i third the motion, NBER will capitulate the week after the election. Thank goodness we have the olympics to remind us how silly politics truly is!

Professor "Lemming" is more like it...

Ciao
MS

Between gov't investment to re-arm in defense against Russia and to replace equipment expended in Iraq plus heavy infrastructure investment to allay this possible recession and fix what needs fixing, I see a couple of years of flat and then another bounce that will make the last one look like a sidewalk skip by a pre-teen playing hopscotch.

Now all we need is a forward looking president/congress to approve some massive gov't investment in future assets be it a Pluto shot, mass transit to North Dakota, or universal health care or all o f the above ..the economy sucks now but the future is lovely.

And I haven't even mentioned the hungry, working, thinking folks who are still doing whatever it takes to be here from whatever place they started.

Gotta love it...

Possible indications & areas of recession to check on:
~diminished borrower capacity
~diminished collateral
~mortgage insurance stability
~FNM & FRE stockholder losses?
~Widening spreads
~Debt offerings tougher to unload
~Unemployment increasing
~Increasing foreclosures
~Increasing NODs
~State budget deficit
~Values of CDOs & CDSs
~Banks scrambling for cash and struggling to refinance their own debt
~Inadequately funded HOAs
~Covered bonds?
~Unsustainable revolving consumer debt?
~business credit lending restrictions
~consumer credit lending restrictions
~mortgage debt lending restrictions
~credit contraction?
~non-warrantable condos can't be sold to GSEs which are failing anyway
~banking transparency issues
Are we at the bottom of this mess yet?

"Fuzz Math" Crash Course Chapter 16: Fuzzy Numbers - consumer price index | Crash Course Videos at Chris Martenson - consumer price index, cost of living, data manipulation, deficit, economic statistics, economy,, GDP, growth rate, hedonics, Inflation, Medicare, rece

Mauldin's newsletter highlights an excellent Rosenberg piece today. He notes that Japan turned down in 1990 yet their GDP didn't post back-to-back negative quarters until 1993.

...forgot:

CR: can you offer examples of a "V" shaped housing bust?

the jobless recovery somehow morphed into the full employment recession.

Kevin Drum had a good post recently which I'd like to share:

"PRIORITIES....Here's the first graf of today's LA Times story on the economy:

Consumer prices took another sharp jump last month with high energy prices fueling a 0.8% monthly increase — nearly double analysts' predictions — and chalked up a 12-month inflation rate of 5.6%, the highest since 1991, the Labor Department reported today.

ZOMG! Inflation is out of control! Now, here's the seventh (i.e., nearly last) graf of the story:

Joel Naroff of Naroff Economic Advisors said that other economic indicators released today were equally worrisome. The Labor Department also reported that workers' average weekly earnings declined by 0.8% in July and 3.1% over the last year, even after adjusted for inflation.

Yawn. People are making less money than before. Whatevs.

Question for the folks who populate our newsrooms: Why is it that a 0.8% rise in inflation, the biggest since 1991, is huge, headline news, while a 0.8% decline in wages, the biggest since 1990, is only barely worth mentioning? In a newsroom with some connection to the normal world, wouldn't it be the other way around?

But I guess I should be grateful. The Wall Street Journal put the earnings news in the 15th paragraph of their story, the Washington Post relegated it to literally the very last paragraph of theirs, and the New York Times didn't bother to mention it at all. So on second thought, good job, LA Times. Yippee."

He's right... I didn't see much discussion of the wage price decline anywhere. Now, maybe there's some seasonality to this data that I'm missing, but an almost 1% drop in wages seems huge.

Gee, anyone wonder why Thornberg left?

Ross,

"The only economists I trust are Lefty and Misean "

I do my best after a stop by Lefty's.

Sad really...for me...have you seen Lefty's prices?

Cheers,

Following CR's link:

"You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery."

They'd have to pay me $10 just to read it. What kind of con are these idjits running? Do I look that stupid...erm check that. Do they think there are that many stupid people out there...erm, check that....

What a clever bunch of thieves. I gotta get into that business.

Cheers,

Taxing my grey cells but I recall a depression defined as 6 consecutive negative GDP Q's.

A reasonable person would pooh pooh the official rate of inflation and conclude we have had 3 negative Q's so far.

Misean, does Lefty still stock Ripple?

Ross,

Well you'd best ask Lefty. Ripple has never been on my radar screen, and I stopped drinking Old English 800 sometime shortly after high school.

Cheers,

Let me see if I understand.

If there is such a thingy as a growth recession, that would make a real recession a growth depression?

Got it.

Ok, I have a problem with this crap;

Re: " The temporal ordering of the spending weakness is"

FIrst, I would like to point out that his theory and model are based on historic patterns, and when he starts out by suggesting that the dynamics of this situation are correlated to historical context, is bullshit!

From June:

Edward Leamer, head of the UCLA Anderson Forecast Center, said that thanks to the combination of high spending in recent years and rocketing fuel costs, the consumer-engine of U.S. economic growth is close to failing.

"The global markets are telling us we are not as wealthy as we think we are and that we have spent beyond our means," he said. But Leamer said while the engine may be broken, the U.S. economic model is not: it just needs a new engine.

Thanks to the "rosy spot" of exports helped by a weak dollar, plus strength in commodities like coal and grains, the UCLA Anderson Forecast Center predicts the U.S. economy will suffer only a mild recession this year.

But without that retail engine of growth, "our long-term prospect is for sluggish U.S. economic growth," Leamer said.

"Unfortunately, there is nothing on the horizon in the U.S. economy that will take over from the consumer."

@ Don

So, 88k job losses are the real number? Of course that counts illeagals, si?

In America goneby, at least we had jobs to lose.

Look, the Fed lost the ability to dis-intermediate and re-intermediate the economy with the financial reform act of 1980. That resulted in the RTC, junk bonds, early 90's bank bailouts and the total destruction of the Western banking system as we now knew it.

Any government stat that is not properly vetted is worse than usless.

Misean,

He sounds like he has a grant from NAR to help keep grad students funding for the rest of summer, but IMHO, NAR is running low on funds and thus the bias in the model will change...

Re: Leamer and CR both wrong

There is mutual concurrence here and it is possible that CRs vacation was too relaxing. This episode is almost like the day Tanta had her head bit off for supporting Fannie Mae ... or was that NAR or SIFMA, I forget now, there are so many things to keep on top of .... oh yah, this guy is all over the web talking his book that there isnt a recession, which is probably related to the theories that inflation is mild and contained.

Re: Make it 1,500

I see your 1500 and raise you 500, make it 2000

As a free addition to the most recent comment, I'd like to suggest that his pontification from June is proof that he is way off base and should probably look at teaching philosophy or art!

Pardon my FRENCH, but is he fuc-ing blind???

"This time, what happens in housing stays in housing," Leamer said, as many employers worried about the economy hold off on new hires but decline to cut staff.

Broadcast: 24/02/2003
Analyst questions Bush's economic plans
Lateline - 24/02/2003: Analyst questions Bushs economic plans . Australian Broadcasting Corp

KEN COURTIS, VICE-CHAIRMAN, GOLDMAN SACHS ASIA: He wants to accelerate and amplify that with the dividend tax cut as well.

So far it hasn't worked.

These big tax cuts last year and the year before haven't really lifted the economy.

In fact, I think now the threat of these big tax cuts is leading to the budget deficit to explode in a way that will later trouble dramatically troubled bond markets.

And if you think of it, Tony, what's been driving the economy in the last two years, if we can use that word driving the economy, keeping it afloat, has been the consumers spending money on houses and on cars.

And that housing and car spending is directly driven by this low, low trend we've had in interest rates.

This ballooning now of the deficits is going to start driving interest rates back in the other direction.
That'll kick the legs from underneath that part of the economy that's been held up so unless something else clicks into gear like corporate spending or exports, and neither of them look like they will soon, this could be a very high-risk strategy that he's taken.

TONY JONES: Are you suggesting that it's inevitable that interest rates in America at least, and presumably in the rest of the world, will go up?

KEN COURTIS: I think that rates are very low now.

They're the lowest we've seen in almost five decades.

They may go a tiny, tiny bit lower.....

Don,

You might want to drop by Mish's blog...read his thoughts on the birth/death model.

I agree it will be 'L'-shaped. But the author keels over dead as he is almost finished writing that 'L'.

DUH!

OT:
The July figures sales figure was the first since September to rise above the year-ago total.

July's median price for a Southland home was $348,000, down 2 percent from $355,000 in June and down 31.1 percent from $505,000 for July 2007.

Broken out separately, Los Angeles County home sales fell 3.2 percent in July compared with a year ago, while prices dropped 26.9 percent.

The county's median price last month was $400,000, down from $547,500 during the same period a year earlier.

Foreclosure resales continue to play a big role in Southern California's housing market, accounting for 43.6 percent of all resales, according to MD DataQuick.

"What we're looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages," MDA DataQuick President John Walsh said in a statement.

Using flawed data to produce an algorithm for future forecasting is about as reliable as a dartboard. Obviously, from the insolvency data on financials, unemployment leaps, inflation and confidence indicators, and debt-to-income ratios we are in for deep, deep decline. Until all this garbage is processed, losses fully taken, and wind knocked out of paper profit takers, this productive energy of an economy will languish. Only an eggheaded fool who has never transitioned from lowest of blue collar to higher white collar could be so delusional. Housing, transports, retail, emerging markets, PM, commodities, FF gap and borrowing terms, Libor, TED spread, VIX--all are screaming DEPRESSION. But the shills wish to convince otherwise. Of course, there are the wise and other wise.

Let's hope that we are already in a recession. At least a moderate one.

Because if this is not a recession yet....It'll really suck once we get there.

Merrill Lynch analyst Kenneth Bruce also said in a note to clients that Freddie Mac may have to raise $5.5 billion in capital as early as the third quarter, instead of the second quarter of 2009.

Credit default swaps on Fannie Mae and Freddie Mac's subordinated bonds each widened by around 27 basis points to around 305 basis points, or $305,000 per year for five years to insure $10 million in debt, according to Markit Intraday.

March 10, 2008: Meanwhile, spreads on the company’s credit default swaps have widened dramatically. The company’s one-year CDS spreads have widened to 800 basis points from about 550 basis points, and the five-year CDS spreads have widened to between 540 and 580 basis points from 450 basis points Friday.

Mar 18, 2008: Spreads on Bear Stearns CDS soared to 1,000 basis points Friday - meaning it cost $1 million to insure against a default of $10 million face value of bonds. Those spreads have since narrowed to around 350 basis points, or $350,000 per $10 million in insurance, in light of the prospect that JPMorgan Chase will take over Bear’s obligations. So a seller of a Bear Stearns credit default swap on Friday, having taken in $1 million in premium, can now turn around and protect himself against a default in Bear Stearns for $350,000. That translates into a $650,000 gain -and the potential profit stands to get bigger as the close of the transaction approaches and Bear spreads move more in line with JPMorgan’s, which are around 115. Those dynamics give hedge funds a big incentive to make sure the deal goes through.

Don't know how to link. Old dog, no new triks.

Everlast "Saving Grace" U tube.

Guess we all need Earl now.

"I can't wrap my head around the fact that any "Professor" is throwing themselves behind a model which hinges on the fact that everything will be the same after the recession as before."

Hint our crop of brain surgeons on Wall Street and the banks attended classes taught by these clowns.

Your right it is not a recession, The economy is still moving along, yet we are in more of a stress-cession:

Am I still going to have a job Monday:

Am I going to be able to afford to heat my home this winter.

Are we headed toward a standoff with Russia?

Iraq.

Family illness

and so on and so on....I know I live it, all 4 wheels spinning, but you always seem to be lagging behind at times, or caught off guard....Oh and I to live debt free, ......but am I ?

Thanks Matt already did.....And yes I did inhale

Yes and no, I took the brued to a fun park over the weekend, and the place was standing room only, but yes I will agree the economy is contracting at rapid speed.

"This time, what happens in housing stays in housing"

That's great... too bad there's an energy crisis at the same time.

Sorry, forward slashes don't paste in here ... hmmm?

"In the beginning, the birth of pure white light.

In the end only entropy, a darkness none can fight."

I'll play devil's advocate to mp:

It's clear how Leamer defines a recession (From the WSJ article):

In his paper, Edward Leamer created an algorithm of three economic indicators — payroll employment, the unemployment rate and industrial production.
[...]
The thresholds include falling industrial production for six months at a rate of at least 6% per year; declining payroll employment for six months at a minimum 1% rate per year; and a six-month rise in the unemployment rate of at least 0.8 percentage point.

But we're not in a recession now because:

As for 2008, the unemployment rate satisfies the recession threshold, but the decline in payrolls hasn’t hit the recession cutoff yet, while “the problems in industrial production are nowhere close to the limit,” Leamer wrote.
His paper examined data through June. In an email, Leamer said those trends hold even including July data released since his paper was written.

To summarize,
- he has an algorithm that has “nearly perfectly reproduces the NBER official peak and trough dates.”
- he clearly tells us what his three criteria are,
- and he tells us not all three of his criteria are met at this point.
- Thus, he concludes we're not in a recession yet.

I think people are arguing with his conclusion without making an attempt to understand how he got there. He may still be wrong, but you should say where you think he's gone wrong.

"This time, whatever happens in housing stays in housing."

Hmmm, reminds me of OJ...

"If the glove don't fit, you've got to acquit."

The last recession was in business growth, and we haven't seen much business growth outside of the residential construction, consumer goods and financial sectors since then.

Has there been much exubererant growth to prune back outside of granite countertops, SUV's and mortgage securities over the last decade?

It really all starts to sound like another version of the "Hitchhikers guide to the Galaxy"
(http://en.wikipedia.org/wiki/The_Hitchhiker's_Guide_to_the_Galaxy#The_Hitchhiker.27s_Guide_to_the_Galaxy
) where "42" is the answer to an unkown question (the secret of life, science, the universe and everything), here the "answer is "recession" but nobody agrees on what the exact variables needed to formulate the question are...
BTW the poster named "Maria Slartibartfast" reminded me of it: as this is the name of a planetary coastline designer in the book

"Of course, the jobs created therein won't employ many of the boyz from Wall Street or clowns with MBA degrees."

Right. They'll be done with Americorps where the workers make 12-16k per year and use food stamps to get their grub.

Yay economy!

During the last housing recessions we weren't talking about bailing out Fannie and Freddie. I think that pretty much says it all.

Nice to see you UB, you are too rare these days; and I never figured out what you were about.

Monthly US data on payroll employment, civilian employment, industrial production and the unemployment rate are used to define a recession-dating algorithm...

They need an algorithm to see if the sun goes down?

Leamer = Serious Candidate as one of History's Poster Child of 2008-2012 Depression.....alongside Greedspan, Bernanke, and Paulson of course....imo