O/T: Is the economy really bad?

Okay, perhaps I'm out of touch. I don't really keep tabs on the news, especially at this time of year. Even when I do, I believe only part of what I hear and see.

Am I out of touch? I probably am. We paid cash for our land and saved to build a small house for cash. All of our vehicles and equipment are used and we paid cash for those as well. We have no credit cards and do not live anything even resembling a lavish lifestyle. Even when the economy is doing WELL we have from time to time struggled.

Our lives are no worse off than they usually are. I'm having trouble with getting the work done in my business, but that is because of rain. I've got all of my repeat customers lined up, like any other year. When I do go into stores, they always seem to be packed with shoppers.


In my opinion, last year was worse. Fuel prices were high, I had repeat customers postpone or even cancel who never did before.

So what is going on? I'm told that everyone is panicked about their finances, etc, etc. Are people spending like fiends because of the government saddling our descendants with debt? I mean, what exactly is going on?

Christopher

What really happened is that people that were living on credit hit the end of their borrowed time in my opinion. even towns cities and major industry like car companies. Now when it's time to pay the piper they can't do it so the government (they can't pay their bills either) stepped in to further aggavate things by giving money to those that don't deserve it. Even now when you look at the stimulus it is going to places that need it the least while the struggling towns and communities aren't going to see any help at all. People like you that have been sensible aren't seeing the effects of this other than prices seem to be jumping. Dave Ramsy had a good televised event about this where it explained it all as pretty much being media hype. I for one think we need to vote out most of our reps in the big town and start fresh while letting those that can't handle their money fall by the wayside. Also we need to make welfare what it started out to be - 3 months max, not generations of support.

ddl, I agree. Let's get the algae and pond scum out of Washington, and replace them with successful small business owners, working mothers, and retired folks, make one of the requirements be that they are God-fearing folks, and get this country back to the fundamentals that it was built on. Success through hard work and thriftiness. Then ship all of the "able-bodied but choose to live on welfare" off to those two countries where our good men and women are fighting for our freedom.

You don't live in Michigan and you should be happy about that. The overall reliance on auto related jobs here has us with an eggs-in-one- basket economy. Forclosures are everywhere. The region has the highest unemployment figures in the country. At the same time people don't save like they used to and everyone is up to their eyes in debt.

Some of the truth is that like you, I pay cash wherever possible and I buy used cars and let someone else take the depreciation hit. I have several credit cards but have zero balances on all of them. If I don't have the money, I don't buy it. I am lucky to have a job that has zero automotive work and our plant has been working overtime until recently.

I lost my job 4 years ago and it was bad then. It's way worse here now but thank God I still have my job. We learned to shop at Wal Mart, turn lights off, use CFL's, cut back on the phones, stay home, consolidate trips where possible. All the simple stuff that pays off.

I was in a rear end crash 2 weeks ago when I stopped for a garbage truck in the road a pickup slammed into me doing about 50 mph. My Chevy Impala was totaled but I was unhurt. I have been out shopping for cars and trust me they act like there's no urgency to sell cars around here. Both new and used cars have premium prices and without rebates, they would not be discounting new ones at all. I figured that if I could get a good deal I would spring for a new one and help the economy but it doesn't look like that's going to happen.

Well i don't know about yor area but just come over here and take a look Everyone around me is layed off or lost there job or about to Take a dive thru town and look at the empty store ft. look at the traffic on the streets heck even go to wally world and look at the few cars in the parking lot of the lesser amount of employee's that are working Look in the local paper for the job adds there are none unless ya work in a nurseing home . Even truck driving jobs have almost come to and end . One company that i worked for for awhile had and add in the local papers looking for drivers now they have over three hundred trucks parked . Take a short walk down the street and look in the lot of a nother trucking company and three quarters of there fleet is setting . Then look in the truck papers at the number of trucks for sale and ownwer operators wanting to get out . My one buddy has not had a load since the first of Oct. last years and he thought that he could survive buy going back into milking cows , Oh now that is not working as milk prices have fallen to a new low . Well the cows have to eat and he needs to plant this years crops and oh my potash is between 780-840 a ton bag fert. is 90 a ton more then bulk oh and fuel prices are going up . Oh times are so good .

I tend to agree with DDL.Last year with gas at $4.00 dollars I had very little extra cash to buy much of anything else. Gas is creeping up,but still affordable.

While I'm sympathetic to those who are losing their homes because of a lost job, it's not our problem or the government's. Too many are living way beyond their means and paying minimum on credit cards. I've owned one new car in my life. I could afford one,but why have the payments? My current truck gets me from point A to B. Who needs more? I'd rather have a few dollars for other stuff that I enjoy. 'course everthing could change if I win the lottery or lose my job.

Larry in Michigan

I don"t know. But there wasn"t any money in my wallet last night.

You keep hearing about the "credit crunch". Credit has "tightened" since lending has gone from "incredibly stupid" to "kinda dumb". From 1996 to 2007 loans were made based on inflated values and future increases - not on ability to repay. People took first mortgages, second mortages and refinanced their home borrowing to 100% (or more) of the equity in their home to buy cars, motorcycles, vacations, appliances, etc... There are a lot of 30 year loans on cars and vacations out there.

The idea of having to have a minimum 20% down (or equity) in your home was considered out of touch. I have friends that have owned their home for 15 years and now owe more than its worth instead of being close to paying it off. They bought a house for $200,000 and refinanced or took home equity loans several times, the last refi being in 2007 for $360,000. They took the "cash out" amount and bought a Yukon Denali and a took a family cruise. Now the house is down to $290,000 and the Yukon is worth less than half what they paid for it. He's had job offers but can't take advantage of them because they can't sell the house. What's funny is this husband and wife are both teachers complaining about how little they earn.

The economy is contracting at an "amazing" rate because previously so much of it was being financed through paper gains that were never realized. Now not only can people not "borrow up" they have pay for what they already have - the days of borrowing the appreciated value out of your home are mostly over. If you heard the "consumer credit" borrowing rate had the largest contraction ever seen in a single month last month. People are "sucking it up" and going back to living within their means (some because they have to and others because they see the need to).

Credit is out there and if you are "credit worthy" its a great time to borrow. However, look out for some big jumps in interest rates in the next year. Even the Chinese have quit buying our T-Bills and the Fed is now buying them with money they are creating from thin air. This is the first time since the 1960s the Fed has done this and with trillions in annual deficits the reaction is going to be pretty hard. People are estimating home mortgages to be in the 8% to 11% range in 18 months - I think it may be closer the 14% - 20% range. It will make the current economic "pain" look mild in comparison.

I havent seen it. Trying to hire people and no takers, booked up solid with the excavting until June of 2010, and already have orders for at least 50% of this years hay production. Looking out on the road, I notice traffic is as heavy as ever at peak times, not so much at off peak. More people in the discount stores but overall my take is we are just getting back where we need to be as an economy. Wealth isnt built by banks loaning money to each other.

If you were to come to the state of Michigan you would for sure say.....Wow, what the *ell happened here. Construction business is dead, that means, carpenters, plumbers, Survey guys, roofers, all trades are in bad shape.
The auto industry is in super bad shape, Chrysler is in Bankruptcy, GM is on it's way to Chap. 11.

You can see that car/truck traffic on the roads is less in the morning and afternoon. (cause of not as many working)
Michigan unemployment rate is 12% I think, and in SE Michigan it is likely 20% or higher.
I have friends that have been laid off for months and the jobs prospects for the future is very grim.
Can anyone out there remember the people of Michigan in their prayers, we need work.

I'm with y'all. Last year was really rough on my business, we managed tomake a profit, albeit small. We are having one of the best years ever this year, profit wise. I'm just worried the bottom will drop out.

Is the economy bad? Yes. Is it as bad as many would like you to believe? Probably not.

Certain factions with-in the government are taking ahold of an opportunity to impose their agenda(s) using fear tactics to sell their ideas. Those fear tactics have snow-balled into what we have today.

The problem as I see it, these agendas that have now been fulfilled will eventually lead us into the economy that they were intended to prevent/help.

It all depends on where you live and what your own personal financial situation is.Just look at what shape California is in.See the Denninger link below.CA sales tax revenues are off 50% from last April.Revenues are off most everywhere.

I see today that the deficit for the US government will be 1.8 trillion for 2009 and 1.3 trillion for 2010.We cant run up deficits like that much longer.

I've got a friend that has hauled rock and gravel for years.He says 2009 is off to his poorest start ever.
Denninger

I actually haven't noticed much difference. Our home mortgage is easy to handle, and I won't buy a vehicle I can't pay cash for.

A couple of funny things happened on credit cards. One with a $250 limit was cancelled, probably because they didn't make enough off of it to pay for the overhead it generated. Another card with a lot larger limit increased the limit even more, probably trying to sucker me into charging more on it. (Which I won't do.)

I always liked to use the one with the $250 limit for on-line purchases because if someone hacked it, they wouldn't go very far.

Knock on wood, I feel I've been relatively unaffected. What does bother me is that "knee jerk" reaction that people/companies do IN ANTICIPATION of things getting bad. Let's face it, if you lose your job tomorrow, that $50 per month you've been saving by cutting out little things here and there isn't going to make up for the money you no longer make. You're screwed at that point, plain and simple. My thought is that until you are affected, you are just hurting the majority by cutting back.

One of my friends is a large landscaper. Many of his apartment complex contracts want him to cut his costs by 10-15% saying they have to cut back this year. I can't rationalize that at all.

Or companies (especially large ones) that made billions NET last year are doing crazy cost cutting measures, hack-n-whack of employees, outsourcing to China, India, etc, all in the name of profit. It is really frustrating to sit in the "Blue Sky and Sunshine" meetings to learn about how much money we saved by outsourcing to China while we have people looking for work over here. Makes you realize just how unpatriotic your company is. We are all in business to make money, but I can guarantee you none of my stuff comes from Chine or India, even if it is cheaper to do it that way.

Made a trip to Minnesota the first week of April to pick up a swather. Straight north through Arkansas, Missouri, Iowa and Minnesota. Every restaurant we stopped at was busy, motels were full, walmart was busy, northern tool and equipment was packed on a week day morning (and expensive) I saw two locations of bass pro shops from the interstate and plenty of cars in the parking lot. The morning I picked up my machine the dealer was prepping a new 42 foot mulch finisher and a new 4x8 big baler for delivery. There did seem to be substantially less 18 wheeler traffic on the interstate, even around KC and the Twin cities.

14-20% ? Sounds like Carter administration years. I was working at transport fabricator- January 1981 had 200 orders cancelled and layoffs started, 3rd cutback in March was my turn. June last year was termination this time- was working for a home furnishing manufacturer, market dropped a bit (more than a bit!). still a lot of stupid commercials on TV, nnalert talking lot of jobs from socialist programs but can't seem to find extra money. Wisconsins highway reserve taken by Dem governor last couple years to pay off political debts. 2010 may see some improvement just to keep nnalert seats, 2012 will either be recovery or new government in charge. Amish farms may be model for close to city veggy projects to feed welfare cases - they'll have to do the work themselves or starve-- might have to give up dope for some. nnalert may copy Chavez and Castro organic garden movement programs. RN

You can say all you want, for the cause of the bad economy. But I belive it's $4.00 a gallon, Gasoline that put the nail in the coffin, Now with gas on the rise again. the economy is going to fall further. The crooks in Washington know this. This country can't afford $4.00 gal gasoline. Dave F.

14-20% ? Sounds like Carter administration years.


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Exactly. Right now our interest rates are artificially low, they nearly had a T-Bill auction failure a month ago. China questioned the US's ability to repay debt and wanted a nhigher interest rate for buying "risky" debt. The Fed stepped in and started buying. Since then the Fed has bought up new issues and some existing issues that prudent sellers are dumping.


http://market-ticker.denninger.net/archives/878-Caution-On-Quantitative-Easing-QE.html


There is a reason China is wanting to trade their dollars and T bill holdings for the IMF gold reserves.

http://www.reuters.com/article/companyNews/idUKTRE53N47O20090424



But things may be changing, and a quickening pace of gold buying would lend considerable support to prices that have threatened to stall at around $900 an ounce -- unless, as many analysts expect, it buys the gold through private channels. The IMF has approved selling just over 400 tonnes of its gold.

"Central banks will go straight to China rather than mess about or spook the market. China will be a ready buyer and pay a decent price," said Jonathan Barratt, Managing Director of Commodity Broking Services in Sydney.

For years China has used its trade surplus to buy up U.S. treasury bills -- effectively paying for the consumer boom that collapsed last year -- but worries about inflation and the slide in the dollar mean Beijing wants to diversify into other assets.

In Pennsylvania, I took the layoff I was offered this winter and worked only part time Jan thru March.
That's the first layoff I've been able to take since the early 90's.
Just sayin.

I just read an article yeaterday on the Amish of Indiana. Seems like things are so bad, thier bishops are giving them permission to take public assistance. This is something they have never done before. If the Amish have to get unemployment, that says something.

People around here ain't hungry yet. To hear the talk'n heads on TV every night you'd think we were all going to starve to death. With the dry weather late in the fall I got behind strip'n tobacco. Could not find help to get it wraped up. Ice storm hit and put all my fences on the ground, could not find help. When people won't work part time for cash in hand type money, they ain't hungry yet. Most of my tobacco crew for cutting and house'n the last 10 years have all gotten jobs in the coal mines the last year. Don't know what I am going to have to do this year. I don't blame them for not wanting a little side money, if I was bring'n home $1,200/week I wouldn't get my feet off the ground in a barn myself.

Dave

Well, as far as I can tell, that would be the Amish in and around Elkhart County. I live outside Bristol in Elkhart County as well, but do most of my business in Illinois and north eastern Indiana. The Amish here have gotten very integrated into the RV industry over the years, and their lives and lifestyles have reflected that. Used to be that when the Amish borrowed money, they went through the Amish bank, or community. I don't think thats necessarily true anymore. I can't see that they're entirely self sufficient and supporting anymore. Lots and lots of Amish between me and my brother down south in Millersburg and I've gotta tell you that I've been seeing things on them Amish homes over the years that I never used to see. Big homes with vinyl siding, trim around custom windows, pickups out in the drive, things that I never used to see. Thats their business, not mine, but I think that they got pretty caught up in the $$$ of the now non-existent RV industry.

True story that folks can learn a lesson from, Elkhart County and how government bailouts do not do much more than postpone the inevitable, so its best to just allow the economy to run its natural course.

Politics aside, here's the deal: Like former President Bush or not, he gave us folks in Elkhart County like the rest of the country didn't get and won't. Here's what happened, and God strike me dead if I'm lying, but its the truth. Elkhart County got its first government bailout in the form of Hurricane Katrina. Think back to the time when Katrina hit the gulf coast, and the fuel prices were already at or just above the $2.00 per gallon mark. That's when the RV industry started its decline because lets face it, motorhomes don't get the best milage, pulling travel trailers don't get pickups the best milage, and you get the idea. RV sales were already dropping off when Katrina hit, and folks in and around Elkhart County were already losing their jobs for it. Remember how much trouble FEMA and George Bush got into for their slow reaction over aid and support to the victims of Katrina? Deserved or not, it happened and they got lots of bad press. What happened then is that FEMA came into Elkhart County and began tossing $10's and $10's of untold $millions to turn out temp housing and stuff to get down to the gulf coast as fast as possible. Everything from small mobile homes for living quarters to motor homes for command vehicals to small enclosed trailers for hauling gear. It happened. If FEMA needed 20 trailers, they bought 40. If they needed 40, they bought 80, all to stop the bad press stories. All of a sudden folks that had been getting laid off were not only being kept on, but others were being hired with unlimited overtime to trun out as much stuff as fast as possible, all at taxpayer expense, the first mega government bailout of a single community, Elkhart and surrounding counties. Life went from bad to very lucrative over night for the RV industry, thanks to Katrina. You could not drive in or around Elkart on the interstate or loaclly without seeing FEMA stickers in or on stuff leaving Elkhart for the Gulf Coast. I'm from there, it happened. Do you remember seeing pictures on the news of miles and miles of RV stuff setting in muddy fields down on the Coast that had never even been used? Again, if 100 were needed, 200 were bought and paid for and built and then shipped to the Gulf Coast to stop the bad publicity. And then the inevitable happened, the federal $$$ dried up because there was no more need for all of that stuff, or even most of it that had already shipped and was setting unused in mud down there. Then the layoffs started all over again, and when gasoline hit $4.00 per gallon and diesel hit $4.50 per gallon, what do you suppose that did for an already severely slumping RV industry? Pretty much polished it off, that's what.

Look, I'm from there. I saw it unfolding first hand and lived through the first government taxpayer funded bailout of them all, and saw first hand what it did. It created a false sense of security and you can drive through and around Elkhart and surrounding RV counties and see new trucks, cars, boats, homes and everything for sale as folks lose everything. BUT, THERE IS A LESSON TO BE LEARNED FROM WHAT HAPPENED IN ELKHART, ONE THAT HAS BEEN TOTALLY IGNORED BY THE NEWS MEDIA NOT FOCUSING ON ELKHART AS THEY DO NATIONAL STORIES ABOUT ELKHART. And that is that government bailouts postpone the inevitable and cost taxpayers and our economy dearly in the long run. I'm from Elkhart County, and its ground zero, the poster child for how government bailouts fail in the long run. It was that labratory for failed bailouts that the rest of our nation never really got to see, but God help us, we will when it comes time to start paying back all of the debt and printing money to cover money that we don't have in the first place. I'm from Elkhat County, unlike the NY Times, Katie Couric, Tom Brokaw or anyone else telling the story of Elkhart County and doesn't have the first clue. I'm an insider of Elkart County, and have been all 50 years of my life. They are not and will never be, politics aside.

Good luck and may God bless, and may you all learn from our mistakes, don't recreate them for yourselves.

Mark

Depends on what you do. If your like us and have a small metal stamping/ machine shop it's not nearly as good as it was last year. Walk in work is down alot and we have lost alot of work to Mexico and China. I know this cause I had to pack the dies and ship them over there.

manufacturing of most anything but guns and ammo is real slow, guess alot of things aren't though...

I am extremly lucky with my one horse construction company so far this year. However my town is dead in the water, many folks without jobs. The few factories we have are pretty much shut down.

Just this evening I was in a house to look at a project, three years ago the house sold for $76,000.00, the guy that purchased it now purchased it for less than $20,000.00. He would not say the exact number, and it was none of my business.

For all of us that are OK, how many have had health issues, lost our jobs, divorce, death in the family? How many will admit to getting help from home, getting a boost when they purchased a wedding ring? We all like to call this good managment, hard work, and on and on and on. I have got none of the above, but I am just pure lucky to survive. I'm not super smart, or anything of the such---just good timing probably as much as anything. I'm poor by most standards, but very lucky to be alive and healthy. Often It is hard to remember however.

Once our home town folks lost their jobs, they lost their health insurance. Not to many can have a clean bill of health to get insurance off the street now.

Like I stated before, I do construction, one of the things that concern my job is anybody can do carpender work if they get laid off. We see that often, and I usualy get involved with those projects by loaning tools. Nine times out of ten I usualy get very involved AT A LATER DATE. I am very gun shy when asked to look at a project that was just done. Now I'm asked to do a total redo at no cost for some reason. Usualy the budjet is gone, and good materials are going to end up as scrap in a dumpster.

We still have some folks that spend more than anyone can see making sence, but that does not make everyone in my town stupid, lazy, poor managers or careless---they just have few jobs.

I live kinda close to where the biggest raid on a packing house took place a year ago. Some folks lost alot of money, had morgaged their homes etc to make a profit from a good going thing a few months before all heck broke loose.

The lenders, and bankers are doing just fine, the folks that owe are on a different page.

Heating oil is a bigger problem here.My cost went from 700.00 to 2200.00 for the same amount of oil.That tied up money that could have been spent for home repair,tires for the truck etc.Took my wife out to eat for Mothers Day.The restaurant was packed with a long wait for a table.Didnt look like hard times to me.On the other hand,3 country stores have closed this year,long time businesses that were over 40 years old.