March 6, 200916 yr Morgan Stanley predicts downturn will be worse than the Depression. Some bleak predictions from Morgan Stanley this morning including the forecast that UK profits could fall by 60% in the current downturn - a worse performance than the great depression of the 1930s. http://www.guardian.co.uk/business/marketforceslive/2009/mar/06/glaxosmithkline-astrazeneca
March 6, 200916 yr They (banks and analysts) are looking at August. Apparently a lot of loans are due that month. There is speculation that many company's/business will not be able to pay or secure further financing.
March 9, 200916 yr The stimulus plan: Where will area dollars go? By Paula Schleis Beacon Journal business writer Published on Sunday, Mar 08, 2009 The money is beginning to flow from Washington, a green river nurturing seeds of economic activity as it winds through the nation's cities and towns. The $787 billion American Recovery and Reinvestment Act promises to improve infrastructure, fuel energy projects and provide financial relief for families. But how will it change the Akron area's landscape? ... http://www.ohio.com/news/top_stories/40914317.html
March 9, 200916 yr Government Sets Us Up for the Next Bust By John Stossel • March 2009 If an athlete injures himself and suffers great pain, we recognize the shortsightedness of giving him painkillers to keep him going. The pain might be masked, but at the risk of greater injury later. That’s a good analogy for the inflationary policies now pursued by Washington. These policies may temporarily “stimulate the economy,” but they also disguise and aggravate the underlying problems. We will all pay a serious price. Policy makers have thrown caution to the wind. Twelve-digit dollar figures are tossed about casually. Late last year, after then-Treasury Secretary Henry Paulson changed course—yet again—and announced that the Federal Reserve would commit $800 billion more in “new loans and debt purchases,” the New York Times reported, “Fed and Treasury officials made it clear that the sky was the limit.” ... http://www.thefreemanonline.org/columns/give-me-a-break/government-sets-us-up-for-the-next-bust/
March 9, 200916 yr Interesting concepts from macro standpoint. I'm not totally buying the 45-54 rule as I think there are so many factors with developing countries, immigration, and the fact that they didn't stop spending money all of a sudden. Just because someone is 45-54 doesn't mean they didn't get divorced and start a new family. I know several people like that. I think it certainly can be seen as a marker from a general macro view. Other factors to consider are the internet's influence in speed of information delivery and sheer amount of people that information can be seen by. Also I feel is under-appreciated is the speed of technology introduction that result in cost decreases from the bottom line or enhancing top line growth from productivity enhancements. How about a positive thought for the recession: Urban sprawl has come to a standstill.
March 9, 200916 yr How about a positive thought for the recession: Urban sprawl has come to a standstill. Ironic! Wouldn't you say? Luster Fading From Last Gilded Age Store Closures May Mark End of Era of Rampant American Consumerism By JOHN HENDREN March 8, 2009 http://abcnews.go.com/Business/Technology/story?id=7033614&page=1 As Circuit City stores disappear from the American landscape -- the company shuttered more than 500 stores on Sunday -- some economists say the end of the chain could also signify the end of a free-spending consumer culture. Circuit City is the latest lesson in how supply and demand can fuel an economic spiral. It works like this. Easy credit leads to a housing boom ... and bust. Troubled banks offer less credit. Businesses that rely on credit to operate cut jobs. Worried workers put off buying big-screen TVs, iPods and computers. Sales slump. And, without the credit to see them through, once-successful chains close their doors for good. That puts more workers on the street and the cycle continues. ... Buffett: Economy Has "Fallen Of A Cliff" Decline Following Billionaire Investor's Worst-Case Scenario, But Says Economy Will Heal http://www.cbsnews.com/stories/2009/03/09/business/main4853556.shtml U.S. Headed For Longest Post-War Recession While Unemployment, GDP Are Not As Bad As 1981-82, Economic Pain More Widespread http://www.cbsnews.com/stories/2009/03/09/business/main4852985.shtml
March 9, 200916 yr $30,000 Millionaires: Douchebags in the Mist Venturing into the Dallas jungle in search of the elusive $30,000 millionaire: Is he myth or fact? Having lived in Dallas for 5.5 years, I can confirm its a fact. http://www.30kmillionaires.com/
March 9, 200916 yr ^^ "I actually think this will be a permanent shift in the way that Americans spend money... (from the Luster Fading From Last Gilded Age Store Closures May Mark End of Era of Rampant American Consumerism By JOHN HENDREN article) I agree, and I think it was someone on this board (dmerkow?) who defined a depression as a recession that causes a permanent shift in the behaviors of people. I've been turning that statement over in my mind for some time, and I think it is a very good description of the difference between a depression and a recession. So, maybe we aren't in the "Great Recession". Maybe it really is a "Moderate Depression". (I'm still not looking for anything approaching a 1930s style Depression)
March 10, 200916 yr Is the Future Going Down the Drain? Baby Boomers Going Bust By Alexander Zaitchik, AlterNet. Posted March 6, 2009. Millions of boomers born into the dawn of the largest economic expansion in history are being forced to re-imagine their retirement futures. http://www.alternet.org/workplace/130361/is_the_future_going_down_the_drain_baby_boomers_going_bust/?page=1
March 10, 200916 yr THOMAS KOSTIGEN'S ETHICS MONITOR The $700 trillion elephant Commentary: Gargantuan derivatives market weighs on all other issues By Thomas Kostigen, MarketWatch Last update: 12:01 a.m. EST March 6, 2009Comments: 355SANTA MONICA, Calif. (MarketWatch) -- There's a $700 trillion elephant in the room and it's time we found out how much it really weighs on the economy. Derivative contracts total about three-quarters of a quadrillion dollars in "notional" amounts, according to the Bank for International Settlements. These contracts are tallied in notional values because no one really can say how much they are worth. http://www.marketwatch.com/news/story/The-700-trillion-elephant-room/story.aspx?guid={024DB809-8506-4AA9-83BB-B053FD4E1C11}
March 10, 200916 yr I just found this pretty funny website that shows covers of The Economist from 2004 until 2008. It looks like they were ahead of the curve too: http://gawker.com/5065684/the-greatest-depression-as-seen-on-the-covers-of-the-economist It's always fun to get slammed by a disaster and then to look back and discover that some people had been warning you about it forever. Well, The Economist has been publishing scary covers warning of DOOM for years, and they are compiled in a nifty slide show here. We've put together a tasty little sampler after the jump. goodness. they sure were.
March 10, 200916 yr Author Too big to fail? 5 biggest banks are 'dead men walking' "WASHINGTON — America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show. Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days. The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring. ... http://news.yahoo.com/s/mcclatchy/20090309/pl_mcclatchy/3184724;_ylt=AhG5kViti9PVN9_oFnKp5sADW7oF Two things jump out in this article. One, the taxpayer will not be able to bail these guys out and two, trust is gone on Wall Street. What a sad state of affairs for the US and its economic reputation.
March 10, 200916 yr The other thing is that it is pretty clear that U.S. is actually bailing out the entire banking system of the developed world. All that money to AIG and Citi that seems to be disappearing is really ending up in the Banks of Europe and Japan. It would be nice if people just manned up and started admitting that we've actually built a completely international banking system built upon the U.S. dollar and that means we call the shots going forward - a lot of the bad bets made by these banks were done as part of regulatory arbitrage between U.S., GBR and the Euro continent. Pissing off key allies like Gordon Brown, Sarkozy, and Merkel seem like a really bad idea right now.
March 10, 200916 yr Author Interesting read from Minyanville. Big Ben Chimes on Wall Street Todd Harrison Mar 10, 2009 9:40 am Step inside, walk this way, you and me Ben, hey hey! I return to my turret to find Big Ben on the little screen and his words all over my eight other screens. As I scrolled through his vibe, a few headlines stood out. Among them: The Fed needs to buttress protection for money market funds (this is huge from a "social order" perspective). He urges authority to take over the biggest financial firms (read: nationalization, temporary or otherwise). Fed should play some role in broader risk management (HELLO McFly!--Where was this proactive initiative when the writing was on the wall?) Fed will seek legislation 'on its own account'' (help me here--does this mean they, themselves, will push for legislation or they want legislation to enable 'its own account,' namely Fed bonds). And finally, and perhaps most importantly, he said he wouldn't support suspending mark-to-market." "....One thing for certain, Minyans, something big is coming down the pipe. Take a deep breath and remain lucid--this is what we've trained for." http://www.minyanville.com/articles/YHOO-Bernanke-GE-Fed-drys-spx/index/a/21537
March 10, 200916 yr oh boy, here's another personal snapshot: my neighbor in our apt building, who is another ohioan from medina originally, just lost his job. he worked in landscaping in central park for 23 years! yeah, they cut everyone who was there for a long time. nice, huh? get this -- he took care of the john lennon imagine area, w/ design, plantings, cleaning up ashes, melted candles, etc.. so if you ever visited the "imagine section" of central park and liked how it looked, think of him. we're gonna help him find something. sheesh, sorry i had to vent that.
March 11, 200916 yr Author Anyone who believed Bernanke's 'projections' yesterday are not playing with a full deck. He and the FEDs tolds us subprime was contained, that the banks were fine, that the economy would not go into a recession, etc.... There comes a point in time when even the 'sheep' figure out the are being led to the slaughter. Foreclosures are going to skyrocket this year and Alt-A will only add more damage to the disaster. The banks will continue to bleed and the government will continue to try every conceivable bailout option they can come up with. But, the damage is already 'cooked on the books'. Will foreclosures forestall market rebound? Commentary: Latest numbers show plenty more pain ahead "LONDON (MarketWatch) -- Investors may have breathed a collective sigh of relief at Fed Chairman Ben Bernanke's reassurance that the recession will be over by Christmas -- if he can just get those wacky banks fixed -- but U.S. home foreclosures are sending a very different message. The numbers for February were appalling, up 67% from January to 121,000, and nearly 20% above the previous monthly record, set last September. Worse yet, the number of homes in pre-foreclosure proceedings is even higher. All of this is occurring in an environment where the U.S. government is pressuring lenders to hold off, and where the Obama administration has been at pains to front billions to prevent further foreclosures. ... -- Tom Bemis, assistant managing editor http://www.marketwatch.com/news/story/Will-foreclosures-forestall-market-rebound/story.aspx?guid=%7BF680C35A%2D89FC%2D4D0A%2D90E4%2D245ABCDAB9B5%7D
March 11, 200916 yr ^ To paraphrase Michael Redmond.... If you keep crying "end of the recession", eventually you will be right. As we've said before, there is a difference between the 'end of a recession' (when the trend stops going down), and the public perception that growth has started (trend line goes up at a steep enough curve that people notice it). I suspect we'll be in the middle ground for a LONG time. So it becomes possible for both the government and the populous, who hold opposite views on the state of the economy, to both claim to be right. There are enormous losses at the banks that have not been publicly put on the books. To do so all at once would collapse the system. So the losses will be booked slowly, drawing out the losses. They'll probably book losses each quarter roughly equivilent to the positive cash flow they get that quarter. When the predessesor to this thread started 14 months ago, we said this could play out in one of 2 ways... let things correct quickly and then got on with the economy, or hold things back so they correct very slowly. Government intervention has clearly brought on the later course. We could have had an absolutely brutal recession and gotten over this quickly, or a slow-drawnout decline and take a decade to get the corrections in. Politically, the decade is more palatable than the short-term economic chaos.
March 12, 200916 yr People don't like 19C style economic cycles (which is what the shorter version you described usually was). The modern consumer economy was built upon the premise that the gov't will prevent sharp swings in the business cycle and we will define ourselves by what we buy (very roughly speaking).
March 12, 200916 yr The modern consumer economy was built upon the premise that the gov't will prevent sharp swings in the business cycle The implementation as of late has been one-sided. Mitigate on the downside, but amplify on the upside! That model has lead to the current problems. Greenspan, regardless of what he now says as he attempts to rewrite his own history, was terrible at taking the punch bowl away when the party started to get out of control. So, we have a failed implentation of an economic model. Is the theory (mitigate both upswings and downswings) bad? Probably not. Is the Model bad? Well, let's just say there are not enough safeguards to ensure that it is implemented the way it should be. Humans have short memories. A question is, how long has the model been impropery (one-sideded) implemented? Since 2000? Since 1987 (start of Greenspan)? Since 1983? (end of last major recession?) Since 1973 (approx end of gold standard)? Since Bretton Woods?
March 12, 200916 yr Yes this is an op-ed... but it really gets at the heart of the issue, in my view. You can't simultaneously claim to have both billion-dollar brilliance AND no clue what was going on. A Tsunami of Excuses WILLIAM D. COHAN Published: March 11, 2009 http://www.nytimes.com/2009/03/12/opinion/12cohan.html?pagewanted=1&_r=1&ref=todayspaper IT’S been a year since Bear Stearns collapsed, kicking off Wall Street’s meltdown, and it’s more than time to debunk the myths that many Wall Street executives have perpetrated about what has happened and why. These tall tales — which tend to take the form of how their firms were the “victims” of a “once-in-a-lifetime tsunami” that nothing could have prevented — not only insult our collective intelligence but also do nothing to restore the confidence in the banking system that these executives’ actions helped to destroy. Take, for example, the myth that Alan Schwartz, the former chief executive of Bear Stearns, unleashed on the Senate Banking Committee last April after he was asked about what he could have done differently. “I can guarantee you it’s a subject I’ve thought about a lot,” he replied. “Looking backwards and with hindsight, saying, ‘If I’d have known exactly the forces that were coming, what actions could we have taken beforehand to have avoided this situation?’ And I just simply have not been able to come up with anything ... that would have made a difference to the situation that we faced.” ... Could these Wall Street executives have made other, less risky choices? Of course they could have, if they had been motivated by something other than absolute greed. Many smaller firms — including Evercore Partners, Greenhill and Lazard — took one look at those risky securities and decided to steer clear. When I worked at Lazard in the 1990s, people tried to convince the firm’s patriarchs — André Meyer, Michel David-Weill and Felix Rohatyn — that they must expand into riskier lines of business to keep pace with the big boys. The answer was always a firm no. ...
March 12, 200916 yr Author We can only hope and dream wall street will come clean, truth serum is administered and these executives go to jail. I got to be honest, I am not very hopeful this will ever happen in a significant way.
March 12, 200916 yr It would appear you are correct, not much will come of all this... Cornerstone developer Joanne Schneider sentenced to three years Posted by Patrick O'Donnell/Plain Dealer March 12, 2009 12:01PM http://blog.cleveland.com/metro/2009/03/joanne_schneider_sentenced_to.html CLEVELAND — Joanne Schneider, who ran what prosecutor's call the second largest security fraud ring in state history, was sentenced to three years in prison this morning after pleading guilty to a series of fraud charges. The three-year sentence was the minimum allowed for the crimes she plead to. Cuyahoga Common Pleas Court Judge Eileen A. Gallagher -- who earlier sentenced Schneider's husband, Alan, to probation instead of jail for his participation in the ring -- could have given her a much longer sentence. Assistant County Prosecutor Dan Kasaris said he was very disappointed in the sentencing, echoing the sentiment of several defrauded investors who attended the hearing. ...
March 12, 200916 yr Author Ok, this is just to funny to pass up. Its an article on housing, etc... in Gainesville, Florida. Check out the names in this article. The news writer had to have fun with this one. :lol: Spring tour showcases historic Gainesville homes ...."Homeowners in Duckpond are proud of the restoration, renovations and maintenance of their historic homes," Scott said. "My neighbors graciously share their experiences and tips." Another home on a tour will be the 1928 Matthews house, now owned by Marilyn Wall Asse, a co-founder of the Hippodrome State Theatre, and Carlos Asse, a set designer at The Hipp. It, too, was a rental house when it was first built. The first renters paid $50 a month. The Asses bought the house in 2000 and have renovated the kitchen, bathroom and front closet. The mechanical systems and wiring were updated and ceilings re-plastered. Carlos Asse designed a deck, which Marilyn Wall Asse built. Marilyn Wall Asse also has worked for four years on her gardens in the backyard, mostly at night with an $8 shovel from Wal-Mart. "The deck and beautiful gardens make us feel like we live in paradise," she said. The 1947 Lannie and Bess Thompson house owned by Amanda Bliss and David Menet, the 1913 Kelley-Swords house owned by Judith Russell, the 1926 Adkins-Cone house owned by Cindy and Mike Strange and the 1926 Duncan house owned by Sue Jester conclude the Spring Promenade's six featured houses...." http://www.gatorsports.com/article/20090311/ARTICLES/903111006
March 12, 200916 yr If one buys the argument that the business cycle can only be suppressed rather than eliminated (which is used by some to argue that the Great Depression was so great because the economic cycle was disrupted by WWI), then I guess it goes all the way back to Bretton Woods, but I think the source is probably found in the 70s and the failed attempt to manage the economy using primarily Keynesian tools. The choices unleashed by the stagflation pushed back toward a more 19C financial capitalist system (which was different from the industrial capitalism of the 30s-70s), which has a sharper boom/bust cycle. I think fundamentally the war was more expensive and financially damaging than we all realize. Also the folks in charge gambled that they could pump up the economy to get through all the problems with the social safety net without damaging the economy with much higher taxes or have to ask for politically risky things like means-tested Social Security/Medicaid. Europe and Japan was entirely complicit because they have similar demographic issues.
March 13, 200916 yr We can only hope and dream wall street will come clean, truth serum is administered and these executives go to jail. I got to be honest, I am not very hopeful this will ever happen in a significant way. Sadly, I've got to agree with this. I'm hoping that can change in the near term. I don't want the US becoming France. And I'm not speaking of socialism, I'm speaking of guillotines followed by Napoleon.
March 18, 200916 yr Author I think this is a clear sign that the economy is still in freefall (the 'new' data must be really scary). It also shows that foreign buyers of our debt (Treasurys) is deminishing significantly, making the FEDs the last resort of buying our debt. It also shows that Bernanke was talking out of his *** about a recovery by the end of the year. They already removed the recover comments. THE FED Fed decides to buy Treasurys FOMC sounds more pessimistic about the economy By Greg Robb, MarketWatch Last update: 2:40 p.m. EDT March 18, 2009Comments: 239WASHINGTON "(MarketWatch) -- The Federal Reserve on Wednesday surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the struggling American economy recover. The Fed also tweaked its other credit-easing programs by committing to buy more mortgage-backed securities and agency debt and include more asset-backed securities under a new credit facility starting this week. Most analysts had thought that the Federal Open Market Committee - the policy making arm of the central bank -- would keep the weapon of buying Treasurys in reserve in case of a crisis. The decision to buy Treasurys shows that the crisis is here. ... http://www.marketwatch.com/news/story/Fed-decides-buy-Treasurys/story.aspx?guid=%7B99A44732%2D2AD2%2D4F2F%2D833A%2DB7FFFC85451D%7D#comments
March 19, 200916 yr Always look on the bright side... Economic woes slow US migration from rust belt to Sun belt http://www.wkyc.com/news/world/news_article.aspx?storyid=109585&catid=22 WASHINGTON -- The latest U.S. Census figures show the nation's economic crisis has many Americans deciding to stay put in rust-belt cities such as Cleveland and Pittsburgh. ...
March 19, 200916 yr Always look on the bright side... Economic woes slow US migration from rust belt to Sun belt http://www.wkyc.com/news/world/news_article.aspx?storyid=109585&catid=22 WASHINGTON -- The latest U.S. Census figures show the nation's economic crisis has many Americans deciding to stay put in rust-belt cities such as Cleveland and Pittsburgh. With finances squeezed, fewer Americans are migrating to Sun Belt hot spots, such as Atlanta, Las Vegas and Phoenix. Census figures released today highlight a U.S. population somewhat locked in place by the severe housing downturn and economic recession. The population figures as of last July show growth slowdowns in once-booming metropolitan areas such as Atlanta, Las Vegas and Phoenix. © 2009 The Associated Press Didn't I mention this to some hillbilly's in another thread?! ::)
March 19, 200916 yr The data coming out show a very low bottom rather than a continuing freefall - but certainly no growth going on.
March 20, 200916 yr Author The US and World car crisis in photos. http://www.guardian.co.uk/business/gallery/2009/jan/16/unsold-cars?picture=341883529
March 24, 200916 yr Author I know I have discussed this before. But, I really think this may be one of the biggest pieces of this economic collapse. The effort to replace the dollar with a world currency. This would have huge implications to the US and to the world power system. I saw were China just announced their support for this as well. U.N. panel says world should ditch dollar By Jeremy Gaunt, European Investment Correspondent "LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar. Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket. Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform. ... http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318
March 24, 200916 yr The Chinese do this at the beginning of every administration. They do a gut check, so we'll see if the current folks Pass or Fail.
March 25, 200916 yr Author While its has become very obvious the Federal Government likes to 'overstate' data in today's economy and then revise it lower in the following months when all eyes are watching something else. It is refreshing to see a Federal agency basically admit they are stacking the deck when it comes to data collection. It a shame the confidence in the 'official' data is being lost across the US and around the world. FEDERAL HOUSING FINANCE AGENCY "WASHINGTON, DC – U.S. home prices rose 1.7 percent on a seasonally-adjusted basis from December to January, according to the Federal Housing Finance Agency’s monthly House Price Index. December’s previously reported 0.1 percent increase was revised to a 0.2 percent decline. For the 12 months ending in January, U.S. prices fell 6.3 percent. The U.S. index is 9.6 percent below its April 2007 peak. The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally-adjusted monthly price changes from December to January ranged from –0.9 percent in the Pacific Division to +3.9 percent in the East North Central Division. Month-to-month changes in the geographic mix of sales activity explain most of the unexpected rise in prices in January. The January home sales reflected in the FHFA data disproportionately occurred in areas with the strongest markets." http://www.ofheo.gov/newsroom.aspx?ID=500&q1=1&q2=None
March 25, 200916 yr Bruised AmEx Returns to Roots By ROBIN SIDEL American Express Co., after outclassing its rivals for the past 50 years, is looking uncomfortably like just another credit-card company. AmEx is reeling from late payments and defaults by customers it aggressively wooed before the U.S. economy tumbled into recession. Its sterling reputation for customer service is under attack from longtime clients. Even cardholders with plenty of money are putting away their plastic, pushing shares of the New York company to a 12-year low. "If we had known this was coming, we would have ratcheted back some of our investment and put tighter guardrails on our credit decisions," says Alfred Kelly, the company's president. In an attempt to mitigate the damage, AmEx is retreating from an ill-timed expansion of its credit-card business. The company is now going back to its roots as a charge-card issuer to well-heeled Americans who can pay off their balance every month. It also is getting tough on many of the same customers it courted when times were good. ... Write to Robin Sidel at [email protected] http://74.125.95.132/search?q=cache:KkJ7zj51SYUJ:online.wsj.com/article/SB123595172956305055.html%3Fmod%3Drss_whats_news_us+Bruised+AmEx+Returns+to+Roots&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a
March 26, 200916 yr Trust in the government certainly should be lost. Check out how we compile unemployment statistics. Our government cherry picks stats to try to make ourselves look good compared to our friends in Canada and Europe. The reality couldn't be further from the truth. It's a completely apples to oranges ways of measuring unemployment. We do not include up to half of our unemployed people in our official unemployment rate. Basically, we're lying to the rest of the world. I posted an article on it in the Toledo economy section: http://www.urbanohio.com/forum2/index.php/topic,18572.0.html that's ok, the rest of the world does that exact same cherry picking thing with grade school/hs test scores and we don't.
March 26, 200916 yr All data is at the end of the day a kind of fiction. True objectivity is a lie, as long as the index component is mildly reliable it really doesn't matter what the number actually is.
March 27, 200916 yr Author So, how deep has this recession gotten, so far? Worst quarter for the economy since the 1930s In terms of lost wealth, lost jobs, falling output, the fourth quarter stands out "WASHINGTON (MarketWatch) -- Now that the books are closed on the fourth quarter's performance, it's fair to say that the final three months of 2008 will go down as the worst quarter for the U.S. economy since the 1930s. In terms of the things that matter most -- output, income, wealth, profits, foreclosures and job growth -- the fourth quarter was a disaster. If you look at each of those categories in isolation, we may have seen worse on rare occasions, but when you examine the big picture, it was the worst since the Depression." http://www.marketwatch.com/news/story/Worst-quarter-economy-since-1930s/story.aspx?guid=%7B564B8982%2DACE7%2D464C%2D914E%2D24C37B5C1B21%7D What do you guys think? Have we hit the bottom, is the worst over, will we continue to stay at this level for a while, will we go lower, or are we starting to rebound? I think we have hit bottom for the time being. If commercial real estate goes bust later this year, and job loses keep growing, banks and other will take another leg down and so will the economy. The next few months are critical, they will either make this the bottom or we are going to have another big drop.
March 27, 200916 yr Personally, I'm anticipating another leg down this fall... due to commercial lending problems as you pointed out. 1) The US has suffered a LOT of job losses, with a lot more to come. From what I've seen, spending drops usually lag job losses by a period of time. I don't think that lag period has truly kicked in yet. So far, spending cuts have centered on conserving cash, not income loss. 2) Commercial lending default rates are starting to rise very quickly. While it's a bit smaller than the housing market, coming on top of the foreclosure losses will really hamper the bank's ability to make loans. I think the banks are in the process of reducing their leverage from something like 40:1 back down to a more traditional 15:1 ratio. One way to do that is to increase your capital reserves while slowly allowing the loan level outstanding to fall (slowly recognize the losses). All the money the gov is pumping into the banking system is building up the cash reserves which will allow the banks to show a better leverage number and to allow the banks to slowly recognize losses (instead of all at once). I think this is where most of the stimulous money is going. And I think the banks will be slowly recognizing losses for many years to come. I think people are tired of the doom and gloom, and will be ready to spend for awhile. That will help the economy over the next several months, but consumer ability to sustain that spending will fail, IMO. 3) I think the stock market will rally some more thru the summer, then will drop again. People are still expecting corporate earnings to hold up, and to continue growing in the near future. By the Fall, it may become clear that corp profits are not going to hold up well and future profits will look a whole lot less rosy. So I see another leg down in the stock market this fall. 4) I expect interest rates to start to rise as Treasury sales of bonds will find less appetite. The gov't borrowing has gone OK lately, but there are signs it's starting to have problems. And we need to borrow lots more. I think that soon the appetite for US gov't debt will fail to live up to the need, and interest rates will start to rise noticable. That will create even more headwind for the economy to recover. 5) But more importantly, I think this Great Recession will trigger a fundamental shift in American's living standards. Many Americans, the US Government, and the country as a whole (current account measurements) have been living beyond its means for some time, particularly since the early/mid 1980s. You can sustain this for a certain period of time thru wittleing down your savings (including ATMing the house & borrowing against the retirement fund) and borrowing against future earnings (CC, big mortgages, student loans, etc), but eventually it will all collapse. The US consumer, government, and nation has been borrowing to sustain it's standard of living. In a macro sense, all this borrowing should lead to a drop in the standard of living of its citizens. We've been able to delay this drop for 20+ years, but I don't think we can delay it any longer. I think we are headed for a long period of re-adjustment - a falling standard of living, a return to living on what you earn (which will be falling in both real terms and relative to much of the world). There will be many efforts along the way to thwart this, but they will only drag-out/delay the outcome for a few years. I could be all wrong on this. And I don't think it will be all doom and gloom. The will be pockets of the economy that do very well. And there are a lot of great ashes around for real growth to emerge from. Many ashe piles will prove fruitfull. But as to the days of all sunshine for the US, it's over for sometime.
March 27, 200916 yr 5) But more importantly, I think this Great Recession will trigger a fundamental shift in American's living standards. [glow=red,2,300]Many Americans, the US Government, and the country as a whole (current account measurements) have been living beyond its means for some time, particularly since the early/mid 1980s.[/glow] You can sustain this for a certain period of time thru wittleing down your savings (including ATMing the house & borrowing against the retirement fund) and borrowing against future earnings (CC, big mortgages, student loans, etc), but eventually it will all collapse. [glow=red,2,300]The US consumer, government, and nation has been borrowing to sustain it's standard of living. [/glow]In a macro sense, all this borrowing should lead to a drop in the standard of living of its citizens. We've been able to delay this drop for 20+ years, but I don't think we can delay it any longer. I think we are headed for a long period of re-adjustment - a falling standard of living, a return to living on what you earn (which will be falling in both real terms and relative to much of the world). There will be many efforts along the way to thwart this, but they will only drag-out/delay the outcome for a few years. The credit card shoe has yet to fall. This is far from over.
March 27, 200916 yr I think the card thing is starting to happen. A lot of people I know (our family included) are starting to get letters from credit card companies for which we have accounts in good standing for a long period of time that state they are jacking up the APR to some insane amount, effective in 30 days, and your only recourse is to close the account (and you can keep the terms as is until your balance is paid off). I think this is a sign the banks are trying to get a lot more money out of people for whom they are floating credit card loans. Many people are not in the position to have the cards be closed as they still use them, so they will be forced into even more debt and possibly into bankruptcy because of it. I agree, it's going to get worse still before it gets better.
March 27, 200916 yr I think the card thing is starting to happen. A lot of people I know (our family included) are starting to get letters from credit card companies for which we have accounts in good standing for a long period of time that state they are jacking up the APR to some insane amount, effective in 30 days, and your only recourse is to close the account (and you can keep the terms as is until your balance is paid off). I think this is a sign the banks are trying to get a lot more money out of people for whom they are floating credit card loans. Many people are not in the position to have the cards be closed as they still use them, so they will be forced into even more debt and possibly into bankruptcy because of it. I agree, it's going to get worse still before it gets better. Yep, i think I posted the American Express information earlier. They got away from their core business "high yield - High spending" charge cards. They started offering credit cards. AMEX is now offering people $300 to close accounts.
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