10 year depression because of Y2K...I DON'T GET.greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
A lot of people on this forum believe we might be in for another Great Depression because Y2K. Shouldn't the opossite be true? Shouldn't the US economy (after a chaotic period) start booming like crazy when we have to start manufacturing the stuff we can't get any more from overseas? Our need for oil, and stategic minerals would probably lead to wars and yankee imperialism in distant lands; war also tends to make the economy boom.
What is the rational for another Great Depression? Does America just sit around waiting for the flow of overseas imports to resume--like we can't manufacture stuff in this country any more?
-- Cigarette Smoking Man (email@example.com), September 25, 1999
The reason why it makes economic sense for american companies to make products overseas to be shipped back to the US is because our labor, material, insurance, environmental (EPA), work-place (OSHA), and legal costs are so high. Since american labor accounts for more than half of manufacturing cost, and new plants constructed overseas can use the latest computerized automation methods as well as draw from a huge low cost labor pool, the disadvantage of huge shipping distances, and tariffs can be easily overcome.
The incentive for manufacturing to shift back to the US will require that our labor costs are reduced to such an extent (and we're not talking a buck or two an hour here) to compensate for all remaining overhead (less relative shipping costs and tariffs). When that day arrives it will be called a depression.
So fasten your seatbelt, it gonna be one helluva ride.
-- Dr. Roger Altman (firstname.lastname@example.org), September 25, 1999.
Say, maybe a plus from all of this will be a change in the laws regarding excessive litigation. I doubt you could sue McDonald's and get a whopping settlement for coffee that was too hot after Y2K! Wouldn't it be GREAT if the laws returned to some semblance of normality in this regard? Perhaps then America could become competitive again....or at least fill our own orders...
-- Ynott (Ynott@incorruptible.com), September 25, 1999.
Outdated technical definitions and "historical perspectives" may be pointless. We have no history to explain the dynamics of today's economic engine. Economists will still be trying to quantify and rationalize today's economy ten years from now. How many economists are listed in the top 400 richest Americans?
Industrial manufacturing will return to the US the same year that GM-Chevrolet decides to build the 1963 Corvair again - using the same design and process as the original.
"What is the rationale for another Great Depression?"
Good question. I think Alan Greenspan said it best (how ironic) that there is no rationale in the exuberance of the stock market.
The similar comment by the president of Microsoft may have a greater impact on the market next week than when Alan Greenspan uttered his "irrational exuberance" remark. Alan Greenspan is not a multi-billionaire.
I'm not an economist, but I think the stock market will become one of the fastest ways of turning a multi- millionaire into a millionaire.
-- PNG (email@example.com), September 25, 1999.
A Year of Disruptions, a Decade of Depression
-- One take (firstname.lastname@example.org), September 25, 1999.
Cigarette Smoking Man seems to be saying the doomers predict a depression, but the good news is you can just have wars to get the strategic stuff you need and that will be a boon for the economy.
It doesn't have to be either/or... it could be both.
"Neither" seems unlikely.
-- Linda (email@example.com), September 25, 1999.
I think the depression model stems from the notion that we will hit a slippery slope that will be hard to reverse. Once that economic engine is cold, starting it can be tough. Just ask Japan.
-- Dave (firstname.lastname@example.org), September 25, 1999.
To everything there is a season...
-- Roger McGuinn (email@example.com), September 25, 1999.
If you touch that hot stove you're gonna get burnt!
-- mommy (firstname.lastname@example.org), September 25, 1999.
With about half of all small business UNprepared for Y2K, you will see failures and unemployment--as simple as that. When we say small, we don't mean just the 30 employee shops. We mean under I don't know, but maybe $10 million in revenue. These are big employers... If utilities go down, even large business will struuggle. If the banks go down, what do you expect? If the IRS goes down... So many possibilities for catastrophe.
-- Mara Wayne (MaraWayne@aol.com), September 25, 1999.
This is not meant to be condescending, or in any other way disparaging: your comments indicate such a distorted grasp of economics that it would seem doubtful that you would understand the workings of any cause of depression, Y2K or otherwise.
-- Jerry B (email@example.com), September 25, 1999.
Roger Altman and PNG are RIGHT ON!
-- Perry Arnett (firstname.lastname@example.org), September 25, 1999.
CSM, Aren't all the ball bearings(for instance) made in Brazil? Isn't Brazil pretty far behind. I don't know very much about ball bearings, but I'm pretty sure they're important.
-- soapie (email@example.com), September 25, 1999.
Thanks for the imput all.
Sounds like we'd get stuck in a depression not because we lack the talent or the need to build factories or whatever, but because it not in the best interests of The Money Men. If there is a huge depression next year, it had better a real short one, or where going to have something like the French Revolution in this country.
-- Cigarette Smoking Man (firstname.lastname@example.org), September 25, 1999.
Next week Wall Street will be in turmoil!
Japan will become a major world power.
The Yen will increase in strength as the Dollar declines.
Americans will get hit much harder than Japanese were ten years ago because we don't have significant savings like they do.
Can you say "American stupidity"?
-- Randolph (email@example.com), September 25, 1999.
If being dead on your feet, living four to a box, eating sub-standard food, and being unable to think for yourself are the dues required for world power, the Japanese people have certainly paid those dues and will continue to pay their dues. I like much about Japan-- especially it's historical culture, thought, and art. I have several friends there and from there. But there's a lot of reasons why I would not especially enjoy living there unless I enjoyed a 7 figure income too. And that goes the same for other asian nations. They are nice to visit for a week with ten thousand dollars burning a hole in your pocket.
Sincerely, Stan Faryna
-- Stan Faryna (firstname.lastname@example.org), September 25, 1999.
stanley, bring your 10 grand on over to my place. i'll play geisha for 20 days for that kind of soy sauce.
-- corrine l (email@example.com), September 26, 1999.
A rational explanation for making Y2K preparations http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001R UO
Got 14 days of preps? If not, get started now. Click here.
Click here and check out the TB2000 preparation forum.
-- Stan Faryna (firstname.lastname@example.org), October 01, 1999.
I think the short answer as to why Y2K and related problems could cause a depression is destruction of capital. Start with the debt load currently carried by government at all levels, corporations, and businesses. Now factor in a potentially massive devaluation of all the assets (stocks, bonds, real estate) that currently back that debt and you have the spectre of a loss of operating capital such as has never been seen in this country.
So many families are financially maxed out, deeply in debt, and only able to pay the bills if both adults work full time. The only two things that give an illusion of solvency are 1) a burgeoning 401K in the "magic" stock market and 2) a house which they pretend to own but actually owe like crazy on. Devalue both of those assets by 50%, take away one of the jobs and what do you have?
Now, consider just how many jobs in this country are really, truly necessary. Look around your average shopping mall or downtown district, for example. If we experienced a significant economic squeeze, people could and would do without 90% of that stuff. All of those stores would go out of business and their ex-employees would in turn stop buying other things. Again, a serious recession or depression.
Whadda ya think?
-- David Palm (email@example.com), October 01, 1999.