Difference between revisions of "Talk:Financial Crisis of 2008"

Revision as of 02:20, December 2, 2008

Thank you for all of your hard work. I would have to question though the starting premise that it is the worst financial disaster since the Great Depression. I realize that commentators are saying such, but they have a tendency to interject hyperbole to make things sound more grandoise than they should. Do we really feel, at this point, that the current crisis is worse than the downturn in the early/mid 70's or the hard hit in the early part of Reagan's first term after the Carter Presidency? Inflation is not 18%, unemployment is not 10%, and the GDP last quarter contracted at -0.3%, which I somehow doubt ranks as high in the list of calamities, especially when you consider that it was induced mostly by fear and a drop in consumer spending. If consumer spending had stayed the same quarter to quarter than the GDP would have grown 1.9% last quarter instead of the -0.3 that we recorded. And that certainly would not be a 'sky is falling' scenario. Learn together 22:53, 14 November 2008 (EST)

well we've just plunged into this mess and nobody knows where it will bottom out. Yes, I think that so far it it worse than the others mentioned in several ways: 1) this is worldwide 2) there have been spectacular bankruptcies and collapses of huge companies--something we never saw before; that includes some of the biggest banks in the world, the #1 insurance company (AIG) and--on the verge--General Motors and Chrysler and maybe Ford too (in Reagan's day it was the much smaller Chrysler that was in trouble); add in the housing crisis and the fall in retirement funds that hit most people with retirement accounts and stock market investments....RJJensen 23:27, 14 November 2008 (EST)

I do have some more thoughts. Most US recessions are world-wide to some degree because we're the big kid on the block. When we fall everyone feels it. The Arab Oil Embargo after the Yom Kippur War grounded the economies of all of the West (if I remember correctly -- it certainly did here). When the stock market first broke 1000 it went back under that level the next day -- and wouldn't come back for 10 years. After the 2000 election the Nasdaq was at 3500, after Gore's run to take the Presidency it had dropped to 2700 and after 9/11 it was 1300 -- so we've had worse financial hits market wise as well. Personally I don't like this downturn as I am invested in the market, but I don't think it does justice to the downturns that we have weathered in this nation. And as for the big companies going out of business, is that because the economic situation was so untenable or because they just weren't that smart? Look at the contract GM has with its union. The workers get paid whether they're laid off or not. Wasn't that a recipe for disaster during any downturn? Did anyone twist the arms of the financial institutions to lend money like they did? Was that an extremely unfortunate series of economic events that caused institutions to fold or circumstances that were half self-made and didn't require a deep recession to occur? Learn together 03:58, 15 November 2008 (EST)

how smart was it of the banks and hedge funds etc to play the games they played? very dumb and they lost $$$$$. But the collapse of multiple very big firms in US and Europe is something the world has never seen before, so I'm pretty pessimistic myself. I see a 50-50 chance that both GM and Chrysler will close down in the next 6 months, along with many of their suppliers and dealers; the article has some scary estimates of how much that will cost the econony, on top of the trillions that have already been lost.RJJensen 14:25, 15 November 2008 (EST)

I'm not sure the numbers are as dire as predicted. The auto sector makes up less of a percentage of the U.S. workforce than it did during the Chrysler bailout, and that only cost 1.2 billion. Many of the jobs would 'shift'. For instance Americans would still buy cars, so car salesmen wouldn't go out of business, they would merely be selling Toyota or Honda or some other non-US model instead. Many of the car plants that would close down enmasse would be bought by competitors who would be itching to make the sales that the American car manufacturers previously made in the world's largest economy. There would be some hard times during the transition, but the overall volume of product and how it is delivered wouldn't change much. Foreign car companies already have plants in the U.S. They would just turn up with a lot more of them. Learn together 02:15, 22 November 2008 (EST)

I am very pessimistic. I predict if GM goes down the transplants will not make up the gap for several years; instead they will cut back production because they can't get parts (many parts companies will go under and the transplants depend on them). (It takes years and billions of dillars to build one new auto plant--we will need 20+ new plants and where is the money coming from?) US auto sales will plunge, prices will soar --like the Prius. People will pay $40k for a car that now costs $25k, and will have to wait 6 to 12 months (like in 1945-47). Americans will be very unhappy. Most GM dealers will close--they are major factories in every Main Street in the USA and are in trouble right now. The closing costs will be hundreds of billions, and a million or two well paid people (like salesmen) will be badly hurt. RJJensen 07:33, 22 November 2008 (EST)

I definitely see a period of adjustment, but it's not like there are no other car companies in the world, and they are still very competitive among themselves and would try hard to get the open market of the largest car buying nation in the world. I do agree the waves could last for years as it takes time to adjust plants to other manufacturers as well. The biggest problem with the bailout right now is will it work? Unions have contracts that workers have to be paid even if they are laid off, and their pensions and medical plans are untouchable. The car companies are bleeding heavily and putting more blood into open wounds won't solve the problem. Costs are so high that the first slowdown would kill the industry -- and the upcoming slowdown looks to be as bad or worse than what they are going through presently. With the way books are kept its hard to tell how much money they really lost, but on paper it was almost 20 billion dollars in the last quarter among the three. With losses like that, apart from helping them to live a bit longer, how is any economic stimulus package going to help them? Chrysler had a plan when they needed help 30 years ago, and they implemented it to turn themselves around. Where it the plan among the automakers now other than a call for help? Learn together 11:10, 22 November 2008 (EST)

I fear too much attention is given to 100,000 overpaid UAW workers -- there are 1 million OTHER workers who will lose their jobs--at 3600 local dealerships for Chevy, Buick, Pontiac etc. If GM shuts down car sales (including US-made and imports) will fall in half for several years, you will wait 6- 12 months to buy an imported new car, and it will cost 50% more than today. (It will take years for Japan to build new factories to service the USA, and they will charge us 50% more.) Americans will not tolerate that. (and indeed it happened in 1945-47). Furthermore the adjustment costs will be far higher than the bailout costs. The government will have to pay all the pensions of retured GM workers, for example (that's a law signed by Jerry Ford in 1976).RJJensen 18:40, 22 November 2008 (EST)

Recent Edit

I think part of Geo's concern is the lack of a source and the veracity of the claim. The Bush administration can not stop funding to General Motors except through a veto -- something which has not come up. Congress has the authority to grant whatever money it sees fit. I seem to recall the Democratic Congress asked for more information before going forward. General Motors themselves has claimed that bankruptcy is not an option, so saying that they are on the verge of bankruptcy may not be accurate either. I haven't made any alterations to your work, but I also hope you take the information given here in helping you to frame the scope and overall presentation of the article. Learn together 21:20, 1 December 2008 (EST)