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Date Posted: 07:49:30 07/21/09 Tue
Author: Jeffman
Subject: Im a bit more optimistic than that
In reply to: Paul Davis 's message, "Re: Actually, I kind of doubt it" on 19:11:29 07/20/09 Mon

Are things going to be tight for people for a while. Yep. But the economy is pretty elastic and tends to 'repair' itself. Here is part of the problem. Everyone is comparing this years numbers to last years numbers to the year befores numbers. And then talking about how far sales are down or where the market is compared to last year. Well the market is not going to recover that quickly. Sales are not going back to last years numbers for a long while. The 'boom' was based on debt spending and its ran out. People have less room to borrow because they are borrowed out. So yes we are seeing a rollback to numbers more like 2000 than 2007.

No I think that things will improve. I think that people will get used to living more within their means. Even in those charts you see examples of where people are saving more and paying more on their debts. There are millions of people out there that are getting out of debt and striving to live debt free! If you spend the time looking at it, right now its practically a movement. In the short term this is going to be painful for the economy. But in the long term our economies will be better because people will be spending money they have not money they havent got. That will enable them to better absorb these bad times and it will enable them to better prepare for eventual retirement.

And then there is the matter of propping up institutions. Take GM for example. They are losing money while at the same time selling 10 million cars a year. Im sorry but if you sell 10 million of anything a year and cant make money then your business model sucks. And keep in mind that GM was losing money even when times were considered good. If I was Ford I would have been ticked off that the govt was propping up my competitor.

Overall I think you are right and its going to take some time to recover. But I think this recovery (unlike the one in 2001 where everyone was told to spend spend spend to prop up the economy) the recovery will last longer and the next recession will take longer to return.

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