I know nothing about economics, so could someone explain how we will eventually get out of this recession? How does it work?
This whole recession thing...
I used to travel past Lehman Brothers every day on the way to and from uni, so that pretty f**king freaky for me that they've gone under.
Alright, how detailed an answer do you want...?
Quote: Winterlight @ September 16 2008, 5:54 PM BSTso could someone explain how we will eventually get out of this recession? How does it work?
Stock up on canned goods. And buy a gun.
Quote: Winterlight @ September 16 2008, 5:54 PM BSTI know nothing about economics, so could someone explain how we will eventually get out of this recession? How does it work?
Quote: Aaron @ September 16 2008, 6:21 PM BSTI used to travel past Lehman Brothers every day on the way to and from uni, so that pretty f**king freaky for me that they've gone under.
Alright, how detailed an answer do you want...?
Something for the average man, please.
Oh and thanks, Curt.
What amazes me is that anyone ever believed Gordon Brown's ludricrous boast that he could put an end to the "boom-and-bust" economy.
Economies rise and fall just as the tide goes in and out. The factors involved in predicting the good times or the bad times are so multifarious that even economics experts have trouble predicting when they will occur. (Those who are good at doing so can, of course, make a lot of money.)
A good book to read as a lay-person on economics is PJ O'Rourke's book on Adam Smith's 'On The Wealth Of Nations', which also manages to be funny as well as informative.
PJ always cracks me up. I wish he'd run for office. At least we'd all have a laugh.
That would make a good thread....or we could just leave it here. 
Who do you think would make a good politician if you could choose anyone to run? (Fictional character or real person)
Stewie.
Quote: Winterlight @ September 16 2008, 5:54 PM BSTI know nothing about economics, so could someone explain how we will eventually get out of this recession? How does it work?
Made this as simpleish as possible:
Markets are traditionally an extremely interwoven, interlinked structure, with property at its core. At the moment what's happening is that high street banks have given out stupid amounts of money to people who have no hope of ever paying off a mortgage, so have huge defecits. So-called 'investment' banks, like Lehman Brothers, run themselves by buying the mortgage debt from the high street banks. So they're buying your mortgage from your bank.
Unfortunately for them, the downward spiral has been so fast that they've not been able to shore up their accounts or to re-structure these investments, so it's a handful of these super-huge banks which are collapsing in on themselves, having passed on their actual profits to the high street establishments.
At some point, hopefully sooner rather than later, enough of these risky investments will have collapsed and/or been shored up, that there'll be a stable floor again. The market will pick up, investors will gain confidence, and things will slowly start building up.
An analogy:
Think of the financial market as a building. Each floor is a different investment (or set thereof). Unfortunately, the builders were Polish, so the foundations of the property aren't as strong as they should be. Over time they begin to crumble, and as no one has done anything to reinforce and support them further, everyone working in the building runs away, and those fondations eventually collapse. This brings all of the floors above crashing down, to various extents. For a while after this happens, the building's still quite unstable, and no one can go in because what's left standing could still collapse.
When the structural engineers - other banks and investment organisations - come and shore up what's left, then people get more confident about re-entering the building, clearing up the damage, and re-building.
How long the re-building takes, God knows.
Quote: Tim Walker @ September 16 2008, 6:59 PM BSTEconomies rise and fall just as the tide goes in and out.
That's what I was thinking the other day. And don't the good times usually last longer than the bad times?
Quote: DaButt @ September 16 2008, 7:04 PM BSTPJ always cracks me up. I wish he'd run for office. At least we'd all have a laugh.
Saw him interviewed about the state of the US economy (and partly to plug the above book) a few months ago on The Daily Show.
When Jon Stewart asked for his opinion about the future of the US economy, he bluntly replied, "We're f**ked". For someone as incredibly able to see through all the bullshit in the world, as PJ is, this sent a shiver down my spine.
Quote: Tim Walker @ September 16 2008, 6:59 PM BSTWhat amazes me is that anyone ever believed Gordon Brown's ludricrous boast that he could put an end to the "boom-and-bust" economy.
Particularly when he was building a boom economy on a bubble of credit.
Quote: zooo @ September 16 2008, 7:07 PM BSTStewie.
Sexy parties and all day long I imagine.
Quote: Tim Walker @ September 16 2008, 6:59 PM BSTWhat amazes me is that anyone ever believed Gordon Brown's ludricrous boast that he could put an end to the "boom-and-bust" economy.
Gordon Brown really f**ked us over. Most Governments would have been putting money into the country's "rainy day fund", to help stabilise this exact kind of situation. He just raided it.