There is one other point of contention.

AIG wasn't nationalized - the Fed Reserve is a federally chartered private organization. It was actually an alright move of the Fed.

AIG has around a trillion in assets and suffered a sudden liquidity crises. I mean, imagine your friend got drunk one weekend and bet more than he had in his bank account with the bookie. And then he can't pay - so the mob is handing him by his ankles off the bridge. You notice he has several nice cars, a nice house, and a Cervelo P3C. You value his assets as much greater than what he owes the mob, so you pay the mob to let him down easy, and then he pays you back over time by selling his stuff for around 90% on the dollar rather than the 10% on the dollar he could get at a pawn shop/firesale style.

And... FaM and FeM weren't nationalized a few weeks ago, but because they were nationalized from creation.

Really?

Energy prices are included in the CPI. However, there is a difference between headline inflation and core inflation. While headline CPI inflation over the past year was above 5%, core CPI inflation was around 2.5%. With the sharp decline in oil prices from over $140 per barrel to below $100 now, and the decline in other commodity prices, headline inflation should fairly quickly move back towards core inflation.

So any way you slice it, increased energy prices (read oil) affects the CPI and is inflationary. The Federal Reserve is facing a major challenge because high commodity prices, especially oil, have produced high headline inflation.

So when you say that high oil prices are anti-inflationary, your reasoning just does not make any sense.

Technically, maybe.

But even if the Fed provides the loan, the treasury may maintain the 80% equity and not the Fed. I think that is to early to definitively say that this is legal or illegal. If a quick repayment and the company is released to the market, fine. If not and the government maintains control I see no other definition other than nationalization.

Yes, stll quiet low.

'Nationalization' also implies it is involuntary.

Besides, AIG's loan has to be liquidated to pay off the loan.

So what you're saying is 70th percentile == "historically low" == "quite low".

High oil prices are anti-inflationary. Basic economics. Watch:

Inflation is caused by hot economies. Right?

High oil prices lead to slower economies. Right?

Now, as a component of the CPI, yes, higher oil prices will result in a higher inflation number - ceteris paribus. But the overall effect of the high oil prices, due to the slow economy, is anti-inflationary. It's hard to measure out the exact effects, but...

You get the picture. I'm too tired to dig up the theses.

By international standards, yeah. It's nothing to whine about. The theoretical minimum is 5%. Certainly not a 'crashing' economy.

Just look at the other peaks going back and where they are?

You win the prize! If most American's lived within their means they could easily survive a mild economic downturn. Most don't and many deserve what they get. As for the financial industry, they got themselves into trouble through greed and stupidity. No money down, no paper work loans? Good idea for all involved. We have survived much worse economic times. The difference is in those days, we didn't have 24 hour cable tv news and history was taught in our public school systems. As for the thread, no change; we save in advance every year for the races and gear we want to buy. We are set for 2009.

So for all of you who claim to NOT be affected by the current US financial situation, do you have any long term investments like retirement plans (IRA, 401K), mutual funds, stocks? Yes in all likelihood, the long term investments overtime WILL bounce back and pay off. BUT there ARE prudent people who lived within their means and have long term investments that are now affected - the ones nearing retirement and those that have to put kids through college. Do they "deserve what they get" for living within their means and investing in the future?

For the people who dismiss the events of this past few months AND who have no investments, then that would explain their oblivious and apathetic attitudes - If you had nothing to begin with, then you have nothing to lose.

Hmmm. Since 1948 a tad more than a third of unemployment rates have been below the theoretical minimum.

So, "35th percentile == theoretical minimum" and "70th percentile == historical low." You know, in combination with that "worst pain I've ever felt" thread I'm gettin' a better idea how to interpret your posts.

Given your persistent whining on the subject, are your unemployment benefits nearing expiration?

Dude, looks like I've hit a nerve. Hope it's not the worst pain you've ever felt.

Far worse than hitting a nerve. You are boring me.

6.1% unemployment rate. BFD.

I'd be careful there, oil prices are dropping because of the concern of a slowing economy.

And if anyone wants to know something about the R word, since 1956: anytime YOY %change in the unemployment levels hits 15% the US has been declared in recession at some then or later - the current 6.1% NFP unemployment makes it ~22% YOY.

Finally my education is worth something on ST, let's do this again sometime!

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Avoiding saddle cancer since '08

nope

So for all of you who claim to NOT be affected by the current US financial situation, do you have any long term investments like retirement plans (IRA, 401K), mutual funds, stocks?

Point me to a post where ANYONE here has said they were not affected? I think EVERYONE in this discussion has acknowledged that people are being hurt and everyone IS being affected. But what some of us are objecting to is use of terms like "crash" and "collapse" and all the other ridiculous, over-the-top characterization of things that's going on (and that only make matters worse). There's some bad stuff happening. It's getting WAAAAAY too much focus and people are losing perspective.

I wish I knew how many posts were made on Slowtwitch yesterday. Probably many thousand. There are a few of us posting on this thread. The others are posting about the new stuff they bought, the races they're training for, how high their seats are, etc. They're either unconcerned or they're oblivious. Sometimes I think that's the great stabilizing force of the American economy ... the oblivious. They just keep going about their business and doing what they do regardless of all the Chicken Littles around them crying that the sky is falling. Thank God for them.

And now you can all attack me for invoking God.

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Bob C.

The "science" on any matter can never be settled until every possible variable is taken into account.

No. Oil prices are dropping due to a decrease in current demand for oil, due to the recent prior high prices.

Econ 101. Supply and demand.

The cure for high commodity prices is, high commodity prices.


Frankly, whether this is "officially" a recession, or not, is irrelevant. It's all cyclical. Nobody will disagree that this is the down part of the cycle right now.
And guess what happens after things bottom out in a recession and/or bear market? They get better and go up again.
The end of the world has been postponed indefinitely.
Yet again.

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float , hammer , and jog

All I have to say on this topic is to the US Congress:

HTFU and act like responsible people instead of the wimps you are!
Going home on September 23 is BULLSH*T and obviously shows your true colors.

Well Bob, I'm glad to hear you are unaffected directly the current financial crisis. But in the coming weeks and months, you will see your investments affected dramatically if you don't see it now. Yes, the free market is great, but without uncle sam to bail us out, the consequences would have been disastrous. It will affect you and I indirectly. As the economy slows down, it will directly affect you, especially being in manufacturing (Unless you deal with the govt or utilities, or some other niche industry).

You are correct, most will be fine, and weather the current situation, but with people's investments taking a hit, most feel less wealthy and are less apt to spend freely, and more focused on their financial security.

Trillions of dollars is not just high drama. That is capital that is wiped out. The economy is resilient, but this has shaken the confidence of overseas investors. We rely on them to buy our debt. If they don't, then this country is in more trouble than most understand. Plus, as countries (like China) buy US debt and hold a large portion of it, they can use this as leverage to affect foreign policy. Since China is now the 800 lb gorilla of manufacturing, a chinese govt backed co. can spring up tomorrow in direct competition to you, and put you out of business next year. So you have a patent on a process or idea? Big deal. China doesn't care, and the govt won't do anything help you if it not in their interests.

So, I am not just talking out of my ass here.

Just my $.02

I'm going to stick with concern & perception. Yes, higher prices slowed consumption. Those higher prices are based off of an supply crunch concern (it hasn't happened yet) that could happen in five years, I don't think that $147 bbl oil was remotely fundamental - $127, maybe. The fact that after Ike crude still dropped ruins your idea that it's completely based off of fundamental supply and demand... econ101 also taught ceteris paribus and the famous "assume (insert situation)". I do think oil will go back up though, partly because of market rally and partly because it shot too low (because of concern not fundamentals) and has to correct to a more fundamental equilibrium price, the one your postulation assumes.

Your cyclical is turning secular in October.

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Avoiding saddle cancer since '08

Hot Tamales:
Very Well said. Some people here don't see it because they are living in their small world with their old fashioned political and economical ideas.
I, like yourself running an international business and realize what is going on around the world and how it will affect us in the long term.
We have to change the system in this country and change it quick otherwise the implications and the price we will pay will be very high.
And yes this will effect everything including the sport of triathlon.

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I see obsessed people.

Not sure that is 100% correct. China does care since their manufacturing industry primarily makes things for the West. If nobody in the West could buy anything, what would that do to China?

A Chinese manufacturer shipped children's toys covered in lead based paint, but we still buy them. We have a very short memory in this country. Besides, where else are you going to buy products from?

Ain't that the truth. This morning the SEC has put halt to selling short (temporarily) on certain financial companies. Otherwise, we might have seen the fall or buyout of the last 2 standing - Goldman and Morgan Stanley, and averted the trickle down effect if that happened.