Linked by Thom Holwerda on Sun 15th Feb 2009 12:24 UTC
OSNews, Generic OSes It was a fun week for OSNews, with many interesting debates on polarising subjects such as the global menubar in GNOME, Chrome using Gtk+ on Linux, and Cuba moving to Linux. We also took a look at Haiku, talked to Nicki Clyne and the CEO of Lunascape, and reported on a few releases of small operating systems. This week's My Take is about the economic crisis.
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Re: My Take: PANIC!!!!!!!!!!!
by aaronb on Sun 15th Feb 2009 12:49 UTC
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In the UK the many people are being made redundant and its harder to get loans regardless of if you are a customer or business.

The main issues in the UK are IMHO:
1. Its our tax money that is keeping some banks open (Its going to be pain paying this back).
2. The Financial Services Authority seem to have no authority.
3. The directors / shareholders / greedy people seem to face no consequences for their actions. (See point two).
4. And finally many people seem to be ignorant and are happy to try and get loans with no intention of paying and are genuinely surprised when their homes start to be reprocessed.

Very broadly speaking if we all live within our means and not be greedy and ignorant this issue would not have occured.

The Netherlands may have been better at sticking to the above or it will probably be impacted 2009 or 2010 (Of course IMHO).

Edited 2009-02-15 12:55 UTC

Reply Score: 4

Yay, politics
by rajan r on Sun 15th Feb 2009 12:56 UTC
rajan r
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Just what OSNews needed, political discussions.

But I'll oblige. Am I affected? So far positively - I'm a student with a fixed allowance, so falling rent and prices have been good to me. On the bad side, I'm in Singapore while my allowance comes from Kuala Lumpur, so the exchange rates have been slightly unkind to me.

My friends studying in the United Kingdom have it far much better - their spending power have increased by a third. Likewise my friends in Australia. And since I'm going to Australia in July, the fact that their dollar is now at rough parity with the Singaporean dollar is a blessing.

On the other hand, graduation is looming and the job market is getting very bad.

Who do I think is responsible for the current crisis? I suppose if you trace it back, it is the secondary mortgage market within the United States. Because those selling mortgages aren't the ones bearing the risk anymore (they sell it off to other financial institutions), it incentivized mortgage dealers granting subprime loans. The government in the United States (with Fannie and Freddie) not only didn't regulate this, but encouraged this risky leveraging. These mortgage debt were then packaged with other better debt and given a rating of AAA by S&P and co, which are then bought up by increasingly leveraged European banks.

I'll reserve first blame for the rating agencies. They had the ability and responsibility to stop this madness. That the risks of Moody and S&P haven't gone down like Arthur Anderson is infuriating - clearly this is a case of corporate corruption. If they gave a rating closer to the true risk level of mortgage debt, it would have shrunk the secondary mortgage market and stopped other financial institutions from loading on risky bonds.

Reply Score: 1

RE: Yay, politics
by adkilla on Sun 15th Feb 2009 14:39 UTC in reply to "Yay, politics"
adkilla Member since:

While C4 & friends screw the Malaysian public royally (with the monarchs joining in on the fun), the job sector hasn't been all that bad. But I am not from manufacturing or retail.

Well just so you know, it ain't all peaches down under either. Had friends migrated recently with a hard time keeping a job.


Reply Score: 1

RE: Yay, politics
by jessta on Sun 15th Feb 2009 15:33 UTC in reply to "Yay, politics"
jessta Member since:

I'm a student with a fixed allowance, so falling rent and prices have been good to me....their spending power have increased by a third. Likewise my friends in Australia.

I'm a student in Australia and I also haven't really noticed any difference. Although I'm also in a pretty good position; public housing, government allowance, no real debt(interest on uni fees is CPI), bonus money from government economic stimulus plan, and another 1.5 years of study. It'll probably be a problem once I get out in to the workforce, but I haven't noticed it effecting anyone I know.

The recent, and continuing bush fires in Victoria this summer have made the situation much worse for some people. The entire economic base of a number of small towns in Victoria has been completely destroyed, I imagine rebuilding will be fairly difficult with tight money.

Reply Score: 2

RE: Yay, politics
by vitae on Sun 15th Feb 2009 18:29 UTC in reply to "Yay, politics"
vitae Member since:

I'll reserve first blame for the rating agencies. They had the ability and responsibility to stop this madness. That the risks of Moody and S&P haven't gone down like Arthur Anderson is infuriating - clearly this is a case of corporate corruption. If they gave a rating closer to the true risk level of mortgage debt, it would have shrunk the secondary mortgage market and stopped other financial institutions from loading on risky bonds.

Yes, the fiscal conservatives are, of course, blaming the homeowners, and they seem to think any government interventiont to fix the problem amounts to socialism, which to them is probably just as bad a thing as terrorism.

If you've got a few people defaulting on their loans you can call them idiots or whatever, but when it happens on a mass scale, it's a sign of a larger problem (mostly the housing market collapse). Here's a two year old prediction:

But really it falls on the banks and the securities traders. If the banks want to make risky loans, they should be prepared to take the hit if they don't come through in a bad market, and not expect to be bailed out by the taxpayer. Likewise, the securities traders want to play their games, and not have any real risk to themselves. As unfortunate as it is for the people who worked at Lehman Bros., one hopes that the rest of Wall Street has learned a lesson from it.

Reply Score: 3

Major Economic Collapse
by arbour42 on Sun 15th Feb 2009 13:23 UTC
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Thom, I'm glad to hear things are alright where you are - is that the Netherlands?

Very quickly, what has happened is that the ENTIRE US banking system is insolvent. There's no other way to state it. Without Trillions of Dollars in "paper" money being injected into the system by the Federal Reserve (who were the original cause of this disaster), the banks, insurance companies, mortgage system and auto industry would now be gone.

Think about it, the entire US investment banking industry has gone extinct. Amazing, no? We're witnessing deleveraging on a massive scale, as a US$500 Trillion++ derivative pyramid implodes.

What's next? It seems that the US government is going to try to monetize its way out of this. With a real, actual national debt now higher than US$70 Trillion, and a mininum budget deficit of $2 Trillion this year, this could quickly lead to hyper-inflation. And I think Europeans like you have all learned what happened in Germany during the 1920's, something few in America remember.

Reply Score: 3

RE: Major Economic Collapse
by helf on Sun 15th Feb 2009 21:04 UTC in reply to "Major Economic Collapse"
helf Member since:

yeah, i cant believe they are going this route. it DID NOT WORK in the past. it is a HORRIBLE idea. its f--king absurd. I'm sad I live here sometimes.

Reply Score: 2

affectes me
by chekr on Sun 15th Feb 2009 13:27 UTC
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I guess because I work for a bank I'm seeing it all first hand...we've lost lots of contractors but are yet to dump any fte's. My girlfriend had her salary discounted by 50% (along with hours of course) and my share portfolio and superannuation has been whacked too. So yeah its real!

I'm still not too worried though, I have a roof over my head, a full stomach, healthy body and a good heart :-) why worry when so many people around the world were already struggling, even if i was to lose my job i would still be better off than 50% of the worlds population.

Reply Score: 1

Not yet!
by RandomGuy on Sun 15th Feb 2009 13:41 UTC
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The crisis hasn't affected me or anybody I know yet.

Reply Score: 1

some die sooner some later
by l3v1 on Sun 15th Feb 2009 13:41 UTC
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I'm sure the crisis is real, don't get me wrong, it's just that I personally haven't felt any of its effects.

Well, you're one of the "lucky" ones then.

Around me, well, I have an uncle who's workdays are now 4 per week, I know some people who lost their jobs. For myself, my salary has been cut back, I spend a lot less and still my expenses are much higher, and what I earn is gone by the end of the month, last month even more. Also, I bought a car last year with a loan, and the monthly fee is 62% higher now than last summer. But I know people who do worse.

edit: by "I spend a lot less" I wanted to say I buy less of ... everything

Edited 2009-02-15 13:44 UTC

Reply Score: 3

Noticing nothing
by righard on Sun 15th Feb 2009 14:27 UTC
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I'm also from the Netherlands and the crisis hasn't effected my, or the people I know, at all. If I wouldn't watch the news, I would not know there was one. Maybe it's still to come, I don;t know; Though the bottlecap prospect excites me also ;)

Reply Score: 2

What, me Crisis?
by jack_perry on Sun 15th Feb 2009 15:41 UTC
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To be honest I think the serious problems in the US are regional, not national; unfortunately those regions have quite a bit of influence on us and the rest of the world.

I've been affected somewhat: a lot of my retirement savings was in the stock market, and currently there's less in my retirement account than I've put in! On the other hand I only started the account three years ago or so, so most of my 403(b) deposits were made right before things collapsed. I have thirty years before retirement, so I'm not too worried about it.

My home value hasn't crashed (to my knowledge). Housing prices in most of the south/southeast have either remained stable or continued to rise moderately, excepting Florida and certain metropolitan areas. Of course our home prices were never so grossly inflated as certain regions of the country (not so many people want to live here, and those that do don't have the financial wherewithal to engage in such stupid mortgage schemes). None of our banks have encountered money shortages, and the president of a major regional bank opposed the TARP bailout publicly, saying it removed the risk from risky behavior. This despite the fact that our foreclosure rate remains one of the highest in the country, if not the highest.

I'm a member of four credit unions around the southeast (two in Virginia, one in NC, one in MS) and all of them have told me personally that they have plenty of money to lend, and have not stopped making loans. One of them even boasted on its website, "No credit crunch here!" I've read that the vast majority of credit unions were actually in good shape, having stayed out of the silliness that characterized much of the mortgage market for several years, but a few weeks ago the federal government forced some money into the CU system anyway, to prop up the few that are having trouble.

So the problem seems to be that certain industries are highly dependent on a certain sector of the financial system--a sector that, prompted by the government, did some very, very stupid things.

We aren't independent of the rest of the country, or of the world. As certain national chains go down--Circuit City, for example--we are also affected: unemployment, smaller tax base, etc.

I've made a lot of factual assertions here, primarily about the south/southeast and the CU market, but to be honest I'm not sure they're all correct. If anyone knows better, please do correct me.

Reply Score: 2

Economic Crisis
by mdoverkil on Sun 15th Feb 2009 15:42 UTC
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Considering I work for one of the major financials, I'm just glad to still have my job.

Reply Score: 1

Still doing fine
by danieldk on Sun 15th Feb 2009 15:55 UTC
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I haven't experienced any negative effect due to the recession yet, neither have my relatives or friends. Like Thom I live in The Netherlands, and we are very fortunate to live in a wealthy country. I graduated from university at the end of august, and I opted for a job in the academia. Maybe things would have been harder if I chose to work in 'the industry'.

I think the economy will collapse even further, although I do not believe that it will get very ugly in most Western European countries. I think that Western countries that stayed farther away from the USAs unbridled neo-liberalist capitalism will do relatively well. Personally, my costs are not very high, because I have social housing, etc. (like many Dutch people). I plan to cut some monthly cost, to have even more room to save some money on the one hand, and to donate to some free software projects on the other hand. I sincerely believe that free software is good for society in a recession, since it will allow people to use the same hardware for a longer time, and to stay current in this aspect of live with little cost.

Many things should be done different, not after the crisis, but right away. Privatizing of crucial services should stop, and be reverted. I am against a socialist state, but at least all the basic things that are required for a decent living should be state owned. Besides that, we should focus more on renewable energy, both because other energy is getting more scarce and we should not fall pray to political blackmailing through energy. Additionally, we should focus on durable product. The time of having a new car/kitchen/whatever every three years is over. It is unnecessary, that consumption rate is bad for the environment, and people often take loans for such buying such luxury.

Finally, in The Netherlands we should stop all those stupid loan commercials. I realize that giving out loans to consumers has been a daily practice in the US. But here, this only became popular on a large scale a few years ago, before that taking a loan was looked up upon as something bad you shouldn't do except when it is absolutely necessary. It's bad to spend money that you don't have yet. Of course, there are obvious exceptions, such as a mortgage.

Edited 2009-02-15 15:57 UTC

Reply Score: 2

RE: Still doing fine
by helf on Sun 15th Feb 2009 21:19 UTC in reply to "Still doing fine"
helf Member since:

"social housing" ? Is that like section 8 housing here? You live in cookie cutter duplexes or single floor "apartment blocks" where everything looks the same?

Reply Score: 2

RE[2]: Still doing fine
by danieldk on Sun 15th Feb 2009 22:05 UTC in reply to "RE: Still doing fine"
danieldk Member since:

"social housing" ? Is that like section 8 housing here? You live in cookie cutter duplexes or single floor "apartment blocks" where everything looks the same?

I don't know if it is similar, since I am not familiar with section 8 housing. Social housing was traditionally provided by non-profit rental corporations with government funding or loans. Social housing corporations own 30% of all housing, and are rented to and by people of (virtually) all levels of income.

But, almost every (city) housing block looks the same in The Netherlands ;) . I wouldn't be surprised if someone bureaucrat uses Simcity for city planning :p.

Edited 2009-02-15 22:08 UTC

Reply Score: 2

RE[3]: Still doing fine
by helf on Sun 15th Feb 2009 22:49 UTC in reply to "RE[2]: Still doing fine"
helf Member since:

ah, ok. thanks for the info. tht is a bit diferent than section 8 here. Section 8 is govenment subsidized housing for people under a certain income level which varies on region.

sorry if I sounded derogatory, didnt mean to ;)

Reply Score: 2

Situation in Brazil
by IamScared on Sun 15th Feb 2009 16:44 UTC
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Brazil is one of the least affected countries. Our financial system received a good reform during a great economic crisis in the 80's and the system became very healthy. Banks in Brazil are practically not allowed to invest in risky papers because the legislation forces the banks to stay with the papers bought for a lot of time. So the subprime market is not even considered for investments here. The main problems we face are:

- Fall of exports because of protectionist agendas from the affected countries;
- Loss of value of the national currency against the dollar and euro, making imports expensive;
- Less availability of loans, provoking problems in the car industry due to the low number of customers;
- Falls in the stock market due to contagious pessimism.

Some industries are suffering severily but others are surprisingly growing. Job cuts are balanced by the availability of new jobs in the growing sectors. Some government actions like tax cuts are accelerating the economy and the consumption in the internal market, balancing the falling exports.

In average, the situation is begin handled in a responsible way by the government and private sector.

Reply Score: 2

RE: Situation in Brazil
by eulogy on Sun 15th Feb 2009 22:41 UTC in reply to "Situation in Brazil"
eulogy Member since:

The situation is similar in Australia.
The banks are in good shape, the economy is still growing. In fact, in the last quarter, there was an increase in full time jobs (and a decrease in part time jobs).

Also, due to reduced demand from China and other Asian countries, demand for minerals (such as iron ore and coal) have declined, as well as their prices.

Reply Score: 1

Affected & in the Netherlands
by boudewijn on Sun 15th Feb 2009 17:02 UTC
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Well, I live in the Netherlands and I'm having some first-hand experience: in February 2007 I bought a new house & put my old house up for sale. Not wise, buying a new house before having disposed of the old one, not even during a boom or bubble. But it was our one chance of getting an old house in a historic town center, so we took the plunge.

Now, two years later the old house hasn't been sold yet. We are renovating it in the hope that we can sell it if it's perfect: but house sales have dropped 50% year over year in January.

Fortunately, I have a job that makes it possible to actually pay the two mortgages, but it's touch and go, and it means no free software conferences for me in 2008 and 2009.

Reply Score: 2

Comment by ideasman42
by ideasman42 on Sun 15th Feb 2009 17:19 UTC
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crises so far hasn't affected me, possibly the opposite being an opensource dev freelancer at the moment.

Edited 2009-02-15 17:19 UTC

Reply Score: 1

Life in a small town in America
by vitae on Sun 15th Feb 2009 17:54 UTC
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We're seeing it in many ways. The job market was never good enough here, and now practically non-existent except for the Indian Casino nearby. We have had a few armed robberies recently, something practically unheard of around here. In addition, I work in a used book store that also sells antiques and used video games. These days we have people coming in trying to sell us any and everything, often on the first of the month when rent is due. We had a girl crying in our store because she couldn't get enough for ps2 to buy Chrismas presents. A guy with extensive welding experience dropped off his resume even though we're not hiring, and would have no use for a welder. Most definitely people in this rural area are feeling the crunch.

But really the entire California job market, especially along the coast is never very good and so this state will definitely be feeling it. You can see that in the fact that the state budget is once screwed up in a state that is wealthier than many nations.

Reply Score: 2

Not affected yet...
by DigitalAxis on Sun 15th Feb 2009 18:10 UTC
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I'm living off a modest graduate student stipend right now, and have been trying to stay within my means for the last three years... I haven't been hurt yet, but I WILL be hurt if this crisis continues much longer, since there will either be no jobs, or a surfeit of qualified applicants when I graduate.

I do think things are beginning to cost more (my food bill is going up), and I'm a bit worried about the massive deficit spending to bail out all the financially irresponsible companies because we need them too much. There's a wonderful lesson to teach your kids: It's ok to do whatever you want as long as you're indispensable.

Reply Score: 2

Yep, I'm affected
by TheIdiotThatIsMe on Sun 15th Feb 2009 18:39 UTC
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I live in what used to be called the rust belt, near Youngstown, Ohio. And I must tell you, the effects have been very real here. I lost one of my two jobs, and the second job's hours have been cut to roughly only ten hours per week. Because of this, I lost my payments to my education loan and cards, some of which have defaulted and the others threatening to. I now have no means to go back to college for a long, long time.

In our immediate vicinity, we have had several plant closings, and one major job source has cut two out of three shifts in their plant. We've not quite half of our retail stores in the local mall shut down, a major retailer in the plaza in front of me shut down, Circuit City of course shut down, and many other stores in local cities around us. There are approximately 600 individual applications to one job opening in the area, including for minimum wage jobs (which is what I hold now).

Family members have had to converge, we have three people living in one small one bedroom apartment for shelter, and myself and one other person making enough to try and stay afloat and fed.

So for many people, it's very real.

Reply Score: 1

RE: Yep, I'm affected
by parrotjoe on Mon 16th Feb 2009 06:28 UTC in reply to "Yep, I'm affected"
parrotjoe Member since:

Also living near Youngstown I can only reiterate what you said. It's been tough around here for a long time - ever since the steel mills went kaput - and we always are struggling to attract new businesses of any and all types. Now, along with what you said, cars don't sell, houses don't sell. A regional bank headquartered in Youngstown still has its head above water but has had federal regulation in there for several month because they made too many bad sub-prime loans. It's more touch and go here than ever.

Reply Score: 1

Member since:

Well, over here there are some effects:
- real estate agencies and construction companies have laid off a lot of people, many have went bankrupt
- some industries have stopped production for a while (auto, steel, chemical, ...)
- getting loans is much harder now
- everyone is blaming the crisis and trying to cut back on spending
Which leads up to: many companies use the crisis as an excuse to not increase salaries and to pressure employees (for example my current company).

It's not as bad as they say, over here, but it certainly isn't nice either.

Reply Score: 1

Atlantic Canada
by StephenBeDoper on Sun 15th Feb 2009 20:35 UTC
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I haven't really noticed any effects of the economic problems here, although it's mainly because this region's economy has been in the crapper for 15 years now (and was never particularly strong to begin with).

As for blame, I would say that the biggest contributing factors are unrealistic business models.

It seems that the only lesson learned from the dot-com bust was a business model that's been described as "sell $20 bills for $18 apiece, and make up the difference on volume." Instead of ridiculously-overvalued companies, we have (or had?) companies that treat the hypothetical value of outstanding loans (that will probably never be repaid) as if it were real money.

The phrase "castles made of sand" comes to mind.

Reply Score: 4

*shakes head*
by kaiwai on Sun 15th Feb 2009 21:34 UTC
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When a government, through intervention, creates a consequence free environment which takes away the usual risk mechanisms that regulate individual and organisational behaviour - are you surprised when the excesses come to wall street and main street?

I shudder every-time I see so-called 'economists' who have seemed to thrown out basic economic theory in the face of his crisis because of their shocking analysis as to the cause of what we see today.

Reply Score: 2

less contracts here
by stabbyjones on Sun 15th Feb 2009 23:04 UTC
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There have been less contracts popping up where i am in Australia.

Big miners have pretty much sacked the west coast after China cut back a heap on orders. Other than that most things seem solid and all i have to do is focus on a perm job instead of pimping myself out to random businesses for a while.

our dollar was awesome in dec and then was pretty much cut in half so no germany and japan this year. ;)

Reply Score: 2

Completely affected
by Dasher42 on Mon 16th Feb 2009 00:21 UTC
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I lost my job, and it is next to impossible to find any job that can meet the bills in the San Francisco Bay Area right now. Positions are posted but hardly anyone wants to seal the deal and hire for them, citing budgeting constraints. I don't know where I'll live at the end of the month. Yes, the downturn is real.

Reply Score: 1

RE: Completely affected
by averycfay on Mon 16th Feb 2009 01:02 UTC in reply to "Completely affected"
averycfay Member since:

The bay area and other places like it kind of suck to actually live in. One thing I've noticed is that while salaries are higher in more expensive areas it doesn't really make up for the huge differences in cost of living. When I lived in Baltimore, I actually had a lower salary than when I lived in Boston, but I ended with a lot more money in savings and a higher standard of living.

So, if you are at all mobile, I'd suggest moving to a more reasonable place. Believe it or not, there are good tech jobs everywhere, not just in san fran, boston, ny, etc.

Reply Score: 2

RE: Completely affected
by ssa2204 on Mon 16th Feb 2009 06:17 UTC in reply to "Completely affected"
ssa2204 Member since:

I lost my job, and it is next to impossible to find any job that can meet the bills in the San Francisco Bay Area right now. Positions are posted but hardly anyone wants to seal the deal and hire for them, citing budgeting constraints. I don't know where I'll live at the end of the month. Yes, the downturn is real.

Sorry to hear how things are. It is sad, but true, that way too often people just simply can not realize actual cost of what is happening here. I am shell shocked every time I speak with people who are so god damn clueless as to think everything is peachy keen here. It get's to a point when you mention how difficult it is to find work, and the person says "Oh really?" that you just want to punch them. Week has not gone by now for the past several months where someone I know, or a friend of a friend, or relative, etc.. is losing their job.

If there truly was justice in the world, the only people losing their jobs would be the morons who voted for Bush. They are the *#&@ who deserve to be unemployed.

Reply Score: 3

In Brazil...
by Jason Bourne on Mon 16th Feb 2009 12:40 UTC
Jason Bourne
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I live in Brazil and the same goes for me as Thom, I remain unaffected. I think people around here are OK with it as well. Looks like this crisis is affecting mostly the wealthiest businessmen for some reason, and it's not touching the regular people. I think it's worse in the USA, no wonder why, 8 years with an under-the-hood dictator spending billions in wars and ammo left alone in-house matters. That's the price to pay now. Who said that the world needs to go along with the USA?

Reply Score: 1

My take on the situation
by Anon9 on Tue 17th Feb 2009 02:47 UTC
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I have so far been affected positively. Gas prices have fallen and as a student that drives around half an hours one way to college each day, the lower price has helped a lot. However, it does seem that there are fewer job opportunities and I am graduating soon.

This has been predicted by Austrian economists such as Ron Paul. I think they are right on target and the problem is the system. We need to end the fractional reserve model and the Keynsian economic system that the US has been based on since for almost 100 years now. I believe we would be much better off with a commodity backed currency.

Reply Score: 1