Craig,

	As I'm sure you know, there are many things that affect any
economy, but we can, at times, finger some of the large entities that
have large affects (effects) on our economy:

	As housing prices went through the roof in the last 5/10 years,
no one was yelling inflation - even though that's exactly what it was -
too much money chasing too few goods.  We allowed anyone and everyone in
America to buy a home - even with no money down or proof of income, and
this drove the price of housing through the roof!!  Of course, everyone
was ok with housing prices going up because we all then went to the bank
to get a second mortgage on the inflated value of our home, and spend
that money on goodies that helped spur the entire world's economy.  

	Now, the question is why didn't the cost of consumer goods go up
when we all had the artificial money to spend from our inflated housing
prices?  It's because we imported goods that were manufactured overseas
at a cost that was so much cheaper to produce (low wages, and less
government mandated controls) that it allowed Wall Street to make a
killing, while keeping the prices of the consumer goods within easy
reach.

	Ok, up comes the sub-prime/credit bust in America that rocks the
world's credit.  Now there is less money chasing the same amount of
consumer goods, so those goods should go down in price (just like the
housing values in America are). But the consumer goods don't go down in
price because we have to account for the dramatic increase in the cost
of the energy used to produce and ship those goods.

	That's the view from 60,000 feet, Craig.   8-)

	

  



-----Original Message-----
From: HP-3000 Systems Discussion [mailto:[log in to unmask]] On
Behalf Of Craig Lalley
Sent: Wednesday, January 16, 2008 12:30 PM
To: [log in to unmask]
Subject: [HP3000-L] OT: Economy

I really don't understand the economy.
   
  For the past 15+ years, home prices have been spiraling out of
control.  People are spending more than they make and the savings rate
has gone negative.  All that time, inflation was low, if not stagnate.
Some people even talked about the problem of deflation.
   
  And now that home prices have all but collapsed, financial
institutions are being bailed out by foreign countries.   Defaults on
mortgages are at record numbers.  The ON thing stopping bankruptcy is
the recent changes in the laws.   
  
So now, now that everyone is cutting expenses and on a budget, now that
the money system is tight.  Sub-prime mortgages, which really are not
Sub-Prime... (check THAT one out), are setting records for default..
with all this happening.
   
  Whole Prices Soared Last Year
http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8U6CQQ80
If someone can explain this, in layman's terms preferably, I would
really appreciate it.   (just in case it goes in this direction, I
already know, "It's all Bush's fault.")   Please leave the politics out
of the debate.
   
  -Craig
   

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