Opinion on economy...

[Jrocket]

How about getting some opinions from everyone in here on what the economy is going to do if we go to war? Ive heard people say the the interest rates will drop and things will be better off than right now and some say the exact opposite.Im no speacialist when it comes to this but would like to hear some ideas from others just as well.Obviously we all want it to be better off but what do you think will happen?.....

[Tom Brown]

Economies are screwed by uncertainty. Both war and the subsequent peace are typically positive influences on economies.

[mbrown2]

My thoughts are ...Interest rates will possibly drop since most money will move to more conservative vehicles; however, consumer confidence will go down so this will negatively impact consumer spending and retailers, so that in turn will have an impact on unemployment rates by company's not hitting their projections and reducing costs to hit their projections....Industries centered around defense will prosper.....Gas/Oil...well forget it...

[HavasuDreamin']

I believe interest rates will continue to hover around the all time lows they are currently at. I don't believe they will go back up until the economy shows some real signs of recovery.
I also believe the economy is going to sit stagnant (sp?) until the war is over for the most part. At that point, I believe the economy will slowly improve.

[my21advantage]

The economy is driven by the people in the market. People are afraid to spend money because of the high uncertainty of war. We are also an economy that revolves around business cycles, and is in a recession now. We'll rebound but I think at least two years. As far as gas prices everyone keeps talking about Iraq, but Venezula (another large exporter of oil) is facing problem in their government that effect our supply of oil.

[Jrocket]

Tom Brown:
Economies are screwed by uncertainty. Both war and the subsequent peace are typically positive influences on economies. Tom,what makes them become positive?

[sorry dog]

I don't see how interest rates can go much lower. We already probably have close to a zero savings rate and risk of future inflation will probably keep the real rate where it is. I would be surprised if fed funds rate goes more than 25 basis points lower. They've pretty much shot all of those type money supply bullets.
I would guess that at the positive conclusion of the war, traders and such would be more confident and maybe help out an equity run. This will give companies more ability to raise capital, but I still think there are plenty growing pains to go before the various bad investments of the last decade are recovered. The stock market is not the economy. Things like real earnings and productivity still matter in the real world.
I feel that even a small amount of inflation at this point could really hurt any positive gains. Also if we do see signs of a strong recovery, that is going to put the fed in a difficult timing position on when to raise rates to more sustainable levels.
[ March 19, 2003, 02:10 PM: Message edited by: sorry dog ]

[Froggystyle]

My opinion is that there has been a lot of posturing going on, and the nation has been divided politically because of potential uncertainty. Some politicians have used the disagreement to their advantage, hoping that if we were to back down from Iraq, Bush would be powerless to defeat them in the next campaign.
The reality, in my opinion is this... We are going to oust Sadaam, and find a whole lot of banned weapons in Iraq. There will be legions of Iraqis testifying to the atrocities perpetrated by Sadaam and his minions, and everyone who opposed the war will be politically emasculated, both in a national and international instance.
France, Germany, Russia and China all have great economic interest in Sadaam staying in power. With Iraq's oil, they could essentially create a super-co-op to compete against America as another superpower, but it would take all of them to do it, as each alone lacks the resources and individual technology.
When we find all of the hidden weapons, and the crimes of Hussein are brought to light, Bush will be way on top of the pile, and will be unassailable politically. In addition, he may go down as the greatest humanitarian of the year for liberating a completely oppressed country.
Our economy will skyrocket.

[TOOMNYTOYS]

FOR GAS PRICES TO BAD CONGRESS SHOT DOWN BUSHES ALASKA OIL DRILLING POLICE TODAY.DAM TREE HUGGERS. WE IN CALIFORNIA ARE SEEING OR PAYING FOR THE AFFECTS OF THIS ON A DAY BY DAY BASIS. BASTERDS. ONE DAY WILL HAVE TO WEAR CATALIC CONVERTORS ON OR ASS WHEN WE FART IN CALIFORNIA. TO DAY CRUDE OIL PRICES TRADED FOR A TWO MONTH LOW. YOU THINK WE WILL SEE THE DIFFERANCE AT THE PUMP? NOPE..

[Bense468]

Oh there is no doubt in my mind, that bush will go into the books on this one. I also think that things will turn for the better. Another thought that i have is that when their goverment gets sight of how serious we are this time, his own people will kill sadaam and turn him in to us.

[Jrocket]

If everyone is holding onto their money and spending less during war,how will the economy survive or get better for that matter? Even if interest rates drop to an all time low,will people still hold on to their money? Im just trying to figure out how things work.Im assuming its nervousness of the consumer that slows the economy,am I right? If this is correct then war sure seems to make people nervous..

[Tom Brown]

I think the threat of war makes people more nervous than war.

[Jrocket]

Bense468:
Another thought that i have is that when their goverment gets sight of how serious we are this time, his own people will kill sadaam and turn him in to us. That would be the best case scenario!! If it was only that easy!! I wish..Great thought though. :D

[Mandelon]

Froggy, its nice to see your old avatar back.
But I have to differ on that skyrocketing thing. Be prepared for several years of nothing. Sideways at best. Maybe a short bull market if the war ends quickly, but certainly not a return to DOW 10,000. Those overvalued days are long gone. P/E ratios are STILL historically out of whack. Consumer confidence in the stockmarket is shaken and millions of people who have lost untold billions are going to be gunshy about jumping back into it.
Interest rates can't get much lower, and any additional effects will be negligible. The only borrowing going on is likely to be rearrangement of debt.
Costs for basic necessities are going up. Fuel, utilities, city services, insurance, and all products using those things to bring them to market. And as always healthcare and taxes! Inflation numbers not reflecting these factors are bullshit, and unreflective of the true state of affairs.
The only thing not going up is wages. Discretionary income is being eaten away. As the aging baby boomers get closer to retirement, will have to increase their savings rate, since their nest eggs have shrunken. This will place further obstacles on growing the economy. Not to mention the increased healthcare costs we will all have to share from those that are un/underinsured.
State and city construction projects that haven't been already funded will be harder to find, not cancelled. That puts a lot of guys out of work, decreasing wages for that type of labor.
Might be a tough time to build boats......There's always some folks with money though. I suggest those who can, should position themselves to weather a long, slow period, and try to take advantage of it if they can. The stock markets of the rest of the world are performing more poorly than ours.
I've sought out a couple of niches in my field that are fairly recession proof.
The only saving grace might be the billions of dollars waiting to be inherited by the spend crazy BMW driving baby boomer generation.

[Jrocket]

Tom Brown:
I think the threat of war makes people more nervous than war. Tom,this might be very true.The talk and thought of war is scarry and uncertain.After we go to war we still wont see a difference to the eye in our everyday work.Maybe to the pocket book but not by looking out the window.We usually cant grasp whats really going on,sometimes we might even ignore the idea that we are at war so we can tell ourselves that we are still ok,financially and safety wise.Out of sighgt out of mind kind of thing I guess? :confused:

[Jrocket]

Mandelon:
State and city construction projects that haven't been already funded will be harder to find, not cancelled. That puts a lot of guys out of work, decreasing wages for that type of labor.
Mandelon,would you say that construction is the major part of how our economy works? I mean,does construction set the way the economy goes,up or down?It would seem that without construction nobody is spending money? I have a hard time putting down in words what im really trying to say so bear with me here.What other single thing in the U.S. makes such an impact on the economy besides construction(Of all sorts)? Seems that if theres no building theres no spending? Right or wrong?

[twistedpair]

Someone brought up the subject of oil and drilling in Anwar. There seem to be a lot of oil guys around here, so maybe someone can answer this for me.
The Democrats always use the statistic that there is only a 6 month supply of oil in anwar, so drilling in this pristine (pronounced God-Forsaken frozen F-ing tundra)doesn't make sense. That can't be right can it? It seems like the oil companies would lose money on that deal. Yet oil companies are lining up to go drill. Are the Dems talking out of their asses as usual?

[Froggystyle]

Mandeleon,
I humbly disagree. I think there are a lot of people with money, and while I don't think the stock market is going to reach inflated rates again, I also don't think it is an accurate bellweather for our economy on the whole.
Investing in stocks, especially tech and .com stocks was a bubble waiting to be burst. The manipulators built it up over a series of years, and got out at the top.
To the contrary, people are now far more likely to invest in their lives and homes. College, cars, toasters and boat companies are now the rage. How do I know? Every person who approached me about investing in the new company was a prior stock market investor looking for something real to put their money into. A real company with a real person with a vision driving it. Most put more into me than they did into the stock market. Don't look now... but if people invest in the companies that build America and provide jobs, they have done a lions share towards improving the economy.
Big business became the indicator for success in the 90's. Small business impacts the economy on a much larger scale though. I think if you see an increase in successful smaller businesses, you will see the economy go through the roof.
In addition, I feel that GWB will be great for this size business. He is looking for this kind of stimulous at the low end of the spectrum.

[Froggystyle]

Jrocket:
Mandelon,would you say that construction is the major part of how our economy works? I mean,does construction set the way the economy goes,up or down?It would seem that without construction nobody is spending money? I have a hard time putting down in words what im really trying to say so bear with me here.What other single thing in the U.S. makes such an impact on the economy besides construction(Of all sorts)? Seems that if theres no building theres no spending? Right or wrong? I think this is 100% accurate. Construction is probably the greatest indicator of economic prosperity.
Keep in mind, with all of this doom and gloom economy talk, new construction is going up still.

[SCUBA STEVE]

Jrocket:
Tom Brown:
I think the threat of war makes people more nervous than war. Tom,this might be very true.The talk and thought of war is scarry and uncertain.After we go to war we still wont see a difference to the eye in our everyday work.Maybe to the pocket book but not by looking out the window.We usually cant grasp whats really going on,sometimes we might even ignore the idea that we are at war so we can tell ourselves that we are still ok,financially and safety wise.Out of sighgt out of mind kind of thing I guess? :confused: I have to agree. Unless we are out fighting the war we won't feel the burdon or stress. I do have to give major prop's to men & woman of the armed forces for doing what they do. I might not fully understand what is going on, but I do understand if this goes down, people may never see their families again. frown

[Jrocket]

twistedpair:
Someone brought up the subject of oil and drilling in Anwar. There seem to be a lot of oil guys around here, so maybe someone can answer this for me.
The Democrats always use the statistic that there is only a 6 month supply of oil in anwar, so drilling in this pristine (pronounced God-Forsaken frozen F-ing tundra)doesn't make sense. That can't be right can it? It seems like the oil companies would lose money on that deal. Yet oil companies are lining up to go drill. Are the Dems talking out of their asses as usual? If this situation involved limitied production cars,then I could see the line forming but to line up for 6 months of oil supply.I dont see it.Something isnt being told here!!Why would they be so eager to get that small amount,unless theres a catch in the contract...
[ March 19, 2003, 02:52 PM: Message edited by: Jrocket ]

[SCUBA STEVE]

Just a thought, I think the $ is out there!! Just that the averge joe is spending it on real estate now. For example, a house that cost $150m 2 years ago now goes for $250m. Yeah intrest rates are low, but not low enough to cover the higher payment and very few companies are offering raises to cover the cost of living. So the average joe has to be on a budget to cover the $2000 house payment, that 2 years ago would have cost him $1300. every business & everyone is effected by this because no one is out spending anymore. Hopefully things will level out soon so everyone can prosper.

[sorry dog]

Construction is probably the greatest indicator of economic prosperity. Actually construction tends to be a lagging indicator of the business cycle since project planning is often influenced by current economic events rather than future forecasts.
I think Mandelon did good job of decribing a negative scenario. I do think it is important to note that interest rates are low so that capital for new projects is easier to come by which spurs growth. Also during times of corporate belt tightening, increased productivity can increase earnings margins which will promote future investment. Of course there are many other exmaples of the cause/effect of the business cycle but I do believe we are still in an adujustment time while bad investments of the past are written off and the unemployed are finding more beneficial roles in the economy.
The inflation risk, though, is certainly to be taken seriously.

[challengerjet]

Jrocket, I do agree with you on the construction point you were making to a certain extent, but I have to say the the Manufacturing sector has a greater impact on the countries economy. If we're not making anything that means we're not selling anything and if we're not selling there's no money exchanging hands. just my $.02
cjet

[flat broke]

If anyone on this board let alone the rest of the financial insudstry had the answer to this question, he wouldn't be here to give the answer. He'd be running his boat in the spot of his choice because he wouldn't have to work.
In regard to interest rates, they are tied closely to the yield on the 10 year bond market, and the dow. Since Last Wednesday interest rates have climbed considerably compared to their low point around 2 weeks ago.
The rates have been low because of two reasons 1. depressed markets need to have attractive pricing to stir business, and the consistent red rate cuts were designed to make home ownership affordable. If you buy a house, you need a washer and dryer, fridge, furnishings etc. Think of all the labor services your home requires. The idea was to keep the housing economy proped up at the expense of our retirments.
The war factors in by applying uncertainty (as mentioned by others) This uncertainty causes skidish markets which drives more attractive pricing to stimulate investment.
Another scenario for the near term (year or so) the conflict drags on, oil prices continue to rise, and thus everything gets more expensive(there is an energy price component in everything we do or use). This causes an inflationary trend and we end up with a market like Tokyo where you could potentially see 0% interest rates. They don't charge interest becuase they need to make it possible to finance things due to extreme inflation.
My .02 and rather uneducated spin on the deal,
Chris

[Jrocket]

flat broke:
If anyone on this board let alone the rest of the financial insudstry had the answer to this question, he wouldn't be here to give the answer. He'd be running his boat in the spot of his choice because he wouldn't have to work.
And the world would be a perfect place....LMAO.We would all be rich somehow.Let me know when you get the answers...... :D :D

[Jrocket]

challengerjet:
Jrocket, I do agree with you on the construction point you were making to a certain extent, but I have to say the the Manufacturing sector has a greater impact on the countries economy. If we're not making anything that means we're not selling anything and if we're not selling there's no money exchanging hands. just my $.02
cjet So how does one go about keeping things steady? Raise and lower the interest rates to adjust to the economies needs or to bail the economy out? Too bad things cant just stay steady or calm. :D

[Mandelon]

Jrocket:
Mandelon:
State and city construction projects that haven't been already funded will be harder to find, not cancelled. That puts a lot of guys out of work, decreasing wages for that type of labor.
Mandelon,would you say that construction is the major part of how our economy works? I mean,does construction set the way the economy goes,up or down?It would seem that without construction nobody is spending money? I have a hard time putting down in words what im really trying to say so bear with me here.What other single thing in the U.S. makes such an impact on the economy besides construction(Of all sorts)? Seems that if theres no building theres no spending? Right or wrong? Yes, construction industry employs staggering numbers of people directly. Plus think about how many ancillary services are required. Then all the folks who work in the stores where materials are sold, the folks who actually make the materials, the delivery people, truckers, the design people, the advertising and marketing....it goes on and on. Every new house need furniture, carpet, appliances......getting it???
The states spend billions yearly on construction, then add the school districts, the municipalities, maintenance districts...all of whom have zero extra money, and are actually facing serious cuts, this is pretty much nation wide.
I think there is like one state that has a healthy budget.
The cities make building permits harder to get, add in Environmental Impact Reports, Traffic studies,,,etc. The tree huggers make it harder too.
The low interest rates have made the housing industry keep rolling along, but once that ends....it could really be a problem. The stock prices of the corporate housing giants has been declining, and is about half of what it was 8 months ago.
I'm not trying to be doom and gloomy, just realistic. I don't see any really encouraging news. The stock market had a huge bubble, and is still not done correcting itself. Housing prices will need to level off and in some areas will decline, just as they have in the past. Foreclosures are up in several regional markets. So far Southern California has held up well.....we shall see.

[Irishluck]

Well i just entered the Real Estate market and all I know is that only time will tell. The gas prices will effect everybody, if the consumers aren't confident they won't buy. Then I think we will all be in a little trouble.

[Mandelon]

Froggystyle:
Mandeleon,
I humbly disagree. I think there are a lot of people with money, and while I don't think the stock market is going to reach inflated rates again, I also don't think it is an accurate bellweather for our economy on the whole.
Investing in stocks, especially tech and .com stocks was a bubble waiting to be burst. The manipulators built it up over a series of years, and got out at the top.
To the contrary, people are now far more likely to invest in their lives and homes. College, cars, toasters and boat companies are now the rage. How do I know? Every person who approached me about investing in the new company was a prior stock market investor looking for something real to put their money into. A real company with a real person with a vision driving it. Most put more into me than they did into the stock market. Don't look now... but if people invest in the companies that build America and provide jobs, they have done a lions share towards improving the economy.
Big business became the indicator for success in the 90's. Small business impacts the economy on a much larger scale though. I think if you see an increase in successful smaller businesses, you will see the economy go through the roof.
In addition, I feel that GWB will be great for this size business. He is looking for this kind of stimulous at the low end of the spectrum. I didn't mean that folks don't have money. I think people, meaning your average American will have less disposable income due to the increased costs of utilities, fuel, insurance, etc. Some of this is offset by the low interest rates they've gotten from their homes and savings of car payments.
The wealthy will have no problems if they've invested wisely. But they probably didn't get it investing in Qualcomm, unless they were in a looong time ago. All the worthwhile gains I've had in the past few years have been in real estate. I've had some buildings double and triple in value in just a few years. You sold me a boat too, remember.
My point I suppose is that living paycheck to paycheck is going to get harder, those checks will have to stretch further. (farther?)
Small businesses employs a lot more people than big businesses do. But the small guys are getting hit with insurance rates that are increasing, as well as increases in utilities, rent, fuel, etc. Plus the increased cost of constant meddling by OSHA, EDD, IRS, State regs. I know several who have given up.
There's not one simple answer. I think it will be a while until things are humming along again. I think families will spend more time at home, or close to home, and improving their home. What's it called...nesting? Get back to basics, if ya know what I mean.

[INFINITEJJ]

Froggystyle:
The reality, in my opinion is this... We are going to oust Sadaam, and find a whole lot of banned weapons in Iraq. There will be legions of Iraqis testifying to the atrocities perpetrated by Sadaam and his minions, and everyone who opposed the war will be politically emasculated, both in a national and international instance.
France, Germany, Russia and China all have great economic interest in Sadaam staying in power. With Iraq's oil, they could essentially create a super-co-op to compete against America as another superpower, but it would take all of them to do it, as each alone lacks the resources and individual technology.
When we find all of the hidden weapons, and the crimes of Hussein are brought to light, Bush will be way on top of the pile, and will be unassailable politically. In addition, he may go down as the greatest humanitarian of the year for liberating a completely oppressed country.
Our economy will skyrocket. I COUDN'T HAVE SAID IT BETTER, in my own opinion. This is how I feel EXACTLY!

[INFINITEJJ]

Froggystyle:
Jrocket:
Mandelon,would you say that construction is the major part of how our economy works? I mean,does construction set the way the economy goes,up or down?It would seem that without construction nobody is spending money? I have a hard time putting down in words what im really trying to say so bear with me here.What other single thing in the U.S. makes such an impact on the economy besides construction(Of all sorts)? Seems that if theres no building theres no spending? Right or wrong? I think this is 100% accurate. Construction is probably the greatest indicator of economic prosperity.
Keep in mind, with all of this doom and gloom economy talk, new construction is going up still. I'm a contractor and I’m busier than I’ve EVER been before. I'm turning down jobs. Business is good, interest is down, and equity is up.
BUSH ROCKS!

[challengerjet]

Jrocket, I'm not disagreeing with you at all about things staying steady or that construction has a HUGE impact on our economy as a whole and I'm certainly not an expert. I have been in the MFGing arena for the last 10yrs and it's been a pretty good indicator for the economy (IMO). I think with all that's going on right now there are going to be alot of Defense Contractors and their subs making alot of $$ off of this mess.
again, just my $.02
cjet

[Jrocket]

challengerjet:
Jrocket, I'm not disagreeing with you at all about things staying steady or that construction has a HUGE impact on our economy as a whole and I'm certainly not an expert. I have been in the MFGing arena for the last 10yrs and it's been a pretty good indicator for the economy (IMO). I think with all that's going on right now there are going to be alot of Defense Contractors and their subs making alot of $$ off of this mess.
again, just my $.02
cjet I understand what your saying.Im just trying to get some different fead back and views of what the economy might do if we go to war.I appreciate your comments and look at all sides of the picture.Im just trying to learn more about the economy and how it works without having to go to college....LMAO :D

[TCHB]

Unemployment is High
State coffers are low on money
State will lay off people and stop programs
Schools will cut back
Stock prices are down and this causes a reduction in capital spending and growth.
Do you know any industry right now that is growing.
The war will not help the economy becuase the money spent on a bomb has no return.
The cost estimate to rebuild Iraq is 20 billion a year for ten years.
We are in for a long slow turn around.

[Jrocket]

I thought I would bring this back up....
Now that the war has been going on for a short time,hows business for everyone? Has work slowed down or stayed steady for you.With the exception of this weeks rain we seem to be slow but steady.Im not into the market at all,so I dont know how the stocks and trding is going.would it be wise of me to hold out until the numbers are really low and buy a small amount to get started or what?
Can anybody give me a headsup on when is a good time to buy,or is it like getting married...Theres NO good time to buy... :D :D

[grads2112]

I thought I'd bring this back up to the top because I thought it was interesting what people had to say about the economy 5 years ago.

[Mandelon]

Wow. I got a kick out of reading this again. I used a lot of big words...:D
The DOW came back up alright, for a while......until this sub-prime fiasco hit the fan, down 777 points today???
Bush sure doesn't look like anything close to a hero in the eyes of the world, much less even his own party. Iraq has been a giant hole for us to pour money into. I am pretty convinced it was not worth it for us.....or them.
The economy now? No doubt it is sick and weakening. I think real estate prices are getting back down to where they probably ought to be. In our area I think we are getting close to the low point. However the lack of available credit may be the impetus to push the market even lower. If a buyer doesn't have a decent down payment and good credit, well, then they are still renting.....
Residential construction is way down, the worst in 17 years I read. Commercial construction will be next. Durable goods down, but not dead. There is just too much new cool stuff out there to buy, and we Americans are used to buying stuff. Its a hard habit to break!

[HDF WATERDOG]

Kinda like a roller coaster. Got a contraption that pushes it higher and higher. Ya kinda coast at the top for a brief period. Then you start heading down with lots of lefts, rights, rollers, off camber turns, upside down at times. Throw in a small lift to make the ride last a bit longer followed by more ups and downs conbinded with more lefts and rights. When the rides over, you're right back where you started, at the bottom. Enjoy the ride while it lasts. The next ride is the Loop & Whirl, garrenteed to make you Hurl.

[riverracerx]

I am predicting doom and gloom at least until my next river trip.

[John.]

The economy is going to suck right up until I have money to spend again. Then, interest rates will go up, cars and boats will be back to selling at full MSRP and my disposable income will end up being the same as it is right now. hopefully, that day will come again soon. :D

[Todd969]

The economy is going to suck right up until I have money to spend again. Then, interest rates will go up, cars and boats will be back to selling at full MSRP and my disposable income will end up being the same as it is right now. hopefully, that day will come again soon. :D
Your opinion means nothing until I get those p&H pics:mad:

[ROZ]

I agree with Rich. I think housing may have settled, but the worst for our economy has yet to come...