How will the subprime crisis ultimately affect our country?
 

Can some of you more familiar with the topic describe what you think will be the lasting impact of this crisis on America and the rest of the world.

In particular, how will this affect the US within the next six months, year, and five years.

Re: How will the subprime crisis ultimately affect our country?
 

I suppose the number one effect will be to lower housing prices. Fewer people qualifying for mortgages lowers demand and more foreclosures due to increasing interest rates increases supply. Also, housing construction comprises a huge percentage of our economy. My dad works residential construction and he said business is off by a third over the past year.

Re: How will the subprime crisis ultimately affect our country?
 

Iron, glad to see there wasn't a thread about this already [img]/images/graemlins/smile.gif[/img]

You mention that it should lower the value of houses in this country, which it should. But what about all those people who took out equity loans on their mortgage because their house appreciated so much. There could be people who owe more than what their house is worth.


I think this is going to have massive repercussions in many job sectors as well.

Re: How will the subprime crisis ultimately affect our country?
 

TSC,

What's up with you getting so passionate about political issues all of a sudden? I think that's great, but I'm just curious.

Re: How will the subprime crisis ultimately affect our country?
 

I use to post here a lot, way back in the day. I was put off by this place because of what I would consider uber partisan [censored].

I love politics and passionate about my beliefs. For some reason I am want to learn more about the recent events as I am deeply concerned about where our country is heading.

Re: How will the subprime crisis ultimately affect our country?
 

subprime isonly aa symptom of the larger problem, which ultimately will lead to national captivity.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
Can some of you more familiar with the topic describe what you think will be the lasting impact of this crisis on America and the rest of the world.

In particular, how will this affect the US within the next six months, year, and five years.

[/ QUOTE ]

this is more a finance question so it is more up my ally...and i'll give it my best shot.

there are many areas where the impact of hte "subprime crisis" can be felt.

first and foremost, as mentioned, defaults and housing prices. in the near term, there is a mass of existing homes in the supply chain that need to be sold down to sustinance level before growth from construction and rebound. the subprime mortgage lenders took advantage of low borrowing rates as the result of falling interest rates after the stock bubble in 99 to push new financing methods on riskier borrowers.

further, by loaning to higher risk groups, they could make more money since hte yields they could demand were higher. this was encouraged by financial market innovation.

mortgage backed securities first appeared in 1980s and were analyzed to death (to price) and came into huge vogue as of late (in terms of massive demand). the demand for these securities, which were given AAA ratings on the top tranche even when the underlying securities were backed by subprime mortgages, soared as interest rates fell.

ratings agencies made money by rating these securities and the demand for that obviously soared. some conflict of interest here may have arisen as can be seen by the following: above i noted the demand for these increased as interest rates fell...one component of that was that AAA rated subprime backed residential mortgage backed securities (RMBS) were priced to yield more than similarly rated corporate bonds or other fixed income securities (this should be a flag as there is no such thing as a free lunch so to speak).

anyways, once defaults started coming in at above expectations, and more were expected in the future, these securities came under immense pressue. a few months back, bear stearns hedge funds (one leveraged 10:1 and one not so leveraged) basically became worthless because of the price pressure on these securities (everybody wanted out of them and trading wasn't even happening. these bets were "marked to model" since there was no market for them)

so shops like bear were in bad spots because they would have to sell to liquidate money for their investors who wanted out, but selling would push the price of their securities down even more further reducing the value of the funds. this shouldn't have happened if some of these securities were actually going to default at the AAA level (rather than at the level implied by their yield, which was probably still understated).

this was the first real sign of crisis.

time passed and everything started looking ok, but then a few weeks back in early august, there were serious issues arising as risk aversion shot up and nobody wanted to hold these types of securities...or even other less risky securities ... some not even related to subprime.

so volatility spiked up a ton as banks and hedge funds were forced to sell some other more liquid positions for funding because money markets were just not functioning and nobody wanted to buy any kind of risky fixed income security at "reasonable" prices.

demand for safe assets like Bunds, Gilts, and especially US 2 years soared.

this caused a massive near term inversion and long term steepening of th eyield curve.

finally the ECB, the FED, and later the BOJ had to step in and provide tons of money to markets, reduce the discount window rate, and basically keep the money market moving to prevent financial markets from siezing up.

equity prices fell 10% and then rebounded after "calm" was (and is) tentatively restored.

so that, sloppily, brings us to today.

the future can play out in a few ways.

imo, the most likely is that US and EU growth slows substantially relative to prior expectations in the coming year as personal consumption falls off a bit. i don't think we'll hit a major recession or anything like that unless some real bad data come in and the fed doesn't reduce the borrowing rate accordingly.

further, companies now have to pay higher prices to roll their commercial paper (short term loans typically for 1 or 3 months). in the past weeks though, this market almost entirely shut down forcing companies to borrow outright or sell some securities to produce funds ...it has since become better but nowhere near normalcy.

so if consumer demand falls, and corporate costs rise, layoffs can ensue (which they have substantially in the mortgage area) and aggregate demand falls further, then slower growth will ensue.

home prices are falling now while the cost of borrowing to buy homes has spiked a ton. nobody wants exposure to the mortgage market now. this is bad for risky borrowers' spending habits they've grown accustomed to these past few years.

further, this could only be round 1. what happens when ARMs reset in the next years? this will increase borrowing costs as prices fall and some borrowers may end up owing more than the value of their home. that is a bad spot to be in and could push aggregate demand down even further. this effect shouldn't be big though.

so, slowing growth could push housing commodity prices down, reduce corporate profitability, increase layoffs, increase the slack in capacity utilization (a good thing for policy makers), and lower risky asset prices over the near term.

on the other hand, the economy has so far remained robust in july due to massive corporate demand (490% above expectations for durable godos orders). prices are coming into line, CA deficit has shrunk (due to dollar fall an increased import prices). this is all good news. the problem is that the future likely holds bleaker news.

finally, the fed is driving this economic car through the rear view mirror. hard to do and their choices will certainly affect the future. i think a 25bp cut will likely happen on sept. 18th unless even better news for the economy comes out this week (we have personal expenditures, consumer sentiment, and a few other notables coming out).

another problem here is that the fed should NOT be "bailing out" anybody who took excessive risks. if the economy is thought to be slowing while inflation is down, then sure, give us a cut.

but do NOT cut rates because equity prices are off their highs or people who took excessive risks are going bankrupt.

hope this post helps some people out as i think it helped me at least give some order to my thoughts, though it probably didn't come accross in this unedited, unrised, slackjawed rambling mess.

Barron

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
subprime isonly aa symptom of the larger problem, which ultimately will lead to national captivity.

[/ QUOTE ]

lol...is that like the captivity in which panda bears live in our national zoos?

seriously though, can you state more clearly what your'e trying to say?

thanks,
Barron

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
subprime isonly aa symptom of the larger problem, which ultimately will lead to national captivity.

[/ QUOTE ]There is a subtle pun in this post. Can anybody else find it?

Re: How will the subprime crisis ultimately affect our country?
 

Barron, so you don't think this will have a major effect on our economy? At least that is what I gathered from your post.

I use to work for a firm who did foreclosures, so I somewhat understand the process.

If these ARM's are causing more and more people to default, and consequently have their houses foreclosed, I want to know who is going to buy all these houses. I mean, prices are falling, but that has more to do with the demand decreasing and the supply increasing.

These lenders generally don't care if a house is foreclosed. They can turn around and sell it at auction to reclaim their money. But if no one can get loans, who is going to buy these houses??

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
[ QUOTE ]
subprime isonly aa symptom of the larger problem, which ultimately will lead to national captivity.

[/ QUOTE ]There is a subtle pun in this post. Can anybody else find it?

[/ QUOTE ]

well it would be a great pun if it read:

"subprime is only aaa symptom..."

that'd be sweet....

other than that though i'm at a loss...let me know the pun if taht aint it...cause that means you got great punfinding eyes.

Barron

Re: How will the subprime crisis ultimately affect our country?
 

Subprime mortgages are a very small portion of the total amount of money lent in reality. The problem basically is the transparency of CDO deals in that the quality of the bonds is suspect and unknown. Therefore people don't want to touch them and also short term liquidity is a problem to lenders that hold the mortgage related bonds in their portfolio. It's more of a crisis in the MBS market than anything else. Remember lenders borrow short and lend long. In order to borrow short, lenders have to continuously borrow money from short duration lenders. When that money dries up there are severe problems. Liquidity in lending will probably be ok for conforming loans but I expect credit standards to be much higher and bigger down payments. I think some of the prices people pay for residential housing in some areas of the country is completely absurd and will come down. In many places it won't be that big of a deal. However, IMO the overpriced real estate tends to be in place where a lot of people live and a thus a lot of mortgage money is involved. IMO a slowdown in the housing industry will have an impact on the economy. How much remains to be seen but I'm fairly certain will see a recession in the near distant future. I hope I'm wrong about that.

Re: How will the subprime crisis ultimately affect our country?
 

Adios, thanks for the post.

[ QUOTE ]
IMO a slowdown in the housing industry will have an impact on the economy. How much remains to be seen but I'm fairly certain will see a recession in the near distant future. I hope I'm wrong about that.

[/ QUOTE ]
This does appear to be the main concern. As I mentioned in my previous post, I am concerned about increased supply of houses and the decrease in prices. This could have a myriad of effects on our economy and society.

Re: How will the subprime crisis ultimately affect our country?
 

I'm far from being an expert, but I am a fairly busy home builder. Luckily my market never saw a big jump in house prices so sales have remained stable.

From my perspective the guys that are going to take the hit are those that were making and buying up these subprime loans, which I understand a lot of hedge funds were doing. A lot of people are going to have ruined credit, but they will still need places to live.

I think, in the end, this will have a minor inpact on the economy over the next two years.

As far as who will buy these foreclosed home, they will sell. For how much is the question. The loan companies can't hold them, so they have to sell them at auction for whatever they can get. I've put some time and thought into getting into this if the prices do fall. With a decent credit line a guy could buy a ton of property and just rent it out. There would be decent equity from the start and that would just grow as the market comes back. If I'm buying for 70 cents on the dollar, I could easily be renting to the same level of customer who previously owned the house for a price they could now afford.

Bottom line, people have to live somewhere. Homes and apartments weren't sitting empty because people were getting loans for bigger houses. The easy loans just meant those who would normal rent were buying and others were jumping up a level or two. Now a bunch of them will be back to renting.

As far as the general economy goes this is a blow, but I'm much more concerned about the value of the dollar and the impact that will have.

Re: How will the subprime crisis ultimately affect our country?
 

"I'm far from being an expert, but I am a fairly busy home builder. Luckily my market never saw a big jump in house prices so sales have remained stable."

thats a major point that most people miss reading the headlines. Prices are not in free-fall. There are a few speculative markets (Miami, Vegas, Phoenix/Scottsdale) that are taking some pricing hits, but in general prices have not come down very much at all. That may change as inventory continues to grow, and some people have to get out, but it hasnt happened yet. In two very high priced areas...Metro NY and Southern California, most sellers arent moving on price, and are leasing if they have to move, waiting out what is probably a short term storm.

As a builder im sure you know that housing starts were up last month. What would be more intersting to know is the price ranges of those starts. If they are mostly for what will be conforming loans, it doesnt mean much. If its starts of 417k+ homes that is a very significant and positive indicator.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
lol...is that like the captivity in which panda bears live in our national zoos?

seriously though, can you state more clearly what your'e trying to say?

thanks,
Barron

[/ QUOTE ]

read the bible. how do you think the jews got to be slaves in egypt?

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
"subprime is only aaa symptom..."

[/ QUOTE ] That was it.

Re: How will the subprime crisis ultimately affect our country?
 

In a nutshell.

Money has become more expensive.

We have gone from a very cheap money environment to a more expensive money environment. Virtually all credit is now more expensive and central bank intervention into interest rates wont effect that to much as there is at present no trust in the banking system because no one knows who exactly is holding the toxic waste debt. Therefore commercial rates of money costs will remain high to reflect the perceived risk of lending.

Increased cost of money will undoubtedly have some "negative" effect on the economy.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
[ QUOTE ]
lol...is that like the captivity in which panda bears live in our national zoos?

seriously though, can you state more clearly what your'e trying to say?

thanks,
Barron

[/ QUOTE ]

read the bible. how do you think the jews got to be slaves in egypt?

[/ QUOTE ]

ya know, i've read the bible (old testament since i'm a jew) and it was a while ago.

i can't recall exactly HOW the jews became slaves in egypt just that at one point they were.

could you refresh my memory and then clearly state your point about how this relates to the "larger" problem of which subprime defaults are a "symptom"?

thanks,
Barron

Re: How will the subprime crisis ultimately affect our country?
 

another thing worthy of note:

the recent growing global markets and high employment rates here at home will provide some cushion from reduced spending resulting from high credit costs and th subprime mortgage meltdown.

further, the biggest impact so far has been localized, in relative terms, to financial markets, that, while still impacting the economy, don't have the same impact a bank run/panic or manufacturing crisis would ahve.

Barron

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
Virtually all credit is now more expensive

[/ QUOTE ] If this is true, how is this going to affect larger companies that take out loans to keep them afloat? I am thinking major car manufacturers, etc.

Re: How will the subprime crisis ultimately affect our country?
 

I think at this point there's just been so much wealth created and so much capital accumulated it would tough for there to be a real crises in terms of mass unemployment / bankruptcy, failing eternal war, invasion or communism.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]

further, the biggest impact so far has been localized, in relative terms, to financial markets, that, while still impacting the economy, don't have the same impact a bank run/panic or manufacturing crisis would ahve.

[/ QUOTE ]

I dont see how you can say this. The biggest impact has been on credit/risk etc markets. The falls in the equity markets were mostly a knock on from this. The intervention by central banks was all about this and they pumped in billions of dollars to to free up the liquidity jam brought about by the banking system refusing to lend each other any money take on any risk etc.

I dont see how you can say anything that forces up the cost of money is localised? I cant think of anything more system wide than that.


[ QUOTE ]
the recent growing global markets and high employment rates caused by low credit costs here at home will provide some cushion from reduced spending resulting from high credit costs and th subprime mortgage meltdown.


[/ QUOTE ]

FYP DUCY?

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
I think at this point there's just been so much wealth created and so much capital accumulated

[/ QUOTE ]yeah but how much of this is real wealth and capital? Thats what all this seems like to me, fake money and wealth. Interest rates were low, so people borrowed more money. The fed kept on releasing more money into our economy, but where the [censored] did all this money come from? Out of thin air if you ask me. I mean I can see that they wanted to counteract inflation, but this just seems preposterous if you ask me.

I would like some insight from those more knowledgable about this than me.

Re: How will the subprime crisis ultimately affect our country?
 

Phoenix is heavily exposed to the housing/subprime problem. A lot of jobs in Phoenix are based on the housing market. Residential real estate makes us a larger part of the local Phoenix economy than any other major metro.

Nationally, this could be less of a problem, but some local markets are going to get crushed. Some places will have price declines greater than 20%.

Re: How will the subprime crisis ultimately affect our country?
 

The mortgage and foreclosure issues are not static. Someone will benefit from the turmoil in the market. Perhaps apartment REITs will benefit, as well.

Remember that there are loss reserves that are built into any securitization. They are rated AAA for seniority on the pool's cash flow. The lower rated tranches are rated that way due to their lower priority.

The same credit crunch occurred in 2001 and in 1998 in the MBS market. There are cycles in any market and the MBS market is no different.

The key factor is how much mortgage rates increase? They have increased from about 5.8% to 6.19%, which is meaningless. Check out www.bankrate.com for the rates.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
[ QUOTE ]

further, the biggest impact so far has been localized, in relative terms, to financial markets, that, while still impacting the economy, don't have the same impact a bank run/panic or manufacturing crisis would ahve.

[/ QUOTE ]

I dont see how you can say this. The biggest impact has been on credit/risk etc markets. The falls in the equity markets were mostly a knock on from this. The intervention by central banks was all about this and they pumped in billions of dollars to to free up the liquidity jam brought about by the banking system refusing to lend each other any money take on any risk etc.

I dont see how you can say anything that forces up the cost of money is localised? I cant think of anything more system wide than that.

[/ QUOTE ]

hmmm, you're right. credit markets a big part of the entire system.

oh wait though, maybe i was referring to massive deteriorations cause by historic banking panics/manufacturing issues and only called the most recent siezure of credit markets localized in "relative" terms... i.e., who are the most affected right now? (financial institutions, hedge funds, private equity, corporations that roll commercial paper, mortgage houses etc.)

who were the most impacted in those other massive instances? idnividuals immediately and harshly. that isn't the case right now due to the cushion from employment and still healthy corporate profits.

[ QUOTE ]
the recent growing global markets and high employment rates caused by low credit costs here at home will provide some cushion from reduced spending resulting from high credit costs and th subprime mortgage meltdown.


[/ QUOTE ]

FYP DUCY?

[/ QUOTE ]

yes i do. remember i'm FOR the fed not bailing out the economy except for a moderate to deep recession.

"malinvestments" should be weeded out and a mild recession wouldn't kill us. i think a short recession here would help long term by 1) reducing CA deficit, 2) bringing savings back into line a bit, 3) prevent badly invested/run/managed companies from surviving longer than they should (by allowing them to profit unnecessarily from borrwoign short/lending long).

actually, i don't even think we need a recession to do this, just substantially lower growth. if it tips below 0, that isn't the end of the world.

but for now, high employment and consumer sentiment founded on that employment and income growth will provide a cushion like i mentioned.

lowering interest rates like greenspan did i think would be a mistake in this case and push off the time we have to have at least a mild recession to bring things back into line.

that being said, i dont' think bernanke would purposefully gear the economy towards recession so he may be slightly accomodative, but not obviously so (i.e. 1 25bp cut should do it for this year i hope).

Barron

Re: How will the subprime crisis ultimately affect our country?
 

After reading some of the posts here, you guys seem to indicate this isn't a big issue. Does that sound right?

It also seems you guys are focusing on one facet of this.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
After reading some of the posts here, you guys seem to indicate this isn't a big issue. Does that sound right?

It also seems you guys are focusing on one facet of this.

[/ QUOTE ]

I think it is a very big deal. However sub prime is only the first domino falling over, it then hit the increased credit cost domino and when that falls over it will hit many dominoes and it is then that the man in the street will be more obviously impacted.

I was trying to point out to Dcf that the very thing that caused sub prime in the first place is the very thing that created the "strong" economy that is supposed to help with its soft landing e.g. easy cheap money. How long is the economy going to remain "strong" without the life support of soft money.

In Britain we have record personal debt which is about 164% of income and is greater than GDP at over 1 trillion sterling+. Therefore increasing the cost of money is obviously going to hurt alot of people, its just not going to happen over night. I dont think it will be to long before we see the fall out however.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
[ QUOTE ]
After reading some of the posts here, you guys seem to indicate this isn't a big issue. Does that sound right?

It also seems you guys are focusing on one facet of this.

[/ QUOTE ]

I think it is a very big deal. However sub prime is only the first domino falling over, it then hit the increased credit cost domino and when that falls over it will hit many dominoes and it is then that the man in the street will be more obviously impacted.

I was trying to point out to Dcf that the very thing that caused sub prime in the first place is the very thing that created the "strong" economy that is supposed to help with its soft landing e.g. easy cheap money. How long is the economy going to remain "strong" without the life support of soft money.

In Britain we have record personal debt which is about 164% of income and is greater than GDP at over 1 trillion sterling+. Therefore increasing the cost of money is obviously going to hurt alot of people, its just not going to happen over night. I dont think it will be to long before we see the fall out however.

[/ QUOTE ]

That's basically it. The other thing about residential real estate is that people's net worth has been enhanced by increasing equity in their homes. This has been used to counter the arguments regarding the lack of savings. I think Copernicus had it right though, the overprice real estate is confined to not too many places. However, a lot of people live in these few places and thus the amount of money lent their is a lot. I actually think CDOs will start happening again but we'll see a lot more over collateralization, a lot fewer tranches, with more high quality bonds being issued.

Re: How will the subprime crisis ultimately affect our country?
 

Overall do you guys think this will continue to lower the overall value of the US$? If so, what do you think the ramifications of that could be?

Re: How will the subprime crisis ultimately affect our country?
 

Hard to say, The Once and Future King has a better take than I about this.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
Overall do you guys think this will continue to lower the overall value of the US$? If so, what do you think the ramifications of that could be?

[/ QUOTE ]

tough to say.

+US$: recession or slow growth means lower spending and reduced CA deficit, lower import demand. further, the lower the dollar falls, the more attractive its goods look to foreign purchasers.

-US$: recession or slow growth means the fed will likely lower rates hurting IR diff trades (as zero EV as they may be overall, they are still done).

+US$: slow growth in the US may increase demand for undervalued US assets and as the economy hits the trough, demand for equities & bonds will rise in international circles (especially sovereign wealth funds whose reserves are massive). this effect would not likely take affect till after the fact of recession hits obviously.

regardless, the ramifications obviously depend on the sign and size of the price change of the trade weighted USD.

i highly doubt the USD will appreciate throughout all of this. i could see positive feedback loops seriously hurting the economy once it gets falling (and incent the fed to lower rates to ensure a soft landing). demand for US assets could seriously fall as other knock on effects are seen to reduce economic performance (equities & bonds).

things like this are obvoiusly complex.

global risk aversion seems to push up demand for short dates US debt. but only to an extent. very likely not enough to prop up a fundamentally weak currency.

Barron

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
ya know, i've read the bible (old testament since i'm a jew) and it was a while ago.

i can't recall exactly HOW the jews became slaves in egypt just that at one point they were.

could you refresh my memory and then clearly state your point about how this relates to the "larger" problem of which subprime defaults are a "symptom"?

thanks,
Barron

[/ QUOTE ]

in a word, debt. debt at all levels is at a record high. americans have been financing their standard of living by borrowing and by the dollar being the world reserve currency, both of which are going to come to an end.

also the information I've seen is that the US has been in a recession (negative real growth) for the past year.

Re: How will the subprime crisis ultimately affect our country?
 

People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding.

BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant.

As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies).

Re: How will the subprime crisis ultimately affect our country?
 

I also want to add that what effect will higher imports have on our economy? Many manufacturers in the US rely heavily on cheap goods from overseas, for many non complex machined parts and other raw materials. Secondly, most made in America goods are already overpriced compared to their foreign counterparts. If imported goods prices increase, we as consumers are stuck between a rock and a hard place. We have to buy more expensive imports and expensive domestic goods. At least thats how I see it.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding.

BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant.

As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies).

[/ QUOTE ]

The US is either the second or the third biggest exporter in the world, behind Germany and basically tied with China.

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
[ QUOTE ]
People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding.

BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant.

As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies).

[/ QUOTE ]

The US is either the second or the third biggest exporter in the world, behind Germany and basically tied with China.

[/ QUOTE ]

In addition, if you're right that the choice is between "expensive Euro goods and expensive US goods" then prices will come own as demand for them wanes. Its when you have cheap Euro goods competing with expensive US goods that the balance of trade becomes an issue. The declining dollar helps that situation

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
Quote:
ya know, i've read the bible (old testament since i'm a jew) and it was a while ago.

i can't recall exactly HOW the jews became slaves in egypt just that at one point they were.

could you refresh my memory and then clearly state your point about how this relates to the "larger" problem of which subprime defaults are a "symptom"?

thanks,
Barron

[/ QUOTE ]

first website that googled up. "people of egypt" refers to jews in egypt.

http://dangoor.com/75001.html
[ QUOTE ]
At the end of the 14 years all the people of Egypt had sold first their cattle, then their land, then themselves, in order to get sustenance.

[/ QUOTE ]

Re: How will the subprime crisis ultimately affect our country?
 

[ QUOTE ]
[ QUOTE ]
People say it makes our goods more attractive overseas, but what exactly are we exporting that can be so attractive to other countries. Certainly we have some raw materials and agricultural goods. But other than major capital goods, cars planes machinery, what else are we really exporting? Almost everything we buy in the US comes from outside this country. Thats the paradox that I am not understanding.

BTW, I work for a manufacturing company and we do export our goods, however I think for our discussion at hand, this is irrelevant.

As far as I can tell, many of the goods that are made here, by multinational manufactuing companies, can be moved to other countries, if the low dollar value affects their exports (IE semiconductor companies).

[/ QUOTE ]

The US is either the second or the third biggest exporter in the world, behind Germany and basically tied with China.

[/ QUOTE ]As I mentioned, other than capital goods and agricultural items, what else are we really exporting?


Secondly, why should we have to make the decision between expensive imports and expensive domestic goods? Can't you see the problem there?