Economic doomsayers are seeming less crazy every day...could things really get that bad?

Question

The doomsayers believe we may be on the brink of the next Great Depression. And it's not just crazy bloggers, but everyone from former heads of Morgan Stanley to Ivy League professors are all seeming quite pessimistic these days.

What are your thoughts, could it really get that bad? And if so, what can one do to protect one's wealth?

Answer 1

What scares me is things like:  On Monday, Paulsen comes out and says, "Fannie and Freddie are in no danger."  yet on Tuesday he said something like, "If we don't bail them out, they will cause major damage to the economy."

Well which one is it?

I think there is such a huge disconnect between the people in charge, and the people paying the bills; that no one knows just how bad it is yet.  The middle and lower classes are taking it in the rear, and the upper class is saying how great things are going.

I just hope nothing catastrophic happens in the next few months that could really kill the economy.  Here's to "wishful thinking"

Answer 2

The doomsayers are too pessimistic.  I think things will get better.  People are too scared over the economy and in reality things just aren't as bad as they can be.  Inflation, while not a good rate, is moderate and not high (though it is a big irritant).   Are we in a recession? Don't know.  But there is a projection that our GDP will have growth of 2% when the numbers are released on the last day of the current month.  So according to that, we're not in a recession and I don't think we would fall into one till maybe later in the current year if things get worse.  And it won't get worse than a regular recession.  There are controls to prevent a depression and other countries depend on our economy so I don't think a depression will happen.

Robert J. Samuelson also brings up some good points as to why we are not in a depression and why things aren't as bad as they could.  Unemployment is around 5 percent despite unemployment being 40% in the Great Depression.  Henry Paulson, Treasury Secretary, predicted that it would take months for the housing market to get better...and that's not years.  

Lastly a lot of banks are failing.  But not that many compared to before.  More banks failed a few decades ago and yet our economy got through it.

I am concerned about long term rpoblems though.  Our big debt that we have is going to hurt.

However, I think the economy will be fine.  It will rebound and just be careful with how one spend.

Answer 3

I think it could and will get that bad, it wont happen overnight but as time progresses you should begin to see more banks falling, more companies, then one day BAM, and everyone has lost their money in a matter of hours. The dollar isnt backed by anything other than the governments word, and even if it did collapse, inflation would be so high because we rely on to many countries for our products, so you would see chaos all over the place. Its a revolution in the making.Buy gold and hold onto it, at least then you can travel outside the united states and still be able to maintain yourself and start all over somewhere else.

Answer 4

I don't know if we're on the brink of a Great Depression. There are safeguards built into the system that didn't exist before, and it's notable that we haven't had a GD since. We've never had a hyperinflation, but we could go bankrupt - the federal debt is far worse than most politicians will admit. As I understand it, it is in the trillions and is so high we're not even paying the interest on it.

Keep your money in a foreign bank, and maybe convert it into euros to boot.