc ! Cripes if we in Japan could only be so poor ! I've said it before, I'll say it again... "being poor in America is a helluva lot better than having money in Japan" !!! Life is good !

"because of the spectacular idiocy of our leaders..."

Yeah, can ya imagine what's gonna happen to us if Mr. Style and No Substance Barak Hussein Obama gets in?

Holey smokes.

USAR

Pay off all credit debts before the interest rates rise. Buy your house now and lock in the interest rate (with inflation going up the payments will look cheaper and the cost of building a house will only get higher) Keep all other costs to a minimum. It's hard to figure saving with your money worth less and less and cost going higher and higher, but your house will hold it's value the best.

Worst case senario: You are retired and on a fixed income = I don't see the gov keeping payments up in check with this inflation = your money is worth 30-40% less but payments increase 1-3%.

necessities: If you are in the market for a car should you buy now? Yes, buy it before they raise the prices and also the interest rates are low. The costs of these products must rise = you haven't really seen it yet, mostly just talk. Fuel efficient cars are getting sold out though and harder to find.

westurn,

You could be describing bread and circuses.

Bush is the right person to convince the nation.

"Being poor in America is a helluva lot better than having money in Japan"

Heh.

this downturn in the economy actually happened before Bush came into office (Internet/stocks downturn+ later 9/11 downturn). They lowered interest rates and that helped massively. People bought homes. Now we are dealing with the backwash of those low interest rates plus high oil/energy, food prices, and Afghan/Iraq +?

You now have inflation and interest rates and costs must go up = in 8 years the situation has become worse, but then again we really didn't have a WW3 either (worst case senario). The common person is worse off generally than 8yrs ago.

The common person is worse off generally than 8yrs ago.

Indeed. The average American has to shoulder the burden of bailing out reckless financial institutions, shoulder the cost of two wars, cope with high oil prices and rising food prices as the value of the almighty dollar shrinks.

Some posters have used anecdotal evidence ("I didn't see anybody having a hard time") to assert the crisis is overblown. In fact foreclosures are concentrated (and very evident) in high-growth states like California and Florida where new communities sprout up overnight.

Now one can have limited sympathy for those who signed documents they didn't understand or overstated their income to qualify for loans. But it's also the loan company's responsiblity to independently verify the information provided by applicants. They obviously fell through on that and now need to be bailed out by the taxpayers because, in contrast to individual families whose loss of a home won't have ripple effects, they are too big to fail. This has to be addressed by the government....

California is losing people by the millions = this is really gonna hurt their tax base and they already are in a deficit + the fires are bad this year.

These wars were paid thru inflation = your money that you saved is now worth 30-40% less and it's getting closer to 50% = that loaf of bread is now close to $3 (a double in price since your money is worth 1/2)

The kicker: Dems want to raise taxes. Since your money is worth less I guess you sort of have to and I'm sure the politicians want their 50% raise also. (I'm trying to make everyone happy here)

California is losing people by the millions = this is really gonna hurt their tax base and they already are in a deficit + the fires are bad this year.

A bit of an overstatement. The Golden State typically has a net outflow during economic downturns and gets an inflow during the good times. If you're unemployed, well there are cheaper places to live.

That's part of the problem here: too many people in the service industry, where employment is generally more insecure, became homeowners (with huge mortgages). When their hours were cut back owing to the economic downturn, or they faced unexpected medical bills, in many cases they could no longer afford the payments. But if you took out a 370 grand mortgage and your house sells for 150 at auction you are on the hook for the difference.

Buying a house is one of life's major purchases. At a minimum, it should require a down payment which demonstrates a borrower's ability to save, as well as a stable work history. All that kinda went out the window during the real estate bubble....

A tax increase is inevitable whichever party wins the White House.

The economy will rebound. No thanx to george bush and his policies of giving tax cuts to the rich and funnelling $4Trillion to the ultrarich.

It's going to take a good year or two to work through the period we're in. And this $$multibillion millstone around our neck called Iraq will be hurting us for years to come.

Sooner we get a democrat in the Whitehouse and get a couple more democrats in the Congress, we'll fix this mess. < :-)

I'm not sure how much control a president actually has over the economy but if you look at history there has been another instance of an unfunded war and government givaways at the same time. It was Lyndon Johnson. The war was, of course, Vietnam and the giveaway was the "Great Society."

That might be the only true parallel between Vietnam and Iraq. But look at the result: "stagflation" in the 1970s that required interest rates of 20% and a big recession to correct.

We've got a similar situation now with inflation taking off due to energy prices plus the lack of growth brought to you by the subprime crisis. Of course the price of building materials was already going up with the effort to rebuild Iraqi infrastructure and the federal budget is in no shape to respond to economic issues. Except by printing money, which is inflationary and devalues the dollar.

The economy will rebound. But it's going to hurt and I suspect that the standard of living is going to suffer.

Very solid financial advice from Badsey.

I don't have much sympathy for those who took on too much debt or for those who gave loans to such risky clients.

It's funny though to see how congress points so much of the blame at the lenders. Especially, since they mandated much of the risky lending via the Community Reinvestment Act.