How would you fix the economy and budget issues?

[saden1]

Originally Posted by Schneed10

Yeah well, duh. But WHY was consumer confidence eroded so badly?

Don't forget, people are reactionary beings. Consumer confidence got crushed because suddenly layoffs were popping up and housing prices were on the decline. When loans can't be had as readily and jobs are hard to find, of course consumer confidence erodes.

Consumer confidence is the ultimate SYMPTOM of a flagging economy. It's never the cause. But it can be the cause of LAG in recovery. A recovery won't happen until people are willing to open their wallets. But they won't open the wallets until they're convinced things are improving, which requires substantial improvements in the job market first and foremost.

The loss of confidence in the housing marked is primarily responsible for the current economic downturn. It's that simple.

[Schneed10]

Originally Posted by saden1

The loss of confidence in the housing marked is primarily responsible for the current economic downturn. It's that simple.

I disrespectfully disagree. That's an incredibly incorrect statement. And to think anything in economics is simple is laughable.

[saden1]

Originally Posted by Schneed10

I disrespectfully disagree. That's an incredibly incorrect statement. And to think anything in economics is simple is laughable.

I'm glad you feel that way...now let's show work:

The year is 2002ish and the economy is doing reasonably.

1. Schneed has a job and makes decent money.
2. Banks are lending at favorable terms and LIAR loans are ready to be consumed by Schneed.
3. Schneed buys a house he can only afford with a 5 year ARM loan.
4. It's 2007ish; Everything is peachy and economy is still doing reasonably well.
5. Poor ol' Schneed's mortgage changes to less favorable terms and he can't pay.
6. Investors get wind of Schneed and his ilk's LIAR loans, lose confidence in the banks and the credit market freezes.
7. Banks stop getting paid and consequently stop lending.
8. Companies can't get money to fund growth and start preparing for the worst.
9. Mass lawyoffs ensue and corporate spending freezes.
10. Poor ol' Schneed gets laid off and his house goes under.
11. His neighbors house's value drops. No more equity to borrow against.
12. Consumers brace themselves for the worse and stop spending.
13. More layoffs ensue and Schneed's neighbor gets laid-off.
14. Schneed loses his mind and starts making retarded arguments about stuff he's not well informed on.

I know you're averse to linking but this whole mess is well documented and sourced.

[Schneed10]

Originally Posted by saden1

I'm glad you feel that way...now let's show work:


The year is 2002ish and the economy is doing reasonably.

1. Schneed has a job and makes decent money.
2. Banks are lending at favorable terms and LIAR loans are ready to be consumed by Schneed.
3. Schneed buys a house he can only afford with a 5 year ARM loan.
4. It's 2007ish; Everything is peachy and economy is still doing reasonably well.
5. Poor ol' Schneed's mortgage changes to less favorable terms and he can't pay.
6. Investors get wind of Schneed and his ilk's LIAR loans, lose confidence in the banks and the credit market freezes.
7. Banks stop getting paid and consequently stop lending.
8. Companies can't get money to fund growth and start preparing for the worst.
9. Mass lawyoffs ensue and corporate spending freezes.
10. Poor ol' Schneed gets laid off and his house goes under.
11. His neighbors house's value drops. No more equity to borrow against.
12. Consumers brace themselves for the worse and stop spending.
13. More layoffs ensue and Schneed's neighbor gets laid-off.
14. Schneed loses his mind and starts making retarded arguments about stuff he's not well informed on.

I know you're averse to linking but this whole mess is well documented and sourced.

Yeah dude you totally misread me. The fact that consumer confidence shows up in item 12 above only proves my point.

Consumer Confidence was not the cause of this economic downturn. There were 11 causes you listed before it. Consumer Confidence is just another domino, it was not nearly the first.

That was my whole point.