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Public opinion about the economy erodes rapidly
Friday, April 18, 2008
When historians look back on this period of time in the U.S., they will surely be amazed at how long the economic "good times" were sustained when, after a stock market bubble had collapsed, a new period of "prosperity" was ushered in via a housing bubble which, as should be clear to everyone by now, is well into the collapse phase.
They will also be surprised at how quickly the tide turned and how dramatically public opinion eroded after it became clear to even the most casual observer that everyone wasn't going to become wealthy beyond their wildest dreams just by owning a house.
This new survey from the Washington Post fills in some of the details on the rapidly eroding public opinion about the economy:The public's ratings of the national economy continue to sour, with assessments deteriorating faster than at any point in Washington Post-ABC News polling.
Pull up a seat folks - the most dramatic economic slowdown in many, many years and the sharpest reversal of consumer sentiment in decades are now underway, reinforcing each other as part of a vicious circle during an election year.
...
Nine in 10 Americans now give the economy a negative rating, with a majority saying it is in "poor" shape, the most to say so in more than 15 years. And the sense that things are bad has spread swiftly. The percentage who hold a negative view of the economy is up 33 points over the past year, and the percentage who rate the economy "poor" has increased 13 points in the past two months. That is the quickest 60-day decline since The Post and ABC started asking the question, in 1985.
...
One force behind declining assessments of the economy is the soaring cost of gasoline. With retail prices averaging $3.39 per gallon (a record high, according to the Energy Department), two-thirds of those polled said recent price increases have been a hardship, including about four in 10 who called the cost of filling their tanks a "serious" burden. Among those with annual family incomes under $50,000, 52 percent said gas prices cause serious hardship, double the number of those from higher-income families to say so.
The government's plan to alleviate some of the economic stress -- through economic stimulus rebates and new tax breaks for businesses -- is viewed even more skeptically than it was in early February. Nearly eight in 10 now think the package will not be enough to avert or soften a recession.
It's going to be (well, actually, it already is) quite a spectacle.
29 comments:
The article is by one of the entertainment writers over at Salon.com, but a good quote deserves to be passed along:
"Will that be the end of the world? Probably not. But I'd better start saving regardless, and so should you. America's not on top anymore, because we've been exporting nothing but lukewarm fajita platters and spray-tanned celebrity jackasses for decades now. The days of closet-reorganizing professionals and Botox parties and hiring a personal trainer for your nanny's personal chef are over ... and thank God for that."
http://www.salon.com/mwt/feature/2008/04/18/recession/
I notice that when Greenspan speaks on the mess that he has created he always talks in terms of what "his legacy" will be when its all said and done.
It's obvious that this relic of a man created a dog's breakfast of broken dreams and bills that will never be paid but instead of being cognizant of the damage he has done he simply says "history will prove that I was right."
Sorry Big Al, history will reveal that you never had the guts of a Volcker who ultimately was much more a man of the people. I think that history will get that right.
I don't understand why you blame Greenspan. This is the lenders fault. Just because rates werethat low did not mean that appraisers should have done what they did, lender's offer 100% financing to ANYONE WITH A PULSE, and also with all the fraud out there. People need to grow up and take responsibilty for their stupidity...
I think the reason that people blame Greenspan is that by holding interest rates so low he discouraged savings. Why save when you get 2% a year at the bank when you could be out spending and having the time of your life.
I agree that lenders are also responsible and that there are many stupid people out there but the point is that Greenspan was paid tens of million$ because he was supposed to be educated and experienced and thus could guide some dummies who couldn't balance a cheque book.
Yes, the blame for the mess is shared by many but how is it that someone with the experience and education of big Al not know what was coming? Actually, I do know. His various reappointments were controlled by the Federal government and the PResident's office who were anxious to create an impression that "all is well."
The thought of saying just because rates are so low, we don't have to say is like saying a pack rat is right in saving everything because they may need something later. Who came out and told people to use there credit cards at 0% financing. People in the US have ALWAYS had bad savings habits. This is just a correction that the economy needed. If an extended recession is what we need or a Great Depression to make people understand savings again, then it needs to happen. People now at days think money grows on trees (which is their house)and kids don't have an understanding of a dollar because they have never been told "No". People need to stuggle so they can understand the REAL difficulties in life. The economy bubble is like the real estate bubble. If there is no small whole in the bubble, it will get bigger and bigger and at one point will just blow up rather that staying at a constant level.
Greenspan, Wall Street, and our Government are at the top of the hill and "it" rolls down hill. When Greenspan announced that more low income families should have the opportunity to own homes, and the financial institutions need to get creative in loan offerings, he opened Pandora's Box. He should have appointed monitoring of the financial institutions, so it didn't get out of hand. Unfortunately for all of us, the "monitors" were out to lunch while the wolves ate. Greed is to blame all the way down the line, from the top to the bottom. We Americans will be paying this price for probably the rest of our living days, passing the mess on to our children. Shame on those that began the ball rolling and the rest of us that got caught up in it!
On the subject of people suddenly realising the truth: British opinion polls show that our PM, Gordon Brown, is even more unpopular than Neville Chamberlain was when Hitler invaded Norway. That's some metric.
The bank savings rate during Greenspans era was far less than 2%. It was more like 1% from what I remember. My mother in law and my grandparents suffered greatly from the 300%+ reduction in their savings / retirement income. My Mother in law had to go back to work in her 70's and worked until the day she died, in spite of the over $300k in savings that her husband had left her. The $250 per month that it generated for her in interest income (as opposed to the $1,375 that he planned on at 5.5%)was not enough to sustain her meager lifestyle, even though she had social security and a house payment of only $325 per month.
Greenspan not only betrayed the savers of our country, he encouraged homebuyers and homeowners to obtain dangerous adjustable mortgages. He should have known that these mortgages would be toxic to the average borrower within a few short years.
Greenspan was asleep at the wheel in his regulatory duties as well, looking the other way, while Wall Street, and the big banks invented increasingly toxic finance products for the World. He is, indeed, without question, the one that should receive the most blame on the current state of the world economy. He is the instigator, the enabler, the trigger, and the smoking gun.
Tim, you have to see this movie.
I.O.U.S.A.
http://www.imdb.com/title/tt0963807/
I can't help but take step back from these posts and think that they are posted by some of the most negative thinking people that one can imagine. That is what separates us from previous generations. Have any of you considered the fact that we may be driving ourselves into recession by being Debbie Downers? No wonder our opinion of the economy is so poor. How can it be positive when every 20-35 year-old fancies his or herself as an economy professor. I'm going with the old people. They have seen far far worse times than we will ever see and are far more positive than we are about the future. They know better.
Why shouldn't every 20-35 year old fancy themselves an economics prof? They do real economic research everyday, unlike the Greenspans and Bernankes. And, they've just realized that they have been had.
Research? Like ml-implode? Like these anti-fed sites? Bernanke and Greenspan know more about economic history than anyone on this website. We read articles written by Idealists like Ron Paul. My take is that we have all overblown this whole thing as we tend to do any time things get weird. We're all such smart Monday morning QB's. So, what's the solution? Back to the gold standard? Move to Croatia? Communism? Everyone knows better than The Fed. The Fed is just dumb, right? The government is so vindictive that they lie to all of us constantly about employment numbers and such. Just lining thier own pockets. With what? Euros? Just like the Dems on Iraq. All critisism, no solutions. I'm telling ya, we go into recession, we can blame ourselves.
I think that serfs in the middle ages gave 40% of their income to their lords. Nowadays, combined taxes probably exceed 50%. Of course, we're supposed to get something in return for that though I don't see what I am getting is worth anywhere near 1/2 my income. Then, there's also the inflation tax. No wonder Nick Rockefeller calls us the serfs.
OK, anonymous, I WILL blame you!
And Greenspan.
Read some f'ing history, for Crisakes, will ya?
Oh, and, grow up already.
BTW, I'm one of the "old folks", with savings in the bank and lots and lots of equity left in the house....
Oh, and, real people have names, they are not "anonymous". You got an opinion, you leave a name, that's how real people converse.
The fault of the mess is entirely Greenspan's.
Here's an analogy: Suppose some idiot politician puts price controls on gasoline so that it costs 10 cents per gallon. This will cause two long term effects: People will buy more gas guzzling cars and oil companies will produce less gasoline. Months later, when gasoline skyrockets because of lack of supply, you can't blame consumers because they didn't perform an oil supply analysis. They acted according to price signals.
Similarly, low interest rates were a price signal telling people that there was plenty of savings in the economy and they could safely borrow. Consumers acted on false price signals. Greenspan misled them.
I wish more of these anonymous posters would pick a name. I'll address this to anon 3:36 and 4:40, assuming they're the same person.
What's with this mindless talk about "Debbie Downers" causing this recession? US consumers have been insanely positive over the last several years, thinking they could spend their way to prosperity regardless of their incomes or how much they borrowed. Yes, excessively negative thinking does not help us get out of this mess, but what's wrong with recognizing economic indicators if they happen to be negative? What's with the Iraq example too? I don't want to start a political flame war, but I assure you it takes more than Oprah-esque positive thinking to win a complicated military conflict. Some people seem to think life is nothing more than a PR campaign or an exercise in "perception management".
It's interesting that this blog has been visited by a lot more whiners recently. I think these people don't want to admit how wrong they've been about Greenspan, the US economy, etc so they lash out anonymously on the Internet. It's just sad. Come on in and join us in reality, the water's great!
Anon440, Ron Paul makes perfect sense. Just about the only one that does. Repeal executive authority. Repeal legal tender and get government out of our lives. If you believe the Fed and the banks are here to help and we're not in Iraq for the oil, we are on different planets.
Donna et al:
The American Consumer (US citizens or plain, old Americans no longer exist) is as much to blame as those in power in Washington and on Wall Street. What, you? It can't be our fault. We have no power, no control. We just wanted to get on with our lives.
The American people bought into our economic and political model years ago. After World War II, the Age of Sacrifice and Hard Work was over, giving way to the Age of Wealth and Pleasure. Hot wars gave way to the Cold War where most of the fighting and dying was done by proxy (don't bore me with the trifling number of dead US soldiers since WWII). The economy boomed as we printed dollars and sucked up global resources.
Now, at the end of the game, we gave George Bush and his band of merry psychopaths two terms to rob, steal, and murder in the name of capitalism and democracy. Sure, he stole the first election, but we brought him back. He promised more shopping and death to our enemies. We would not have to give up our lattes or the lives of rich, white boys.
We gleefully point the finger at Greenspan, ignoring that we called him the Maestro for ten years. When he pointed out one bubble (remember "irrational exhuberance"?) we castigated him for ruining our high. So, he gave us more of what we wanted.
We point the finger at Wall Street. But where we complaining when their chicanery allowed us to borrow more than we could ever repay or the returns on our investments looked so good. Even when they were massively overpaid, we didn't mind because, like Horatio Alger, one day we would earn that much.
Gee, Washington and Wall Street lied to us? Gee, we spent too much money on plastic crap? Gee, we elected psychopaths who torture, kill, and shred our Constitution.
Gee, whose fault is that?
singapore expat:
There are a few problems with your post:
1) Why do you assume that readers of this blog were on board during the speculative mania? I, for one, never called Greenspan "the Maestro". Nor did I castigate him for his one moment of small courage when he talked about irrational exuberance. Not all of us were born Kool-Aid drinkers.
2) The crazy spenders aren't necessarily delusional. After all, our government fully intends to print our money into worthlessness. In that environment, why not spend everything and live beyond one's means? It's the savers (like most of us around here) who are punished by inflation. That's why we're angry.
3) As for Bush and other idiot politicians, we live in a country where BOTH parties are awful. I haven't voted for a mainstream presidential candidate since 1996 when I was in college. We also have a media that spins everything from the economy on down. It's no wonder we have a poorly informed populace. Many of us found refuge on blogs like this one to get away from the nonsense of the mainstream media. Yes, people should take more responsibility for their economic actions, but they were misinformed and manipulated the whole way. Don't worry singapore, they'll get their comeuppance now as they learn the folly of their ways in the harshest way imaginable.
By your logic, everyone deserves mass suffering due to the public's poor choices. Are you some kind of masochist? You'll get your wish as reality dawns on everyone and they start to freak out when they realize how far America will decline. The last traces of hope recently vanished as the Fed made it perfectly clear that they will try to bail everyone out by printing money and no one is allowed to fail. I guess we're not supposed to be upset by this, for some reason I can't possibly understand.
Having been a broker and having maintained the friendships I made while in that profession, it sounds to me as though the "anons" are also of some type of broker persuasion. As one of my broker friends extolled to me recently, "If only people would stop being so negative, the markets would stop going down!". I responded that it is the people's extreme positive nature that makes markets go up as well. Don't pick a side. You don't have to be right. You only have to make money ; )
"Don't pick a side" - one of my mottos in life. The herd instinct is one of the most powerful and under-appreciated forces in human behavior.
Kevin Phillips has a new book out - Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. I'll take a wild guess here that this will create more cognitive dissonance for passersby at Barnes and Noble.
It's interesting that people keep blaming banks & lenders, but no one stops to blame homebuilders & developers for not building homes people could afford. All of a sudden they started jumping for $200-300k+ homes & townhomes that were just out of people's price ranges. Every morning i drive through an empty development on the way to work in Atlanta and can't help but see how many of these 300 to 500k homes and townhomes just sit there empty waiting on some fool to come along.
http://www.westvillagega.com/
A quick google map search shows how undeveloped the place is after they stopped construction late last summer.
http://maps.google.com/maps?f=d&hl=en&geocode=&time=&date=&ttype=&saddr=&daddr=33.844934,-84.490206&mra=mi&mrsp=0&sz=17&sll=33.844827,-84.490217&sspn=0.00671,0.009978&ie=UTF8&ll=33.845362,-84.490228&spn=0.01342,0.019956&z=16&om=1
So if no one can buy or afford a $600k house, why keep building them year after year? That was stupid of the homebuilders.
Little Larry:
As you pointed out, there are plenty of Americans who are not guilty of greed, apathy, or stupidity, but who have been collectively punished by public policy. To give you an idea of my own guilt in this mess, I have a degree in political science, earned in the heart of Washington. I am a trader working for a bank. And, I have never voted in a US election. So, I vindictively point fingers and lay blame but am almost as guilty as those who actively got us where we are today.
My point remains that America (as a whole) went down this route voluntarily. The truth was there but no one wanted to hear it. Anyone who spoke out was a traitor, a terrorist or French.
I am not happy that our financial system is imploding. The consequences are dramatic for my family. I believe our leaders (Bush, Cheney, Greenspan, Bernanke, and most of Congress) should be tried (using waterboarding) for treason against our country. I believe about ten percent of Wall Street employees are guilty of theft, corruption, and racketeering.
Of course we should be upset. We and our children are going to pay the price. Just hope that your kids can learn Chinese quickly enough to compete.
All I can say is, thank God for blogs! Without this outlet, many more people would not know what is really going on, because they rely on the MSM for their viewpoints and opinions. I never saw the this tidbit, nor did I see any analysis of what it might mean, on the MSM.
http://www.plenglish.com/article.asp?ID=%7BEBA55617-2676-4091-ABBC-20650EB6FEE1%7D&language=EN
It looks to me like the Bushies are preparing to get out of Dodge when this mess blows up, and it leads me to "conspiracy theorist's" blogs. What it tells me is that those who should know, and who have the means, are prepping for a hasty exit when the sh*t hits the fan. Why shouldn't the consumer be pessimistic? Why should I buy a new car?
Jon Stewart says it all:
"I think that'll work out great if your home is made out of plastic and located on Baltic Avenue."
(March 17, 2008 - speaking of the $600 tax rebate to help home owners)
There is an ERROR in the graph. The Net Negative for March-April should be flat. It is a total of the other two.
This is due to
the fact that United States is a socialist country for
rich people (privatise profit while socialising risk).
Please read his latest article in yahoo:
===============================
Survival of the Richest
http://finance.yahoo.com/expert/article/richricher/76669
Most of us are aware of the sacrificial slaughter of
Bear Sterns. Some people call it a bailout, but I call
it a handout -- a government handout to some of the
richest people on Earth, paid for by American
taxpayers.
It's the survival of the richest, and the poorest be
damned. There's something dismal about a society that
operates by those values.
===============================
Capitalism will never fail because Socialism will
always bail it out. So the best way to invent a new
scam (like real estate securitization) and rip people
off with government policy assistance.
Sorry. Ok, My name is Walter Sobchek. Didn't realize there was a problem with annonymous. Most of the names on here looked fake.
And, Donna, this is not how real people converse. Old folks should know that :)
I've got my history pretty well dialed in. What about my take makes you think I am ignorant of history?
My point about Iraq is that much like this blog and others, everyone has critisizm about Iraq, but has no practical solution to suggest. Just as eveyone offers critisism about where our economy is today and how it got there, but no PRACTICAL solutions to suggest. AND, while its becoming common for folks to say that the gov't will print dollars until they are worthless and that we went to Iraq for no good reason, WHY? WHY would our gov't want a worthless dollar?
Walter,
The primary function of government is to steal from you.
Re: Iraq
Just leave now period. Let Al-Sadr run it. Let the Iranians do whatever they want. It is none of our business.
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