Some People Just Don't See the Recession

In regards to my article, Unsustainable Vehicle Prices: Is Tata Onto Something?, I received an interesting comment by someone wishing to remain anonymous on Seeking Alpha. It read:

User 141119: “Uh, excuse me but you said “as the recession worsens” That is a bunch of crap. We are NOT in a recession and whomever thinks so is either a ticker watcher, watches too much news and TV, and believes all the hype in the liberal media. For you to say this just discredits yourself even more. If the US is in such disarray, then how come I can’t find a parking spot at Walmart on a Saturday morning? Recession my butt!”

I thought writing “as the recession worsens” would be a bit controversial… There are debates about whether we are indeed in a recession. But the tone of his comment really irked me. To think that people shopping at Wal-Mart was an indication that times are good, just doesn’t make sense to me. Perhaps I’m the idiot. Without much thought I went ahead and wrote the following response:

You can’t find a parking spot at Wal-Mart because that is the only store anyone can afford to shop at anymore. Looking at Wal-Mart store parking lots is a poor way to determine if we are in a recession… Plus, Saturday mornings are typically VERY busy for retail stores since many of the M-F crowd use Saturday to get some shopping done. As the economy worsens, expect more people to shop at Wal-Mart! People still have to eat.

The U.S. is in the beginning stages of a recession… It will get worse. I don’t pay any attention to the Liberal media… I just watch as the USD becomes worth less and less each passing day (worth about the same as the “Canadian Peso”, as we used to call it). I just watch as emergency funds are injected into the market to keep it afloat. I just watch as the U.S. government runs around the world looking for several billion dollars a day to keep the empire afloat. I just watch as the Fed goes around the world to other central banks and asks them to work together to help stabilize the situation in the U.S. - Now the Bank of Canada is lowering interest rates because the Canadian dollar got too strong against the USD - Even though they have rampant inflation in the west due to a major economic BOOM and were recently considering INCREASING interest rates.

I just watch as Citibank and others go overseas in search of new investors (almost begging) to sell parts of their companies in order to get cash injections - Selling portions of major American banks to Asian countries is becoming common. I just watch the banks rolling out their write-downs of $18 B a piece. I just watch the bankruptcy numbers continue to increase… I just watch the number of FOR SALE signs hanging in front lawns. I just watch the number of homes in foreclosure.

I don’t get my news from the mainstream media - each of those can be had right through direct press releases from the respective government departments or company websites… You’re the one listening to Liberal media if you think the problems are a temporary setback and that the U.S. economy will quickly be back on track to allow the stock tickers to continue their infinite ascent (much of which is due to inflation anyways, but meh).

PS> If you think shopping at Wal-Mart contributes to the sustainability of the economy and that proof of others shopping their in droves is proof the economy is good - You’re in for a rude awakening! Of course people are going to shop at the cheapest store when their discretionary incomes begin to decline.

I’d actually tend to think that your thinking is quite Liberal. I’m just an ultra-conservative who believes fiat currency is inherently flawed and that economies that are financed completely with debt are on a dangerous path. You can’t print or borrow your way out of a recession forever. They should have allowed a small recession several years ago. Now, everyone has borrowed so much money in the past few years and that is what fueled the boom - But now that so many people are burdened with 25 year mortgages on $500+k houses, they will have to pay for them over a 25 year period - Those people won’t be buying ANOTHER $500k home anytime soon.

When such a large number of people buy/build homes that are $500k+ a piece, the economy is going to see a massive boom - Normally not everyone would buy all at once, but the Fed lowered the interest rates and created a housing boom - at the same time banks lowered their lending requirements and were giving money out to people WITHOUT proof of income or assets! So, almost everyone bought.

Let’s hope things get back on track - but as long as so many people believe the Liberal media’s idea that the market should always be a bull and things are fine the way they are with everyone getting further into debt - we will have problems. How about this: If times are so good, why is everyone so far in debt? If times were truly good, we’d have more savings in this country. Instead we are selling the infrastructure right from beneath our feet!

Go look at how Cintras (linked to Spanish King) is buying highways (already built/paid for by government) and putting up toll booths. Go look at how Cintras is building a major super-highway from Mexico to Canada (it’s already in Texas) - Go look at how the legislation for that highway states that no other highway can “compete” with it. Now we’ll have legislated highway monopolies?

For crying out loud, what do they mean no other road can compete with it? Its a road! It’s a basic peice of infrastructure that a government is supposed to provide for - and now it can’t have “competition”? C’mon, the more infrastructure a country has, the better… How’s this all happen? People aren’t paying attention because they all get their news from the Liberal media that either never mentions it, or briefly does and then moves onto the latest news on Britney.

America is so deeply in debt, it’s selling itself! That is the scary part. You won’t notice the recession for a while - they will just crank up the printing press and start printing them dollars so quickly that inflation will ramp up. Let’s hope we work our way out of this mess we’ve created - but its real hard to start working your way out of a mess when you have so many that don’t believe we’re in one! Arghh. Yes, there are fallacies with my argument/examples - go ahead point them out - I don’t care. If you can’t see the basic gist of the situation we are now in, it’s your problem.

User 141119, Yes, I’m sure you’re correct - the economy is honky-dory, it’s a damn good day, and it’s a perfect time to go borrow some more money to buy stuff at Wal-Mart like everyone else. Everyone else is doing it. //end”

I knew the comment about the recession would be a bit controversial - that’s fine - but I didn’t expect someone to argue that things were indeed fine because the parking lot at Wal-Mart was still full. Wow. Is that how we judge our economy now? It doesn’t matter about debt levels or the value of the USD - as long as the parking lot at Wal-Mart is full, we’re “A-Okay” (as I put my thumbs up). Wow. Haha, I’ve never been accused of being Liberal before. I’m the same guy that wants Low/No taxes, smaller government, fiscal balance, less bureaucracy, no fiat currency, pro-constitution, pro-capitalism, etc, etc…

Maybe the commenter was being reasonable, and I’m the one that’s unreasonable; Maybe I just don’t get it. Can you tell I just got back from a 11 hour day at work without breaks or lunch? I need to go eat.

Comments

[bergl328]

Ok, here's my take. I'm a Liberal (on most things) and I'm reading comments from two "conservatives&qu... who both have their heads up their asses. I agree with your comments about User 141119 - he's to ignorant to understand what's happening around him and understand it. I also see the things you do and agree with what you wrote, up to the point where you said you wanted lower taxes, less bureaucracy and pro-capitalism. That's were I think you are a bit to myopic. Wouldn't a capitalist welcome the "Cintras' " of the world? Or does it just bother you that it's happening here in the US now?

The US has used the World Bank to put many countries into the same position that we are now facing ourselves. We loaned money knowing it couldn't be payed back and the told those same countries to take the bitter pill and reduce government size, become fiscally responsible and to sell of their infrastructure too reduce costs. Corporations of the World Bank participants then went in and bought up the water companies, utility companies, etc, at a fraction of it's value and then proceeded to raise prices on those that could barely afford to pay them to begin with. (And conservatives wonder why no one likes the US anymore.)

I'd love to have no or low personal income tax, but I don't see it happening. It's our tax dollars that the World bank uses (at least 51% is) and it's companies that profit. Companies make poor business decisons, assume more risk than prudent to bolster profits only because they know there will be no consequences for them - the government, using out tax dollars will bail them out and, while we're at it. let's just give them another $50B so they don't have to spend any company money. How often have we seen this scenario - Automotive industry, Aircraft industry, Savings and Loans, Insurance, Banks, Brokerages and on and on. The companies get more incentives, more tax breaks, more favorable legislation and the individual tax payer bears the burden in higher taxes and prices.

Each time we go through one of theses messes more beauracracy gets established to deal with it and the companies wind up in better shape and the individual in less. I realize that there are complex interrelationships here, but the only way to ensure that this doesn't keep happening over and over again is to not bail the companies out with tax payer dollars. If they fail they fail. Shareholders should be able to sue the respective corporate boards and leadership for mismanagement and I think. they would, in future, think twice about the companies that they invest in.

Take a look at the playing field and I think you will agree that it is strongly skewed in favor of business. If you agree with that perspective then I believe you'll gain a better understanding of the whole.

[chicago John]

There is no such thing as a liberal media, all you have to do is look at the ownership and point out a liberal that owns it, Sure there maybe a few reporters but thats it. If the media is so liberal, why did the idiot in the WH get such a free pass for all his years. Liberal, my foot.

[RobertNabloid]

Thanks for the comment bergl328! I need intelligent feedback like yours more often, even when slightly critical. I'll reply to your comment:

"Wouldn't a capitalist welcome the "Cintras' " of the world? Or does it just bother you that it's happening here in the US now?"

Well, I don't like selling highways that are already paid for by the government to private foreign owned corporations that then put tolls on them. I realize taxes are used to pay for maintenance, but now the road costs citizens MORE due to the profits that Cintras will require it generate. I do not think selling basic infrastructure of any country is a good idea... In fact, I think its governments job to provide basic infrastructure for a country. The fact that legislation is introduced so that no other highways can compete with theirs is where it begins to cross the line. I also realize that my taxes won't be lowered due to the government no longer having to maintain that particular highway, but now I'll have to pay extra to Cintras to travel it - In short, it feels like a roundabout way of increasing taxes and selling off the basic infrastructure system - I don't like it when a foreign country or government can buy and control America's infrastructure. I don't like it when America goes out and buys or controls foreign infrastructure either. Even a capitalist like me sees some uses for government.

"The US has used the World Bank to put many countries into the same position that we are now facing ourselves. We loaned money knowing it couldn't be payed back and the told those same countries to take the bitter pill and reduce government size, become fiscally responsible and to sell of their infrastructure too reduce costs. Corporations of the World Bank participants then went in and bought up the water companies, utility companies, etc, at a fraction of it's value and then proceeded to raise prices on those that could barely afford to pay them to begin with. (And conservatives wonder why no one likes the US anymore.) "

- I agree completely with you. I don't like what we've done to the rest of the world either. With our "economic hit men" (Seriously, go read confessions of an economic hit man! Great book that talks about those issues in great detail.), it should be quite clear we have interfered with many other nations - I agree with Ron Paul on this issue and think we should be friends and trading partners with all, but refrain from interfering like we have in the past. We are only creating potential enemies.

"I'd love to have no or low personal income tax, but I don't see it happening. It's our tax dollars that the World bank uses (at least 51% is) and it's companies that profit. Companies make poor business decisons, assume more risk than prudent to bolster profits only because they know there will be no consequences for them - the government, using out tax dollars will bail them out and, while we're at it. let's just give them another $50B so they don't have to spend any company money. How often have we seen this scenario - Automotive industry, Aircraft industry, Savings and Loans, Insurance, Banks, Brokerages and on and on. The companies get more incentives, more tax breaks, more favorable legislation and the individual tax payer bears the burden in higher taxes and prices. "

-I agree with you, this is wrong. Government interference in matters such as these are wrong. I'm against ANY government interference, whether pro-business or anti-business - I think government should not interfere AT ALL. They should not bail out corporations, just as they should not bail out people. People and corporations need to be held accountable for their actions. Ron Paul would eliminate many of the bureaucracy's that are in place and would go back to having no income tax... Remember, Income Tax is actually quite new and we survived for many years without it.

"Each time we go through one of theses messes more beauracracy gets established to deal with it and the companies wind up in better shape and the individual in less. I realize that there are complex interrelationships here, but the only way to ensure that this doesn't keep happening over and over again is to not bail the companies out with tax payer dollars. If they fail they fail. Shareholders should be able to sue the respective corporate boards and leadership for mismanagement and I think. they would, in future, think twice about the companies that they invest in. "

-That's a huge problem! I agree with you, and think government has become way too bloated due to this process. I prefer Ron Paul's way of dealing with this. Get rid of many of the government departments altogether.

"Take a look at the playing field and I think you will agree that it is strongly skewed in favor of business. If you agree with that perspective then I believe you'll gain a better understanding of the whole. "

-I completely understand what you're saying! I don't think it should be skewed in favor of business. However, I think its always about the pro-business or pro-citizen stance... government should be neither. It seems like one day government does things to bail our corporations and hurt individuals - and the next day someone in government is trying to bail out individuals and hurt corporations. It should be NEITHER!!!!! No bailing out, no favors, just stop inteferring at all. Besides, corporations and businesses ARE controlled and owned by people... Corporations and Businesses ARE people - just hiding behind the corporate veil. Either way you cut it, the government is bailing out people - it just seems to be bailing out the rich people for taking on massive risks which usually, in the end hurt many citizens. It should be neither pro- or anti-business. Both are equally bad. In short, when I talk about no interference, I mean NO interference for bailing people or corporations out. We need more accountability in this country. That's what I meant from the start from no interference.

[RobertNabloid]

I just re-read my last paragraph and think I didn't explain myself very well. By pro-capitalism, I simply meant I'm more of a Austrian School of Economics style of laissez-faire capitalist. - In other words, no interference. I don't want companies getting large grants and getting bailed out every time they do something stupid. Leave the corporations alone, PERIOD. Capitalism does just fine without all the stupid bail-outs for dumb mistakes. If the corporation fails, it fails - just as when a person fails and goes bankrupt, they go bankrupt. The corporations that are being run sustainably and intelligently will prosper, and the ones with bad management will suffer, as they should. Let's the corporations and citizens be held accountable for their actions.

The whole sub-prime mess is partly related to the fact that the large banks know the government will bail them out if they get into trouble. How wrong it is that that they conduct business knowing such information, but its true! They then go ahead and try and get take on risky and fraudulent loans so everyone can buy an expensive home (even if they can't afford it) and it ends up hurting the individuals, in order to try and make the corporation some extra profit. Then it backfires and the government must bail out the corporation or risk the banking system having massive problems and the potential layoff of millions of employees. Now they talk about bailing people out too. The way government interferes with one group ends up affecting the other. Sometimes the bail-outs are to protect the employees so they don't lose jobs. It's still wrong.

The entire reason corporations exist is for liability reasons related to the risks corporations often must take to conduct business. They exist to provide a separate legal entity for which you can put some money in and conduct business - and if things go bad and the company is bankrupted, the owners of the company don't end up losing all their personal belongings as well. They only lose what money they have risked to conduct the business operations. I don't think the government should bail them out at all, EVER. Corporations have a legal status that provides some safety net against the risks they take to operate, and that should be enough. But in order to help save jobs, government interferes. Sometimes the interference and bail-outs they give corporations are to try and help both the company and the employees, but it shouldn't be done PERIOD.

I'm pro-capitalism, but I'm from a different school of economic thought and I'm not a fan of Keynesian economics as it leads to massive overspending in the government and stupid bail-outs like we've so often witnessed. I do truly understand what you meant by pro-business stance that government often takes. I don't like it. I also don't like the anti-business stance many others must take in order to balance the issues... I think it should be NEITHER, not one or the other as most people seem to think it is. It should be NEITHER! Let the people be.