# Will the national/world economy completely collapse? **URL:** \ **Category:** Great Debates\ **Created:** [September 20, 2008, 9:01am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415 "2008-09-20T09:01:48Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [September 21, 2008, 1:04am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/21 "2008-09-21T01:04:52Z")
**Scylla** : But PEs are actually fairly high – and they’re “reasonable but not especially low” when you take into account the earnings collapse. Besides, we should be focusing on the credit markets, not equity. That’s where the trouble lies. According to the TED spread, [we live in interesting times](http://www.bloomberg.com/apps/quote?ticker=.TEDSP%3AIND). > [@Measure for Measure](#): > > …Congress is apparently on board… Ok, but NY Times columnist and Princeton Economist Paul Krugman is saying [No deal](http://krugman.blogs.nytimes.com/2008/09/20/no-deal/), pending some clarification. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 22, 2008, 2:30am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/22 "2008-09-22T02:30:15Z")
Okay, now that we’ve seen a plan, I’d like to go back to one of my OP’s questions (or at least a variant thereof): what effect will this particular proposal have, good and/or bad? Will it pass, no matter what its merits? Will the feared economic collapse happen if it does/doesn’t pass? What will the consequences be if Congress, for practical or political reasons, denies it or spends significant time arguing about it? After all, a lot of people, even Newt Gingrich, are looking at it in askance. How much time do we have? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 22, 2008, 2:53am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/23 "2008-09-22T02:53:14Z")
> [@Discordia](#): > > So with this new bailout costing something like a trillion (I bet it’s like construction projects and goes up and up and up to 2 trillion or something), just how high can the US debt go? > > Maybe Americans - including the Government - will finally learn you can’t live off debt. > > Stop laughing! It can not go higher without going in front of congress again. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [September 22, 2008, 4:46am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/24 "2008-09-22T04:46:24Z")
> [@Leaper](#): > > …what effect will this particular proposal have, good and/or bad? Krugman: [Thinking the Bailout Through](http://krugman.blogs.nytimes.com/2008/09/21/thinking-the-bailout-through/) [Authorization for the use of financial force](http://krugman.blogs.nytimes.com/2008/09/21/authorization-for-the-use-of-financial-force/) and as referenced earlier, [No deal](http://krugman.blogs.nytimes.com/2008/09/20/no-deal/). ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 22, 2008, 6:32pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/25 "2008-09-22T18:32:15Z")
Are the facts outlined [in this LJ entry](http://airscale.livejournal.com/400605.html?thread=2960605#t2960605) accurate? What about the speculation in the comment directly below? How likely is it? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 22, 2008, 6:40pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/26 "2008-09-22T18:40:28Z")
Like I said in another thread, Paulson wants to be able to handover money to any financial institution without limitation. He also wants any decisions he makes to be unreviewable by any courts or administration agency. What is he planning that requires those provisions. He was a big time financial pro who made a killing in the financial markets. Now he has a concience and is for the public good. then he should not be afraid to do it in the light of day and to do it legally. What is he afraid of, getting caught? ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 22, 2008, 6:44pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/27 "2008-09-22T18:44:04Z")
… ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 22, 2008, 6:45pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/28 "2008-09-22T18:45:15Z")
I think I’m missing what that has to do with the link I just posted, but okay… (BTW, I’m an idiot: I should clarify that the thing you first see on clicking my link is the reply… Which I mention _second_. The main LJ entry is the first, and it’s “hidden” the way the linking works; you’ll have to scroll up to see it. I just made a direct link to that particular comment because I thought the speculation was the most detailed and interesting, and I wanted to draw attention to it, since it was in the middle of a large number of comments and there was no better way to single it out.) ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [September 22, 2008, 7:14pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/29 "2008-09-22T19:14:19Z")
> [@Rune](#): > > Don’t worry. Now that you’ve embraced socialism you’ll be fine. :rolleyes: If we elect Obama POTUS and he puts through every single thing on his agenda successfully, we still will not have “embraced socialism,” not even by West-European social-democratic standards. ---
**Author:** ![BMalion](https://avatars.discourse-cdn.com/v4/letter/b/e274bd/32.png) [@BMalion](https://boards.straightdope.com/u/BMalion)\ **Post date:** [September 22, 2008, 7:14pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/30 "2008-09-22T19:14:27Z")
> [@Scylla](#): > > Total collapse is not completely off the table. As long as there’s no danger of zombies. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [September 22, 2008, 7:30pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/31 "2008-09-22T19:30:22Z")
> [@gonzomax](#): > > The next few days will be critical. We’ll have embraces socialism by the beginning of October, several Milton Friedman Units later… ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [September 22, 2008, 9:43pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/32 "2008-09-22T21:43:23Z")
> [@gonzomax](#): > > It can not go higher without going in front of congress again. And, certainly, the next time we can rely on Congress to have some restraint… ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 23, 2008, 2:04am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/33 "2008-09-23T02:04:08Z")
Ugh, now oil gained $16+ a barrel. I really don’t know how to time gas purchases. I made sure to do it before Gustav, because I didn’t want to be caught in rising prices. I did it again before Ike, for the same reason. Both times were epic fails, as far as making prices rocket. Now when it actually DOES happen, now that I have 3/4 to 1/2 a tank left because of the previously mentioned Ike business, now they really DO skyrocket. Perhaps I’ve been coming across as more panicked in this thread than I intend. But things like this really do make me wonder, about my judgment in these matters if nothing else. Which is why I turn to the Dope. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 23, 2008, 2:26am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/34 "2008-09-23T02:26:50Z")
If the bailout is needed ,why do they have to have Paulson with single Authority. He wants authority to handover money to any financial institution without limit. He also wants it outside the jurisdiction of any court and not re-viewable by any government agency. If he is not planning on looting it or giving it to his rich friends, there is no need for these provisions. Especially when lack of regulation was a big part of causing the problem. I would have thought he would want to act in the bright light of day to give confidence to the public. This worries me big time. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 23, 2008, 2:33am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/35 "2008-09-23T02:33:19Z")
Wiki says Paulson is worth 700 million. He was at Goldman Sachs and made a fortune with market shenanigans. Now he is to be trusted as a man of conscience and for the people. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [September 23, 2008, 3:27am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/36 "2008-09-23T03:27:26Z")
At what point are we supposed to assemble ourselves into outlaw motorcycle gangs to ride the wastelands in search of fuel? Because I need to start putting my team together. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [September 23, 2008, 3:29am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/37 "2008-09-23T03:29:45Z")
> [@Scylla](#): > > Total collapse is not completely off the table. But seriously, what would “total collapse” _mean_ exactly? Let’s game this thing out. ---
**Author:** ![Giraffe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giraffe/32/129_2.png) [@Giraffe](https://boards.straightdope.com/u/Giraffe)\ **Post date:** [September 23, 2008, 3:40am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/38 "2008-09-23T03:40:03Z")
> [@Ludovic](#): > > Expanding the program beyond its original intent is something we need to be aware of, but I can’t see the path to there from here. From the [text of the draft bill](http://www.nytimes.com/2008/09/21/business/21draftcnd.html): [QUOTE=Draft Version of Bailout Bill] Sec. 6. Maximum Amount of Authorized Purchases. The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 **outstanding at any one time** [/QUOTE] The $700 billion is not an absolute ceiling, it’s just the maximum that can be on the books at any moment in time. So, technically, there’s nothing in the bill that prevents e.g. buying $700 billion in near-worthless mortgage securities, selling them below market value, then buying more. It’s also a little troubling that: [QUOTE=Draft Version of Bailout Bill] Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. [/QUOTE] ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [September 23, 2008, 5:15am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/39 "2008-09-23T05:15:10Z")
> [@spoke-](#): > > But seriously, what would “total collapse” _mean_ exactly? Let’s game this thing out. During the Great Depression, unemployment peaked at ~25% in 1933 and didn’t drop below 10% until World War II. When I said, “We’ll be fine”, I meant, “That won’t happen again.” US unemployment will not average over 20% in 2008, 2009 or 2010. The Dow could drop below 10,000 and keep falling. That’s not the same thing. > **[Unemployment](https://en.wikipedia.org/wiki/Unemployment)** > > Empirical methods > Prescriptive and policy > Unemployment is the state of not being in paid employment or self-employment but rather currently available for work. Unemployment is measured by the unemployment rate, which is the number of people who are unemployed as a percentage of the labour force (the total number of people employed above a specified age added to those unemployed) during the reference period. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 23, 2008, 6:08am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/40 "2008-09-23T06:08:38Z")
> [@spoke-](#): > > But seriously, what would “total collapse” _mean_ exactly? Let’s game this thing out. The guy linked in post #25 gives his definition. But I don’t know him from Adam, so I can’t attest to whether anyone else’s definition comes even close. I just toss it out to offer at least somewhat of an answer. **Measure for Measure** : Does your answer also mean that you don’t think that anything you don’t mention that could CAUSE that kind of unemployment will happen either? Just making sure. [Previous page](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415.md?page=1) [Next page](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415.md?page=3)