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Maybe I'm a pessimist, but geez...things don't seem to be going well out there. A laundry list of things on my economic mind include:

Housing

High Gas Prices

Inflation

Bear Stock Market (down 20% since October high)

Shrinking availability of credit

Fannie & Freddie

IndyMac (Bank Failures)

Poor corporate earnings

Unemployment rate

Weakening Dollar

Ford / GM Troubles

I hope that Michigan is buffered from the crappiness since we have been stewing in it for some time. What are your thoughts? Will it get worse before it gets better? What is the future of the West Michigan banking sector?

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Maybe I'm a pessimist, but geez...things don't seem to be going well out there. A laundry list of things on my economic mind include:

I hope that Michigan is buffered from the crappiness since we have been stewing in it for some time. What are your thoughts? Will it get worse before it gets better? What is the future of the West Michigan banking sector?

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With all due respect, I believe that this line of thinking will dig us a bigger hole and makes the United States less competitive on a global scale. I can guarantee that young educanted individuals in countries like India and China don't have a laissez fair approach to their "entitlements." So I disagree...things will get worse before better and our "bouncing back" will have to occur in much more drastic ways than it has in the past. The world is flat...
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No, I don't think West Michigan is "buffered" from the crappiness. However, it sounds like with the weakening dollar, there is more demand for a lot of the manufactured products made here in West Michigan. In fact, I was just reading that non-residential construction in the U.S. for the manufacturing sector is way up over this time last year. And we are still heavily geared toward manufacturing.

As far as the West Michigan banks go, I think things will be changing here soon, with maybe some of the smaller banks like Mercantile and Macatawa merging or severely downsizing.

As for the rest, you have to take it in stride and make adjustments. The America of the 60's through the 90's, where we had very little international competition other than Japan, are over.

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We've already seen Lasalle being bought by BofA, which has changed the West Michigan banking scene fairly dramatically.

I think it would be interesting to see a Mercantile/Macatawa merger. Since both are more or less spinoffs from the (now ancient) FMB/Huntington merger.

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everyone needs to relax.. all of this has happened before. the world is not coming to an end. WE DO NOT NEED governemnt intervention to save us. they will only bring us down. You should look at the government policy (of other highly successful countries i.e. China, Brazil) in regards to international trade... oh wait there isn't one. They take the Laissez-faire approach to international trade which gives them a strategic advantage. Also, a weak dollar is not a bad thing. It will give more people jobs. All a high dollar is good for is buying goods on a global market, its TERRIBlE for selling them (look at UK they sell virtually nothing on the international market because they cannot compete price-wise).

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As much as I like Kunstler's dire warnings, his predictions are too extreme. On the other side, those who think we're not in for some huge shocks ahead aren't extreme enough. The amateur economist in me believes people will make rational decisions as the price of gasoline creeps higher. We may see a trend to more local economies as transportation and industrial production becomes prohibitively expensive, but we aren't going back to the dark ages by any means.

I've taken this opportunity to buy stocks that should weather the storm and recover nicely in the next couple of years. If I'm right, I'll do fine. And, if I'm wrong, money won't be worth anything anyway, so owning worthless stock won't upset me in the least. :)

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I know it is a little different, but a couple of months ago the different contractors and subcontractors that I work with all of the sudden became so busy that they didn't know how to get everything done. Things were incredibly slow for quite awhile, and then all of the sudden they were swamped.

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I know it is a little different, but a couple of months ago the different contractors and subcontractors that I work with all of the sudden became so busy that they didn't know how to get everything done. Things were incredibly slow for quite awhile, and then all of the sudden they were swamped.
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The flip side of all of this is opportunity. My wife and I just bought a home that 2 years ago sold for $330k and we closed at $224k on July 9th and had the seller pay for all closing costs. For whatever reason, he overbought, but we have a really nice home that we never would have been able to afford just a few years ago.

I am in the middle east right now, and I see people from India and Asia working 65 hours per week doing technical and skilled work, as well as IT jobs at a very high level, and not bat an eye at the conditions or wages. They are happy to do the work. I am not saying that I would change the US, but we have been insulated for a long time against foreign competition. You travel abroad, and it is common to see people fluent not just in 1 language, but 2 and even 3 languages. I have been in Qatar for nearly a year, and it is rare to see an American over here. I see a lot of Brits, Chinese, Indians, Aussies, and other Asians. Americans are slipping behind, and stick out like a sore thumb in some of the areas I travel because they struggle so much with the cultural, language, and technical understanding of global business. Not all Americans are like this, of course, but there are a lot more by proportion than the nationalities I mentioned. If it were a football game, the US may not be the Detroit Lions, but we are not the Giants, Patriots, or Cowboys either. Probably the Packers or Bears.

As for some of the inflation and gas prices, a lot has to do with increased global demand, but a lot is also driven by the US government's fiscal policy and weak dollar. Essentially, our debt and deficits are coming home to roost, and the dollar has sunk 40% in the last two years because nobody wants dollars any longer. As oil is traded in dollars, the cost of oil is skyrocketing (a dollar that is worth less will buy less oil). I read in The Economist that nearly 25% of the cost of our gasoline increase in the last two years has to do with poor fiscal discipline by the US, and foreign governments no longer willing to buy our bonds to support our deficit. When people do not want dollars, the value falls....and is continuing to plummet. I am in an oil and gas rich country (Qatar), and I cannot go a day without all of the major papers and news talking about how the oil countries need to quit the dollar trade for oil (and their currency peg). People, if that happens, inflation in the US will accelerate and oil will go through the roof.

Unfortunately, nobody has the political stomach to say that falling house prices may actually be a good thing if it make homes affordable for people who have good credit, live below their means, and are not strapped by credit card debt and payments on their big SUVs and F150s (or gas to fill them up). Nor do we have the stomach to say that electing people who pushed big government and cut taxes while starting a war really was not the wisest thing to do financially. As a result, the value of our dollar is taking a beating. We need to cut social programs and/or raise taxes (anyone notice the largest budget item this year is interest payments on the national debt -- essentially, as a nation we are paying the minimum monthly payment on our national credit card known as government debt, and it takes up more of our dollars than even the military). We can't have both. Even without the war in Iraq, we would still run an annual deficit.

No, I am not insensitive to people who are struggling to make house payments, or strapped for cash because they are scraping to get by with food increases. It's a tough situation, but largely one of our own doing. If we really want things like lower gas prices, and stable housing market, then we need to raise interest rates (it will strengthen the dollar), drastically reduce government spending (help cut inflation and strengthen dollar), completely overhaul our education, tax, and legal systems to make it globally competitive. I am a Grand Rapids native, and hope to live my life there once I come back from this desert dust bowl. Being here has been an eye opener, though, and made me aware that America has some cracks in its armor. We are at a turning point, and how we respond will really shape the future.

Sorry for the lengthy reply. I am a newbie, but this topic seems to have resonated with me. Hopefully, I didn't make anyone too upset with my rant.

Take care,

Zhahn Doe

PS -- the end of the world is not approaching. It's just a change that is occurring on the scale of the Industrial revolution. Globalization is here to stay and accelerating. If you cannot find at least 10 countries from 4 major continents, you should be concerned.

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