Confirmation of the obvious. But makes all these news reports still talking of the "looming recession" look all the more ridiculous, now that we've "officially" been in recession for a year--which all of us knew already anyway.
NevskyProspekt writes:
Confirmation of the obvious. But makes all these news reports still talking of the "looming recession" look all the more ridiculous, now that we've "officially" been in recession for a year--which all of us knew already anyway.
OkieLawyer, calling the bottom will be fun - I'm an optimist by nature.
And thanks to everyone for all the nice comments and thoughts about Tanta. I'm extremely grateful for the time we had together. There is never enough time.
I will post some comments, emails and more this afternoon.
Now we wait for a bottom to the recession- it is waaaay to early to start calling the end of the recession.
I call that Arizona will reach bottom in our recession in 2011. Bottom will consist of six months of YOY sales tax growth above the prevailing inflation rate.
I have read (can't remember where!) that NBER doesn't like to announce recessions until they think we are about half way through. Something alluding that they do not want to "scare people" until they see a light at the end of the tunnel. My question is whether the light they see is an approaching train or in fact sunshine and daylight...
Bust: '29-'33; MCM debt fell 8% per year and GDP fell 12% per year --> ratio of MCM debt/GDP grows 124% in four years
Recovery: '33-'39; MCM debt remained flat and GDP grew 10% per year --> it takes until '39 for MCM debt/GDP to fall to normal level of 51%
This depression -- debt problems are with mortgages and consumer credit
Boom: '80-'07, MCM debt/GDP: 48% --> 104%
Bust: '08-'12, assume that, again, MCM debt falls by 8% per year and that, again, GDP falls by 12% per year --> ratio of MCM debt/GDP grows ~125% in five years
Recovery: '13-'22; assume that, again, MCM debt remains flat and that GDP grows by 10% --> it takes until 2022 for MCM debt/GDP to fall to normal level of 48%
15 years in total: five years of downward movement and ten years of recovery until we reach normal levels of MCM debt/GDP
Lots of scrimping and saving to payoff debt or replenish vanished savings (i.e., written off debt) over those 15 years
Learn to be thrifty, folks, 'cause you will be using that skillset for a long time.
---"This is not what a recession looks like....no way!" Mike Green and Jim Benham show 11/16/07
----Mike Green: "Wallstreet thinks things are bad, but in reality things are very good. 12/18/07 (At the time: DOW at 13,323, Nas at 2596, S&P 1454
----"I have a real problem with people not using facts in basing their opinions." Pat Powell, Powell investments (Reference Peter Schiff's opinion that we are in a recession right now 11/22/07) Q208 revisions prove he is right when Q407 comes in at -.02
----"all the bad news is priced into financials" Mike Green and Jim Benham show 12/14/07
----Fred Layne on Bloomerg (layne and Barry) "This is a great time to be a buyer of equities 12/19/07.
----Donald Luskin calls the bottom for financials on 12/07/07 (VFH financial index at $56.22 at time of call)
-=--Economist Monti says there will probably not be a recession in 2008, Bloomberg 12/17/07
----Mike Green: "This is the cheapest stocks have been in my lifetime" 12/17/07
----Michael Darda from MKM partners: "There is no evidence for that (recession)" "I think those who think a recession is coming are wrong, dead wrong". 12/20/07
----Bruce Kassim "We think growth will rebound rather smartly in the second half of 08" 12/20/07
----Larry Kudlow "It does not look like a recession to me!" 12/20/07
----Brian Wesbury on Larry Kudlow show, "Brian Wesbury is not seeing recession, so add me to that list" 12/20/07 (Estimated 3.0 real growth next year, while Roubini estimated -1.5% 2008)
----Buzz Zaino, Royce & Associates: "I think the spring will see a rise in homebuying, why wait until 2009, the early buyers will get the best deal." "I think we've seen the bottom (housing stocks)" 12/26/07
----Richard DeKaser National City Chief Economist: "I think the first half of 08 will have GDP at less than 1% with a rebound to 3% in the second half of 08".
----Joe Brusuelus "I see an average growth of 2.1% for 2008. I think we will skirt a recession." 01/02/08
----Brian Wesbury calls for Dow 15,000 by end of 2008!!!. Reaffirms a no recession call. 01/02/08
----Paul Kandel "I think we skirt by both a recession and stagflation and just see slow growth for 2008." 01/02/08
----Mike Green "These tech stocks are the cheapest I've ever seen them" 01/02/08
----01/06/08 Abby Joseph Coen calls for a 14% return on the S&P for 2008 to 1650 due to avoiding recession. (Cohen loses job calling S&P on 3/17/08, replacement calls for drop to 1160 and rebound to 1300 by year's end)
----01/06/08 Colin Glingsman of Oppenheimer Capital..."This month (Jan) is the bottom for financials, we will have a slight recession, the stock market will be up on anticipation for 2009, the bottom for housing stocks is upon us"
----01/06/08 Jeffy Kleintop (LPL Investments) "This is a great time for stocks since they are pricing in a recession that won't happen."
----01/06/08 Brian Wesbury "I don't think we are headed for a recession"
----01/08/08 NEW YORK, Jan 8 (Reuters) - BlackRock Inc global equities chief investment officer Bob Doll on Tuesday forecast U.S. stocks will reach record highs again in 2008 as the U.S narrowly escapes a recession.
(BlackRock's Doll sees record year for stocks in 2008
| Reuters
Amazing call, CR, bravo. I have enjoyed the subtle transition on your charts from your labelling the current recession as "probable" to just a gray bar.
---01/28/08 Lincold Anderson (LTL Financial) on Bloomberg: "We see this as a buying opportunity (for stocks), we don't see a recession ahead" (S&P at 1353 at the time).
---01/30/08 David Boss on Bloomberg after the planned 50bps cut by Bernanke: "We think equities are going to be up 12 months from now."(S&P at 1355 at the time)
---02/04/08 Fritz Meyer on Bloomberg commenting on the highest insider buying in January since 1996 "I think the insiders know when to buy. I would guess that at the end of '08, the market would be substantially higher than it is now. (said S&P at 1600 by year's end was "entirely reasonable"(S&P at 1380 at the time))
---02/06/08 Jim Cramer, "I'm predicting a housing shortage and a bank stock shortage...There's gonna be a housing shortage a year from now!".
---02/08/08 Joe Keeting of First American Asset Mngmt, On Bloomberg, very bullish on stocks "I think we can do 10-15% this year. I think you will see low double digit gains" He also said "Bank of American is a good place to be right now. (BAC at $43.07 at the time of the call, $21.00 by 10/23/08)"
---02/11/08 Barton Biggs on Bloomberg "I think valuations are quite attractive, unless you think we are going into some kind of credit abyss...and I think that's unlikely".
---02/21/08 Neil Hennessy, (chronic bull, who was saying buy stocks all second half of 07), "We happen to be in good economic times but people just don't believe it.." Bloomberg TV interview/ Dow at 12,279.
---03/11/08 David Sewerby on Bloomberg, "there are some attractive valuations out there and the fed is easing. I think we are at the bottom for stocks." (Dow was up 400 to 12,140 on that day)
---03/14/08 Barton Biggs on Bloomberg, (after the Bear Stearns blow-up), "The markets are trying to make a bottom here. (DOW at 11,951) We think we could see a 1000 point rally soon. Sometime you have to make a stand. This is just panic and you have to buy when it's the at the worst. We are in (the market) right now.
---03/14/08 Jerry Jordon on Bloomberg, (Dow at 11,951), I think you load up on (stocks) Monday, and on Tuesday....This may sound crazy, but I think we hit all time highs (for stocks) this year(2008)!
---03/17/08 Jim Paulsen on Bloomberg, "The S&P is still expected to earn double digit profits, I think it's already priced in." S&P at 1276.
---03/20/08 Punk, Ziegel & Co.'s Richard Bove says "now is the time to invest in banks, any more bad news will be meaningless. The financial crisis is over and investors should take advantage of the "once-in-a-generation opportunity" to buy banking stocks"
---03/20/08 Brian Wesbury on CNBC "We are not going to have a recession. A recession is highly unlikely. We see 2.0% this quarter. We don't see anything close to a recession."
---03/22/08 Moe Ansari calls the bottom of the market on his radio show. Dow at 12,361, S&P at 1329.51 Nas at 2258.
---05-07-08 Brian Wesbury on CNBC says "I predict Dow 15,000 by the end of the year" (2008) Dow at 13,000 when he said it. He also reitterated his "no recession" call.
---05-07-08 Frequent CR poster Sebastian said (In response to the above Wesbury comment): "I don't know what model(s) he uses, but the fact of the matter is that DJIA at 15,000 by the end of the year isn't really out of line.
Sebastian
Sebastian | 05.07.08 - 12:39 pm | #
---05/08/08 Barton Biggs on bloomberg encouraging going long saying "The economy is just not that bad off...we are talking to companies and aren't hearing the gloom and doom that others think is out there."
---05/11/08 After Meredith Whitney sasy Citi is the most overvalued financial stock at $23, Charles Peabody on bloomberg sees Citi in the mid 30's by mid 2009, thinks many are too pessimistic on economy.
---05/11/08 On bloomberg Charles Lemonidas says MBIA is a good buy at $10 and sees a near future stock price from $25-$40. He also liked Boeing(BA) at $85, Lemonidas also recommended Freddie and Fannie the Friday before they essentially went to zero.
---06/30/08 Ron Rimcus of BB&T Financial recommends KBH at 17$ a share on Bloomberg. He says there is $17 on KBH's books so you are getting it for free. He sees healthy returns a "few years out".
---07/01/08 Phil Orlando on Bloomberg says the second half of the year will show positive growth and the current weakness in the market will be a good buying opportunity.
---07/03/08 US Treasury Secretary Henry Paulson said here on Thursday that the US economy would most likely be stronger at the end of 2008, even as oil prices surged to new records above 146 dollars."I think there is a very strong possibility that we will be growing at the end of the year. We will have stronger growth at the end of the year than we have right now," he said during a press conference after talks with his British counterpart Alistair Darling. "http://www.breitbart.com/article.php?id=080703120512.75gtwijc&show_article=1
---07/07/08 UBS among others came out with 1650 year-end call on the S&P500. At the time of the call the S&P was at 1245. They were calling for an 18% rally in the index in 6 months.
---07/29/08 Win Smith of WHS Holdings on Bloomberg says the financials are making a bottom (VFH at 39.12) and said he is starting to buy Merryl (MER 24$) after they raised 8 billion for cash they previously said they didn't need.
---08/05/08 Thomas Lee, Equity Strategist, says stocks will be higher by year's end and the S&P500 will be at about 1450 by the end of 2008. (S&P at 1289 at the time).
---08/11/08 James Chessen, American Bankers Assoc, on Bloomberg laughed at the prospect that the FDIC is facing a crisis. He pointed out that we are "no where near" the crisis on the 1990's and that the FDIC is adequately funded to handle the coming bank failures.
---08/27/08 S&P 500 at 1281 Sebastian writes:
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
I was coming back to see if my guess, lo those many years ago, about when the recession would start, was closer than the it's-summer-2008-and-your-guess-that-it-would-start-just-after-greenspan-departed-was-WRONG-WRONG-WRONG, ex post facto, might have been in the running for at least a tin star.
11 months of recession, and yet no major homebuilder BK's. But maybe a big 3 omen over in Germanay where Porsche, Audi and Volkswagen are taking some downtime.
Sports Guy Lafleur writes:
11 months of recession, and yet no major homebuilder BK's. But maybe a big 3 omen over in Germanay where Porsche, Audi and Volkswagen are taking some downtime.
German carmakers make fresh move to cut output
Not to worry. I've heard that they're ratcheting up Sham-Wow!! exports.
Confirmation of the obvious. But makes all these news reports still talking of the "looming recession" look all the more ridiculous, now that we've "officially" been in recession for a year--which all of us knew already anyway.
the WORST part in my opinion:
all of the people who failed to see the recession, will now say "well we're already a year into the recession so we're likely over half through with it!"
It's disgusting that they go from denying something could happen, to denying that it is happening, to then saying "OF COURSE it is happening, but it's almost over"
"my job just told me that Giant Banking Company that I'm currently contracted to till 12/31 has reduced the hourly rate that they pay contractors. across the board. 15%. I get a % of my hourly rate. so theoretically my salary would drop 15% How's that for a x-mas bonus/raise.
retest the low this week? today? say 7800. big bounce again? lookin' kind of crummy today so far. Seems like if we break into the 7000's this month, could be looking at another 1000 point drop. ppt where are you?
Typical. We here at Calculated Risk know things anywhere from a few months to a couple of years before they become accepted by the mainstream. It's good to know that the Federal Reserve has been lurking here lately.
Cover story for a PPT stick save today will be, 'Recession was declared 'here,' but, based on historical averages, folks realize it is almost over --> and they buy, buy, buy into the close.
I can almost hear Kudlow saying that NBER is wrong, because their call wasn't based on conventional measures, and that the market turnaround begins in January.
I'm still sticking with Oct 6th, 2007 shortly after breakfast like I have since Oct 6th, 2005 shortly after breakfast when my bi-weekly housekeeper announced she had bought a house. This gave me a year (2006) to reallocate and divest of all non-personal use real estate. Seems a little early but remember this is Southern California and we are 6-8 months down the curve ahead of the rest of the nation. The Central Valley of California has been 4-6 months ahead of us so look to them for the future. Try home prices anywhere from Merced to Bakersfield.
Rob Dawg writes:
I'm still sticking with Oct 6th, 2007 shortly after breakfast like I have since Oct 6th, 2005 shortly after breakfast when my bi-weekly housekeeper announced she had bought a house.
Good thing we heaved $160B stimulus last spring to keep the country out of recession. What a waste.
When do we learn that the time to manage economic cycles is when they are expanding rather than contracting. During contraction the amount of effort and capital required vs results hardly justifies bothering.
I've frequently said that CR gives us a 12 month window into the future. This comes in quite handy when investing. Looks like this confirms my premise with some more data.
"some investor guy writes:
Typical. We here at Calculated Risk know things anywhere from a few months to a couple of years before they become accepted by the mainstream. It's good to know that the Federal Reserve has been lurking here lately."
It is funny to see the Fed and Senate visit my blog--of course I don't know if they like it or were just bored with playing Minesweeper.
I can almost hear Kudlow saying that NBER is wrong, because their call wasn't based on conventional measures, and that the market turnaround begins in January.
I've been watching the great K on and off of late.
over the last few weeks he has admitted that we are in recession.
this will bolster his case that we are nearing an END to the recession.
although I disagree with a large portion of his ideals (he is quite the supply sider) he also does have a brain and some things to say.
not that I think he should be a respected financial journalist... just that some of his economic analaysis is intriguing.
The White House commented on the news that a second downturn has officially begun on President George W. Bush's watch without ever actually using the word "recession," a term the president and his aides have repeatedly avoided.
Above all, keep your eyes closed and your head tucked neatly in the ground.
Good thing we heaved $160B stimulus last spring to keep the country out of recession. What a waste.
Bearly:
I am personally very divided about what to do with this mess. i agree wholeheartedly that the problem needed to be solved prior to it getting so large.
but how about now? are stimulus checks a bad idea? I can't think that they'd be any more worse than the Wall Street bailouts.
the problem as always is the method of implementation, specifically that they will give stimulus/bailout but use debt to do it.
Good job, CR. We all knew it smelled and tasted like a recession/depression. Didn't need the confirmation of NBER to know you were right. I'm looking for the bottom. See it for housing starts in a year. Housing prices should bottom in late first quarter 2010. The overall economic bottom is still unclear. Could be a long haul.
A small clarification, and nice response from NYT writer. (Details count)
Me:
Nice obit on Doris Dungey. You should explain though that the recommendations that you cite at the end come straight from personal bankruptcy procedure in Federal Courts.
I knew that, more or less, but ran out of time and space. Next time I'll do better. Thanks for writing.
DS
Me: Thanks for responding. If the reader doesn't know, it sounds like her idea is to punish the executives, when her point is they should be held to the same standard as the common man.
CR:
it will be most interesting to me when you (and others I trust) start posting that they see a bottom and/or early recovery.
interestingly, it will take a lot more faith by me to believe/act on a bottom/recovery call than it was to believe/act on a recession call.
I think Elvis is early on House Prices bottoming.
the larger Alt-A wave of recasts doesn't finish until Dec 2011.
some of those will of course recast/default/refinance prior to this... but I still think that puts the house bottom later than 1Q2010.
If it takes a year to acknowledge parentage of a recession it will undoubtably take 4 or more to admit paternity for a depression.
The classic two-step was to belatedly see a recession and preemptively forecast a rebound but this time is different. Part 2 wasn't in the cards so they were forced to admit to part 1.
"It's disgusting that they go from denying something could happen, to denying that it is happening, to then saying "OF COURSE it is happening, but it's almost over"
Yearning,
The scariest part is that the group of people you refer to includes some who have been authorized to spend $700 billion, virtually unsupervised, to 'correct' problems they were - and probably still are - totally ignorant of. They don't have any idea what they are doing, and we are all expected to pay enormously for their ignorance.
The White House commented on the news that a second downturn has officially begun on President George W. Bush's watch without ever actually using the word "recession," a term the president and his aides have repeatedly avoided.
I wonder if there's some behind the scenes political maneuvering to associate this thing squarely with GWB. This release seems uncharacteristically early for the NBER.
I can't exactly say I disapprove though I'd find it a bit distasteful if so.
As a nation we punish ourselves by blaming presidents for economic problems created by their predecessors.
The scariest part is that the group of people you refer to includes some who have been authorized to spend $700 billion, virtually unsupervised, to 'correct' problems they were - and probably still are - totally ignorant of. They don't have any idea what they are doing, and we are all expected to pay enormously for their ignorance.
Yes it is sad.
I find it intriguing and depressing that there would have been ways to mitigate this disaster, but they were not implemented at the correct times.
Indeed, imagine how different things would have been if Monetary policy and regulation were carried out by CR/Tanta and the bloggers from 2005 when CR started to present.
not that we all agree (we don't). however, our implementation of things would have been quite different, and also more informed. also less biased.
it is sadly clear that all the regulatory bodies and the govt itself have been captured by the financial firms
What happens when (not if) those laid off start cashing in their 401K.
Suddenly DOW 5000 does not seem out of the realm of possibility.
CR:
We are waiting for Tanta's charity of choice. I feel I owe at least 1 credit worth of tuition to the charity.
(one credit is measly, I have probably learned couple of semesters worth of education from Tanta and all the commentors here)
"Safe Haven in Real Estate" = a piece of property THAT IS PAID FOR that you can pull your RV to - having a well & electric and sun enough to grow a veggie garden.
What leading indicators are you looking at to determine that things are starting to recover? Is it housing prices? Starbucks same store sales? Serious responses please.
I wonder if there's some behind the scenes political maneuvering to associate this thing squarely with GWB. This release seems uncharacteristically early for the NBER.
I can't exactly say I disapprove though I'd find it a bit distasteful if so.
Based on this article, the usual time frame to announce has been 6 to 18 months. Therefore this is quite in line, especially because it is so obvious now that we are in a recession.
... The NBER usually takes 6 to 18 months to decide when a recession starts or ends. Hall's committee didn't announce the end of the 2001 recession until a full 20 months after the fact. ...
a severe recession
and prolonged recession
characterized by inefficient economic productivity
high unemployment
falling price levels
I don't want to argue any of the arcana. I don't even want a better definition. Yes, they'd be welcome additions but what I want is simple: What can we do? AFAICT the only aspect within the power of intervention is "productivity." That means justified infrastructure and basic R&D investments. Pretty small potatoes for the size of the problem and only effective in the long term.
This is a very unique day... First we hear about Tanta and now it's the formal declaration that CR "got it right". On November 30th you both were honored to a degree that is great, and you deserve even more.
Rob Dawg writes:
The classic two-step was to belatedly see a recession and preemptively forecast a rebound but this time is different. Part 2 wasn't in the cards so they were forced to admit to part 1.
So true. Last time I saw him on the boob tube, Eddie Lazear was saying the economy was experiencing a mild downturn and would return strongly in early 2009 unless new policies dampened "risk taking" or over taxed.
omrade sbarrkum(Unrated) writes:
It just struck me:
What happens when (not if) those laid off start cashing in their 401K.
Suddenly DOW 5000 does not seem out of the realm of possibility.
The other fallout will be the end of 401Ks as a retirement model - look for something FAR MORE compulsory & 'regulated' coming out of this. I'd bank on it.
"I think Elvis is early on House Prices bottoming.
the larger Alt-A wave of recasts doesn't finish until Dec 2011.
some of those will of course recast/default/refinance prior to this... but I still think that puts the house bottom later than 1Q2010.
Yearning to Learn"
You could be right. 16 months seems about the right amount of time to me for a price bottom, but I could be early. My sense is that prices will continue to drop rapidly next year, and the Alt-A issues beyond to 2011 will just result in price stagantion.
""What leading indicators are you looking at to determine that things are starting to recover?"
Steadily rising employment, with increased activity in real and productive output; and either increased purchasing power or declining consumer debt in the working and middle classes.
Circuit Breakers are still set back at the end of September quarter numbers. So we would have to experience a serious Wile E Coyote dropoff before they would kick in.
My condolences to Tanta's family, and to the entire CR community. I am still in shock.
What leading indicators are you looking at to determine that things are starting to recover? Is it housing prices? Starbucks same store sales? Serious responses please. - nipsy russell
You chose that avatar and also want a serious response?
Serious. The return of non-distressed housing sales breaching 2/3rds of total sales is a good point to catch the inflection to start bouncing along the bottom. At that point lots of money rushes in to acquire real estate assets at cash flow justified pricing. That is the bottom. Demographics is the only thing to lift off that bottom. Either household formation or average household size reductions will do it. Too early to predict demographics.
Endings of recessions differ. You could argue the early 00's downturn didn't end to mid-03. Ditto the early 90's downturn didn't end to mid-92.
Usually it is the post recession struggle when people are at their most bleak. It is the actual chugging of the labor market that seems to lift peoples spirits.
dryfly | 12.01.08 - 1:32 pm | # FAR MORE compulsory & 'regulated' coming out of this. I'd bank on it.
I agree. I think the future isnt going to be a replay of the immediate past.
From an economic standpoint, stocks maybe going back to a dividend model as against growth in value.
Society, no clue except that consumerist /throwaway society will be thrown into history (about time too). Hopefully an economic model based on equilibrium /sustainable will evolve.
Spunkmeyer writes:
On the plus side, maybe this will limit the ability of douchebags like Rush L. to "blame" the recession on Obama in the coming year.
You've gotta be kidding. Since when did such a trivial thing as the Truth ever stop right-wing demagogues like Rush?
The other fallout will be the end of 401Ks as a retirement model - look for something FAR MORE compulsory & 'regulated' coming out of this. I'd bank on it.
How would this differ fundamentally from social security?
I'd think part of the lesson we would learn from this whole episode is that governments and regulated systems are just as fallible as individual and private systems.
How are these state run pension plans doing these days?
Becoming ever more the cynic these days I find myself reading "FAR MORE compulsory & 'regulated'" as "FAR MORE easily abused by special interests and political agendas".
Nobody ever explains how these things will lead to more foresight and accountability.
Okay, that vented: could a New Deal II not change/improve unemployment numbers? - YTL
Two part answer. Personally I don't consider government employment to be a net benefit to the general economy. More of a shuffling than a stacking. Second, we can easily improve the "numbers" like we have for decades; change the measures. No, U-6 is U-6 and it doesn't respond to intervention. It does respond to incentives. You know, like, dare I say it?, lower freakin' taxes which means lower freakin' spending.
If someone bothered to go through all of the old posts, they would discover that most of the long-time posters on this site knew the recession started in Dec07 or Jan08.
... Indeed, imagine how different things would have been if Monetary policy and regulation were carried out by CR/Tanta and the bloggers from 2005 when CR started to present. ...
Just for the fun of it, here are the headers of a few posts from CR before 2005 on Russ Winter's forum...
"What leading indicators are you looking at to determine that things are starting to recover? Is it housing prices? Starbucks same store sales? Serious responses please."
Well, the index of leading indicators is a longstanding attempt to do this. The components are:
-Average number of initial applications for unemployment insurance
-Number of manufacturers' new orders for consumer goods and materials
-Speed of delivery of new merchandise to vendors from suppliers
-Amount of new orders for capital goods unrelated to defense
-Amount of new building permits for residential buildings
-The S&P 500 stock index
-Inflation-adjusted money supply (M2)
-Spread between long and short interest rates (the yield curve)
-Consumer sentiment
-Average weekly hours worked by manufacturing workers
In the current environment, I think we should add the spread between AA or AAA corporate credit and treasuries, a similar spread for municipal debt, and a reduction in credit card delinquincy rates.
"How would this differ fundamentally from social security?
I'd think part of the lesson we would learn from this whole episode is that governments and regulated systems are just as fallible as individual and private systems.
How are these state run pension plans doing these days?
Becoming ever more the cynic these days I find myself reading "FAR MORE compulsory & 'regulated'" as "FAR MORE easily abused by special interests and political agendas".
Nobody ever explains how these things will lead to more foresight and accountability.
ac | 12.01.08 - 1:43 pm | # "
Yearning to Learn writes:
it is sadly clear that all the regulatory bodies and the govt itself have been captured by the financial firms
Yearning to Learn | 12.01.08 - 1:25 pm
It is time that this kind of statement graduates from being ridiculed, to being developed more explicitly. If true, it renders most of the usual civic discourse perfectly futile nonsense- a fantasy world- Orwellian.
Why do so many, who are better thinkers and writers than I, shy away from this task, and continue opining as though the old debates are still meaningful? Some are promising, with regard to blaming both "sides", but few are saying it explicitly...
You know, like, dare I say it?, lower freakin' taxes which means lower freakin' spending.
Oh, Rob, if only that were so. Unfortunately, lower government spending = higher government borrowing. And we all know how well that's likely to end...
Yields Next to Nothing Lure Funds to Riskier Assets (Update3)
Dec. 1 (Bloomberg) -- In the best year for Treasuries since 2002, fund managers who only buy government bonds are seeking permission to invest in corporate debt they considered toxic just a month ago.
...Treasury funds are receiving permission to buy debt of Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. after the Federal Deposit Insurance Corp. finalized plans on Nov. 21 to guarantee their debt.
while everybody gradually stops reaching behind themselves and patting on their back, you have to admit there is a difference between forecasting, predicting, guessing, prophesizing or observing directly that a recession seemed to be underway or about to be underway and the process of confirming said phenomena based upon analysis of the statistics produced by the economy, necessarily a retrospective process
CR, are you still reading here? Because I don't want to toot my own horn, but I will. Ol' Outsider who doesn't know nuthin about economics, and I called it almost first:
Outsider writes:
We're already in recession, CR. Our business is tied to the home decorating industry around NYC. It's been a very reliable recession indicator for 20+ years. Housing slump or no housing slump, this year was the best ever until 3rd quarter. December is deader than a doornail. Unless this is the 1st time our orders don't jive with the economy in general, which I highly doubt, we're in it, and it's a doozy.
Outsider | 12.27.07 - 12:53 pm | #
AND
Outsider writes:
...
Anyway - CR, will you hat tip me when statistics finally show that a recession started in Nov/Dec of this year?
Outsider | 12.30.07 - 9:00 pm | #
JimPortlandOR writes:
Well, at least we get to properly name this the George W. Bush recession, war and incompetence binge.
**
No, no NO, Jim! The new Democratic majorities in Congress had been in office for a whole year, so clearly it's Pelosi and Reed's fault. We would be in a total depression if it weren't for the inspired leadership of our beloved President and the filibuster power of the glorious Senate Republicans. Do I sound sarcastic?
"The lawsuit, which seeks class-action status, was filed against Bank of America (BAC), which bought Countrywide in late 2007. It argues that most of the Countrywide loans are not Countrywide's or Bank of America's to modify, but rather are owned by trusts that bought them through securitizationthe process of financing home loans through the public markets by parceling them out to investors. "
HARM,
No prob. I'm a lot mellower with all the new plumbing.
I am actually long term hopeful about California. It comes from two unlikely sources. Recent arrivals are not expecting gilt services while neither are we long term residents. As the bubbleheads either buy in or cash out increasingly we are left with stakeholders.
A new California will emerge with a foundation in fiscal restraint. At first it will be necessary and then imposed and ultimately desirable.
Please forgive me. I am in a foul mood. Besides the obvious, Cyber Monday has been an ugly bust for me. No big deal, except my ego.
The bad news, for me at least, is the predection of a depression by those who sucessfuly called for a recession.
Depressions are not anything to look forward to with antcipation. You may be looking down on the flood plain but you will still feel the pain.
That is bang on, though most here probably don't have any experience in collecting large datasets and then analyzing them...while it has been bone simple clear we were in a recession, it is a bit like in a courtroom setting - what you know vs. what you can prove.
Getting good data is usually 80% or more of the struggle.
The only thing that is going to get stimulated in this new economy...is what will be affected by old farts that still have cash to buy Viagra. It's 4th and 10 on our own 1 yard line with 1 second left in the game. Too bad the recievers are all double covered downfield. The admission of faulty policy and rigged numbers will just crush market confidence further...prolonging the malaise. Look for the new Obama Deal to ensure souplines and poor houses for all. Good luck and God bless....We need HIM now more than ever before.
I hope Ben's blather makes him feel better about being a socialist. I thought this was supposed to be a speech on monetary policy. This is just bass-ackward explaining of what he thought he was doing.
SHHHHH! Can you people keep it down. Ben is telling me how he is better than free markets. We must suspend free market capitalism and replace it with his market manipulations. Free markets will resume when he has total legislative, executive and judicial powers.
Some of us will be wisecracking on our way to the gallows...it took me awhile but I learned not everyone appreciates that perspective. My greatest concern in the unfolding disaster is what kind of world are we building for my four year old daughter.
OT, but... I have tried to pull up the SSA web page for three days....said I'd help the hub begin applying for his money. They have been down for three days. The only phone number listed for ANY SSA office (in any town) is (wo)manned by an automatic voice, allowing no opportunity to speak to an agent. If you say you want to speak to an agent, the voice first says you might have to wait, then says you need to call back at another time, and "goodbye". What's going on?
mock turtle, my unsolicited advice is to let it go. Being wrong is its own punishment and he was wrong.
Subsequent events can change disputes and attitudes for the better. For example, now that the election is over, I'm enjoying Rob Dawg's posts again.
I'm also struck by how ironic it is that CR's bold prediction (the shading on his charts) was proven correct the day after he lost his partner here. Some victories really are pyrrhic in nature.
Comrade V writes:
Rob Dawg writes:
"I am actually long term hopeful about California... A new California will emerge with a foundation in fiscal restraint."
I'll have whatever he's having.
LOL! Okay, okay. "Long term" is the olde guy idea of "long term." We have to fall on our faces first. What? This is bad? We HAVE to fall on our faces no matter what. It isn't the stumble, it is the recovery.
Actually, I would argue that the recession started the day that the first subprime blowups were revealed, but that is just me. By the commonly accepted guage, the recession started this summer, but what difference does it really make. We have flattened since the end of last year, and this fall we have started over the cliff. Now the NBER will serve as bottom enablers who will claim it is over in January.
Brick and mortar numbers are slower to pull together, IIRC Thursday we should get some real stats...otherwise, the only hard data is Comscore on the online shopping to date which has been nothing short of disastrous IMNSHO...the key being that they put YoY holiday spending to Thanksgiving at -4%, while in the preceding five years plus that has run at over 20% growth annually.
Cyber Monday will tell a lot I think, in that it has also run at YoY growth rates in excess of 20% and it is a data point we will get quickly...
I quoted a comment from 'BC' on Mish Shedlock's site to a friend of mine who knows DC well.
"A bearish structural factor bearing down on the US economy and equity
market will be tens of millions of Boomers (retiring and being "retired"
involuntarily) being involuntarily fired from employment at peak
earnings, many of whom will never again earn anywhere near their peak
earnings (and medical and life insurance benefits).
Boomers by the millions will be forced to draw down on assets (declining
in value) at a much faster rate than they or most economists imagined in
an attempt to maintain the Boomer consumer lifestyle.
Hedge fund withdrawals are occurring as many financial services types
(hedgies, mutual fund mismanagers, bankers, etc.) are seeing their
livelihoods and a large share of their net wealth evaporate at an
alarming amount and rate. Private schools, private clubs, religious
institutions, charities and not-for-profit entities, etc., are now being
negatively affected by the meltdown in financial assets, including
leveraged real estate.
The deleveraging/liquidation process is still underway for hedge funds
and barely just beginning in the overall US and global financial systems."
The friend's comment:
"These people drive to skirmishes in the class war in their Porsches. Their children gather on the playing fields of National Cathedral School and Saint Albans waving red flags."
I am an author, abeit a rather unsuccesfull one. About 1/2 my books are sold through the different Amazons. Primarily US, UK, and Germany. My big sales period is now until Christmas.
I noticed my Amazon sales dropping completely off about 2 months ago. I posted, on an authors blog, if anyone else had noticed this? Yes, they sure had.
My sales numbers are not just down. They are almost zero. I am fortunate in that I do not make a living from my writing. It just an interest and a way of paying for my kids college.
I can also tell by how slow I fall through the numbers that Amazon is not moving anywhere near the books they did at this time last year.
Speed writes:
Ben Stein equates believing we're in a recession is like believing in UFOs.
01/21/2008
Why is this guy on TV?
Speed | 12.01.08 - 2:07 pm | #
Well I personally believe in UFOs, but I don't necessarily believe that their origin is from beyond our atmosphere. So I guess Ben Stein is right. Those who know what UFO means are capable of believing we are in a recession because we also know what recession means.
Becoming ever more the cynic these days I find myself reading "FAR MORE compulsory & 'regulated'" as "FAR MORE easily abused by special interests and political agendas".
Nobody ever explains how these things will lead to more foresight and accountability.
ac | 12.01.08 - 1:43 pm | # "
They won't - just different set of masters & agendas.
The main reason behind social security was the belief that people were too stupid or selfish or shortsighted to manage their own money well and when they fail they put all of society at risk [hungry mobs are angry mobs]... so don't give them the choice of starving. Relative poverty fine - destitution & starvation not fine
The earliest 'social security' model was a support level really little more than 'three hots and a cot'... over time that coupled w/ the 'ownership society' expanded into the expectation of an early retirement into a mini-McMansion on the 18th hole.
We will see a return to the earlier model but more compulsory & regulated.
It won't be all bad but will take time to recalibrate expectations. Poverty is a great tool for resetting expectations - believe me.
"I noticed my Amazon sales dropping completely off about 2 months ago. I posted, on an authors blog, if anyone else had noticed this? Yes, they sure had."
I too, although I write poetry, and in the memorable words of a monk at a monastery bookshop: It's poetry. It just sits there.
Demographics are easily predictable, but how the boomlet handles the downturn isn't. All things being equal you'd expect it to have a serious sustained period of growth after the pig passes through the university python, but grad school/ hiring environment may smooth that effect out.
Economy should reboot by march/April 2010 but be anemic in recovery until 2014.
AllenM,
RE lawyers I know in PHX are looking/praying for a bottom of august next year. They don't know downside risk but I'm guessing another 15% drop in the "stable" parts of town. At this point if I could arrange financing I'd be buying up city blocks along the light rail beyond 19th ave. You can buy houses with decent lots for under $30k in maryvale.
Sure, they claim the recession started a
year ago, all the while denying it existed. They try to push it back in time now to rush it along getting us to
believe recovery is sooner to come. The
frauds never end.
"You want Free Markets? You want depression as well. They go mutually together." -Samual Jackson | 12.01.08 - 2:07 pm |
That's a good point and very worthy of discussion.
mp
Well I think there may well be a fundamental relationship between free markets and business cycles. I.E. you can't fundamentally take the recession out of the free market.
That said I would also note that,
a) Highly authoritarian and centrally managed economies also experience all sorts of calamities (amongst the worst in history when the wrong guy takes charge).
b) It seems that the worst problems in "free markets" have occurred when governments have stepped in to promote the excesses that seem to naturally arise in these markets (e.g. Greenspan and his promotion of sub prime home loans in an environment already rife with excess).
Want financial security for you and your kids/grandkids?:
Pay for a piece of land (1 acre minimum) that has a good well, electricity, and plenty of sun and weather to grow veggies. Keep an RV available to drive there.
Rob Dawg, did you happen to catch this last election. Spendifornians voted for billions and billions of bond issues. - Republicans are TRAITORS
You don't see the problem? "Republicans are traitors." You have no idea how much that has annoyed me. Make no mistake, I'm not saying wrong. I'm only saying annoying.
Yes, the mob ruled and voted bread and circuses aka healthcare and transit. Still I view this as the last gasp of progressive politics started in the early 1900s. The new paradigm is two phases. First a failed pay-go and then seconda as a real ongoing enterprise.
my concern over the 10 yr is that the massive rise in price/drop in yield signals that the US spending its way out of this mess is regarded as a non factor: either because
a.) it won't work
b.) compared to the massive sums being churned in other regions, it really is true that the US economy is still the best one out there
"a) Highly authoritarian and centrally managed economies also experience all sorts of calamities (amongst the worst in history when the wrong guy takes charge)."
Both kinds of economic systems experience 'calamities." So what can you conclude from that?
oh, and as I've said elsewhere, i'm of the belief that the 10yr will touch a sub 2% yield before beginning a brutally painful readjustment to over 7% over the next decade...
Thought CR was saying there was no recession earlier this year based on the available 'data'.
Now we see why govt numbers can't be trusted. As for the numbers being released right now, it must be worse than it appears based on the wrong calls of the past by bulls & govt sources..
oh, and as I've said elsewhere, i'm of the belief that the 10yr will touch a sub 2% yield before beginning a brutally painful readjustment to over 7% over the next decade...
monta's ankle
Wez is on the same page - except I see the US 30 year up to 4-5 by Spring/Fall 2009. This will compell BB to cap long term rates.
we have the rare "mouth of the volcano" formation on the chart between 1pm and 2 pm, tectonic plates are shifting and the market opens in less than 1 hr
Holiday sales may be worse than thought: researcher
By Brad Dorfman
CHICAGO (Reuters) - Holiday sales are likely to be worse than thought based on surveys taken over the Black Friday weekend, according to America's Research Group.
The group's founder and CEO, Britt Beemer, had already forecast 2008 would see the first decline in sales in almost a quarter century of holiday spending surveys as the U.S. economy shrinks.
Beemer told Reuters on Sunday he expected to lower his forecast this week after seeing how consumers responded to his group's survey during the three days following Thanksgiving, the traditional kickoff to the holiday shopping season. Holiday sales may be worse than thought: researcher
| Reuters
the guest writes:
Now we see why govt numbers can't be trusted. As for the numbers being released right now, it must be worse than it appears based on the wrong calls of the past by bulls & govt sources..
I expect them to keep saying everything is fine on television, even to the point where the people are at the door with torches and pitchforks.
Pilgrims Pride Seeks Bankruptcy on High Grain Costs
By Erik Larson and Choy Leng Yeong
Dec. 1 (Bloomberg) -- Pilgrims Pride Corp., the largest U.S. chicken producer, sought bankruptcy protection along with five affiliates after rising grain costs and a poultry surplus led to four consecutive quarterly losses.
The company, the second largest chicken producer in Mexico and supplier to Wal-Mart Stores Inc. and Yum! Brands Inc.s KFC restaurant chains, listed assets of $3.75 billion and debt of $2.72 billion in a Chapter 11 petition filed today in U.S. bankruptcy court in Ft. Worth, Texas. Pilgrims Pride said it will seek $450 million in financing arranged by Bank of Montreal to fund operations during its reorganization.
Nova, I read much on the topic back when I was in high school. Perhaps it was my "dark" stage but I read an inordinate amount on the subject. I have a set of book called the Dr.s of Death. It's a four book series that effected me greatly.
Yes, it would. We were at Auschwitz and touring the original gas chamber. I was runnning my hand against the wall, I like to touch, and came across some gouges. They fit perfectly for my fingers. Thats when I realized someone had clawed them in their death agony.
That is a misrepresentation of this particular survey - the revision downward is from a forecast of negative sales growth for the first time in 20+ years - please be more accurate.
No beef with your statement on the happytalk, but that is not the case with ARG (the NRG shilling fair game IMNSHO).
Endings of recessions differ. You could argue the early 00's downturn didn't end to mid-03. Ditto the early 90's downturn didn't end to mid-92.
I'm tempted to argue that the early 00's downturn still hasn't ended. All we did was attempt to postpone it by trying to borrow our way out of it. That's what I've been tempted to argue since 2004 anyway (when I sold all my stocks), assuming I was the sort of person to be tempted and/or argue.
I might also be tempted to argue that we never stopped trying to borrow our way out of it and the borrowing numbers keep getting much, much bigger. $700 billion here, $800 billion there, pretty soon we're talking real money.
These are just a few of the things I might be tempted to argue.
Those that know me also know how tempted I was to change my name to Deflationary Mark this year. I just can't get myself to the point where I want to bury paper fiat dollars in my backyard as a long-term store of value though.
Therefore, most of my nest egg still sits in inflation protected treasuries at a time when inflation protection seems rather silly. So be it. I'm also not cancelling my fire insurance simply because my house isn't currently on fire. Call me silly!
C. Alexei You nearly have me howling with laughter in my office!
Spouse is a real estate land use zoning attorney.
In 2006 she went to work for a very well funded suburb at my suggestion to escape billables.
In hindsight it was an absolutely masterful move.
The bottom in Phoenix will take a while, there are still waaaaay too many folks trying to catch knives.
It will become more obvious when the lenders are willing to rewrite mortgages to keep folks from walking because it is much cheaper than facing a total meltdown market. BTW- did I mention that I will be whacking my mortgage with Citi soon;-?
In short, we have a long way to go, and a short time to get there.
"One option is for the Fed to buy longer-term Treasury or agency securities on the open market in substantial quantities, Bernanke said. This approach might influence the yields on these securities, thus helping to spur aggregate demand.
Treasury prices rose on Bernankes remarks, with yields on 10-year Treasuries tumbling about 10 basis points to 2.74 percent and two-year notes dropping to 0.85 percent. One basis point is equal to 0.01 percentage point. "
These the same treasuries that people are now admitting might be bogus?
Bernanke Says Fed May Buy Treasuries to Aid Economy
By Scott Lanman and Vivien Lou Chen
Dec. 1 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said he has obviously limited room to lower interest rates further and may use less conventional policies, such as buying Treasury securities, to revive the economy.
The U.S. economy will probably remain weak for a time, even if the credit crisis eases, Bernanke said today in a speech in Austin, Texas. While the Fed cant push interest rates below zero, the second arrow in the Federal Reserves quiver -- the provision of liquidity -- remains effective, he said.
Bernanke has created more than $2 trillion of emergency lending programs in the past year, using the Feds balance sheet and money-creation authority to cushion the economy from the worst financial crisis in seven decades. The central bank may lower its benchmark interest rate to zero and pump even more funds into the banking system, economists said.
Although further reductions from the current federal funds rate target of 1 percent are certainly feasible, at this point the scope for using conventional interest-rate policies to support the economy is obviously limited, Bernanke said in prepared remarks to the Austin Chamber of Commerce.
One option is for the Fed to buy longer-term Treasury or agency securities on the open market in substantial quantities, Bernanke said. This approach might influence the yields on these securities, thus helping to spur aggregate demand.
Treasury prices rose on Bernankes remarks, with yields on 10-year Treasuries tumbling about 10 basis points to 2.74 percent and two-year notes dropping to 0.85 percent. One basis point is equal to 0.01 percentage point.
New Credit Programs
Last week, the Fed announced two new programs aimed at unfreezing credit for homebuyers, consumers and small businesses. Those include a commitment to buy as much as $600 billion of debt issued or backed by government-chartered housing-finance companies and a $200 billion initiative to support consumer and small-business loans.
It is encouraging that the announcement of that action was met by a fall in mortgage rates, Bernanke said of the Feds decision to buy housing debt.
The Federal Open Market Committee next meets Dec. 15-16 in Washington. Economists surveyed by Bloomberg News forecast a quarter-point reduction in the target overnight interbank lending rate to 0.75 percent, with some expecting a half-point cut.
Interest on Reserves
The Fed will continue to explore ways to keep the market federal funds rate closer to policy makers target, after paying 1 percent interest on banks reserves failed to stabilize the rate, Bernanke said. The average daily rate has been below the central banks target every day since Oct. 10.
Thats because Fannie Mae and Freddie Mac, which are large suppliers of funds, arent eligible to get interest from the Fed and thus lend below the Feds target, Bernanke said.
The Fed also aided the rescue of Citigroup Inc. last week by agreeing to backstop a $306 billion pool of distressed assets after the company, the Treasury and the Federal Deposit Insurance Corp. shoulder the first losses.
Bernanke reiterated his defense of the governments decision to let Lehman Brothers Holdings Inc. fail, which intensified the financial crisis.
Unavoidable Lehman Bankruptcy
Lehmans bankruptcy was unavoidable, he said. Since then, authorities have gained the tools to address any similar situation that might arise in the future. Bernanke noted that the funds to aid Citigroup came from the $700 billion financial rescue passed by Congress in October.
The U.S. economy officially entered a recession in December 2007, the panel that dates American business cycles declared today. The National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts, said the economy was last in a recession from March through November 2001.
Our nations economic policy must vigorously address the substantial risks to financial stability and economic growth that we face, Bernanke said.
The Feds balance sheet will eventually have to be brought back to a more sustainable level, Bernanke said. However, that is an issue for the future; for now, the goal of policy must be to support financial markets and the economy.
Signs are increasing that the recession may be the worst in a quarter-century.
Manufacturing Contracted
A private report earlier today showed manufacturing in the U.S. contracted in November at the fastest pace in 26 years, putting American factories at the forefront of the global industrial slump resulting from the lack of credit.
The Institute for Supply Managements factory index dropped to 36.2, the lowest level since 1982, the Tempe, Arizona-based group reported today. A reading of 50 is the dividing line between expansion and contraction. Similar measures from China, the U.K., euro area, and Russia all dropped to record lows.
Erin is giddy now on cnbc, Ben said there is no comparison between the GD and this Recession. What he failed to say Erin, is this one is going to be much, much worse you giddy dingbat...
Rob Dawg,
I agree with you to an extent, but the timeline IMO is way out. I don't know if we will be here to see it and there will be incredible pain to usher in the changes. New "leaders" like Ron Paul will have to be voted into office and purge the system.
If the fed is sanitizing its money injections by balancing them off with a sale of treasuries, then what the FUCK happens when the fed starts buying treasuries?
Monetary velocity has cratered, so not much...for now - as soon as velocity picks up though, inflation could roar - though the Fed will then 'mop up' excess liquidity (so goes the conventional wisdom).
The Dark Valley: A Panorama of the 1930s by Piers Brendon
This was a book that has influenced a lot of what I think might be possible in our future. Scared people are people that scare me. Stabilty at all costs is much too high a price.
With the downward economic slope so steep now, this economic crisis will most likely go out of control, especially in the USA.
There is nothing now to stop it, the last ones were manufacturing sectors and those are now also in big trouble. Engine number four is out...
Even miracle man Obama will not be able to do jacks**t, most likely he will be the last president of USA before it breaks up smaller, more manageable states.
I think this crisis probably will be bigger than for most part relatively peaceful collapse of USSR.
I think GDP has been over-stated for years as well as the entire Treasury yield curve. We have been deceived for many years with falsified statistics and manipulated government data, so what now, do we simply fall back to the mean and ignore the lies, or do we engineer a system that will be more truthful?
Under "Fiscal Policy" subtitle:
Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.
"a) Highly authoritarian and centrally managed economies also experience all sorts of calamities (amongst the worst in history when the wrong guy takes charge)."
Both kinds of economic systems experience 'calamities." So what can you conclude from that?
Well I think we have to look at more fundamental and structural causes.
For example I'm starting to think that large scale synchronized economic activity is inherently prone to collapse.
Again, I've noticed in many other types of systems both natural and artificial the tendency for highly integrated complex systems to be inherently brittle is compensated for via massive redundancy and replication.
Something we maybe don't/can't do with economies.
Currently I think we might all need to go back to subsistence farming.
We will see a return to the earlier model but more compulsory & regulated.
It won't be all bad but will take time to recalibrate expectations. Poverty is a great tool for resetting expectations - believe me.
dryfly | 12.01.08 - 2:18 pm | #
Absolutley correct, and this will be the end of most investment management firms. Their primary sources of growth were meant to be 1.) defined contribution assets, and 2.) overseas institutions, and both of those engines are aggressively in reverse. Couple that with collapsing asset bases for revenues and you have a recipe for a massively shrinking industry.
Nova - you should keep the name! You invented it, it's your persona here, and there's no reason to change it really. Just my worthless two cents. But congratulations on completing two books - that's really impressive.
I think far to many "scared" people own guns. To many have to have their information feed to them in predigested bites. People like that, I think, have the potential volatility of old fashioned nitro.
The 30-year T bond action today is basically predicting depression.
I'm thinking more that like all other markets in this country it merely represents massive government intervention and bears increasingly little relationship to reality.
Our "free" markets reflect manipulation not the real world. As such they are becoming useless for their intended purpose.
Our economic "nervous system" is so doped up that it serves little practical value anymore. Hence the ensuing economic malaise.
Comrade Kristina writes:
Please don't besmirch Socialists by including Ben in that category. This is not Socialism at all, it's Fascism with a splash of oligarchy...
Comrade Kristina | 12.01.08 - 2:06 pm | #
THANK YOU
jo6pac
The yield curve is melting fast, this is amazing! What did Congress think, TARP was going to help yields? We have transfered the tsunami of cheap and easy credit to our Treasury and now, they are dumping the TARP burden into US debt, so now that we crashed the economy with credit fraud, why not fucking crash The Treasury with debt fraud?
I can't believe none of you saw this coming. What is wrong with you people?
spinach
1 year down, 6 more to go...
CR is da man!!
Now if you could just predict when we will come out of this recession!
Now...how long does it last?
You have defeated the pig sir.
Remember, yogi's global meta-index will not be manipulable by using phony stats.
Confirmation of the obvious. But makes all these news reports still talking of the "looming recession" look all the more ridiculous, now that we've "officially" been in recession for a year--which all of us knew already anyway.
Since the average recession lasts around 12 months, I guess we are done.
You called it then, CR. I had dibs on January along with many others here.
CR the Captain!
I remember you had a "pic the start of the recession" contest a long time ago ... I was only off by two years.
Thanks for the continuing clarity and level headed analysis, CR.
And an extra thanks for the info pr0n charts!
NevskyProspekt writes:
Confirmation of the obvious. But makes all these news reports still talking of the "looming recession" look all the more ridiculous, now that we've "officially" been in recession for a year--which all of us knew already anyway.
YouTube - cool hand luke
Let all of the apologies from the experts who claimed otherwise, commence.
I'll wait here.
Right yet again--Thanks, CR!
I called 'recession start' in Oct. '07, so, as in things with my wife, I was a bit premature (ha, ha).
Congrats on the bullseye, CR.
We are in year one of the five year downturn. Lesser Depression lasted 3 1/2 years; this Greater Depression will last five years.
There you have it - the U.S. economy has officially been in a recession for one year.
All the more reason we need to...
hey, wait a second.
So we hit bottom a couple months ago, right?
Surprise, surprise....NOT!
Clearly the bottom is now in. The recession must already be over, right?
Dow 36,000 here we come!
CR, your accuracy is amazing!
USD/JPY is doing that thing again.
OkieLawyer, calling the bottom will be fun - I'm an optimist by nature.
And thanks to everyone for all the nice comments and thoughts about Tanta. I'm extremely grateful for the time we had together. There is never enough time.
I will post some comments, emails and more this afternoon.
Best to all.
The Dow chart is going shizoid...Maybe the market was waiting for it to be official before it implodes?
Now we wait for a bottom to the recession- it is waaaay to early to start calling the end of the recession.
I call that Arizona will reach bottom in our recession in 2011. Bottom will consist of six months of YOY sales tax growth above the prevailing inflation rate.
Someday this war's gonna end...
We going to get some circuitbreaker action today?
CR, I personally can't wait for you to call a bottom.
I have read (can't remember where!) that NBER doesn't like to announce recessions until they think we are about half way through. Something alluding that they do not want to "scare people" until they see a light at the end of the tunnel. My question is whether the light they see is an approaching train or in fact sunshine and daylight...
Also we can say from their 2006 predictions that Nouriel Roubini was about a year early and David Rosenberg was right on the nose (late 2007 IIRC).
Well, at least we get to properly name this the George W. Bush recession, war and imcompetence binge.
Huh. Whatever happened to buy the rumor, sell the news?
Mustard seeds, people. Mustard seeds!
I called it last year in December and said that they also will likely amend it to beginning in November, 2007 after all the dust settles.
Just imagine how bad the numbers would be if the calculations used real inflation numbers.
Fulda must be advancing too quickly through the Chunnel to send a field report...
Does this mean that CR can end the recession by drawing an upward GDP line on his next graph?
For some giggles on a sad day, here is a talking "dead" head recession prognosticator.
Bloomberg News
You need not listen beyond 1:30 minutes to start laughing.
Sad...very sad.
Data and logic for predicting 'how long will this last':
Summary -- the down leg could run until 2012, and 'normal' may not return until 2022
Last depression -- debt problems were with mortgages and margin loans
Boom: '22-'29, mortgages, consumer credit, and margin loans ('MCM debt')/GDP: 54% --> 69%
Bust: '29-'33; MCM debt fell 8% per year and GDP fell 12% per year --> ratio of MCM debt/GDP grows 124% in four years
Recovery: '33-'39; MCM debt remained flat and GDP grew 10% per year --> it takes until '39 for MCM debt/GDP to fall to normal level of 51%
This depression -- debt problems are with mortgages and consumer credit
Boom: '80-'07, MCM debt/GDP: 48% --> 104%
Bust: '08-'12, assume that, again, MCM debt falls by 8% per year and that, again, GDP falls by 12% per year --> ratio of MCM debt/GDP grows ~125% in five years
Recovery: '13-'22; assume that, again, MCM debt remains flat and that GDP grows by 10% --> it takes until 2022 for MCM debt/GDP to fall to normal level of 48%
15 years in total: five years of downward movement and ten years of recovery until we reach normal levels of MCM debt/GDP
Lots of scrimping and saving to payoff debt or replenish vanished savings (i.e., written off debt) over those 15 years
Learn to be thrifty, folks, 'cause you will be using that skillset for a long time.
Conjure bag predicted Dec 2007 as the start definitively in the late fall of 07.
Does the NBER call depressions?
Cool, if it's been going on for a year, it must be almost over already!
---"This is not what a recession looks like....no way!" Mike Green and Jim Benham show 11/16/07
----Mike Green: "Wallstreet thinks things are bad, but in reality things are very good. 12/18/07 (At the time: DOW at 13,323, Nas at 2596, S&P 1454
----"I have a real problem with people not using facts in basing their opinions." Pat Powell, Powell investments (Reference Peter Schiff's opinion that we are in a recession right now 11/22/07) Q208 revisions prove he is right when Q407 comes in at -.02
----"all the bad news is priced into financials" Mike Green and Jim Benham show 12/14/07
----Fred Layne on Bloomerg (layne and Barry) "This is a great time to be a buyer of equities 12/19/07.
----Donald Luskin calls the bottom for financials on 12/07/07 (VFH financial index at $56.22 at time of call)
-=--Economist Monti says there will probably not be a recession in 2008, Bloomberg 12/17/07
----Mike Green: "This is the cheapest stocks have been in my lifetime" 12/17/07
----Michael Darda from MKM partners: "There is no evidence for that (recession)" "I think those who think a recession is coming are wrong, dead wrong". 12/20/07
----Bruce Kassim "We think growth will rebound rather smartly in the second half of 08" 12/20/07
----Larry Kudlow "It does not look like a recession to me!" 12/20/07
----Brian Wesbury on Larry Kudlow show, "Brian Wesbury is not seeing recession, so add me to that list" 12/20/07 (Estimated 3.0 real growth next year, while Roubini estimated -1.5% 2008)
----Buzz Zaino, Royce & Associates: "I think the spring will see a rise in homebuying, why wait until 2009, the early buyers will get the best deal." "I think we've seen the bottom (housing stocks)" 12/26/07
----Richard DeKaser National City Chief Economist: "I think the first half of 08 will have GDP at less than 1% with a rebound to 3% in the second half of 08".
----Joe Brusuelus "I see an average growth of 2.1% for 2008. I think we will skirt a recession." 01/02/08
----Brian Wesbury calls for Dow 15,000 by end of 2008!!!. Reaffirms a no recession call. 01/02/08
----Paul Kandel "I think we skirt by both a recession and stagflation and just see slow growth for 2008." 01/02/08
----Mike Green "These tech stocks are the cheapest I've ever seen them" 01/02/08
----01/06/08 Abby Joseph Coen calls for a 14% return on the S&P for 2008 to 1650 due to avoiding recession. (Cohen loses job calling S&P on 3/17/08, replacement calls for drop to 1160 and rebound to 1300 by year's end)
----01/06/08 Colin Glingsman of Oppenheimer Capital..."This month (Jan) is the bottom for financials, we will have a slight recession, the stock market will be up on anticipation for 2009, the bottom for housing stocks is upon us"
----01/06/08 Jeffy Kleintop (LPL Investments) "This is a great time for stocks since they are pricing in a recession that won't happen."
----01/06/08 Brian Wesbury "I don't think we are headed for a recession"
----01/08/08 NEW YORK, Jan 8 (Reuters) - BlackRock Inc global equities chief investment officer Bob Doll on Tuesday forecast U.S. stocks will reach record highs again in 2008 as the U.S narrowly escapes a recession.
(BlackRock's Doll sees record year for stocks in 2008
| Reuters
Amazing call, CR, bravo. I have enjoyed the subtle transition on your charts from your labelling the current recession as "probable" to just a gray bar.
---01/28/08 Lincold Anderson (LTL Financial) on Bloomberg: "We see this as a buying opportunity (for stocks), we don't see a recession ahead" (S&P at 1353 at the time).
---01/30/08 David Boss on Bloomberg after the planned 50bps cut by Bernanke: "We think equities are going to be up 12 months from now."(S&P at 1355 at the time)
---02/04/08 Fritz Meyer on Bloomberg commenting on the highest insider buying in January since 1996 "I think the insiders know when to buy. I would guess that at the end of '08, the market would be substantially higher than it is now. (said S&P at 1600 by year's end was "entirely reasonable"(S&P at 1380 at the time))
---02/06/08 Jim Cramer, "I'm predicting a housing shortage and a bank stock shortage...There's gonna be a housing shortage a year from now!".
---02/08/08 Joe Keeting of First American Asset Mngmt, On Bloomberg, very bullish on stocks "I think we can do 10-15% this year. I think you will see low double digit gains" He also said "Bank of American is a good place to be right now. (BAC at $43.07 at the time of the call, $21.00 by 10/23/08)"
---02/11/08 Barton Biggs on Bloomberg "I think valuations are quite attractive, unless you think we are going into some kind of credit abyss...and I think that's unlikely".
---02/21/08 Neil Hennessy, (chronic bull, who was saying buy stocks all second half of 07), "We happen to be in good economic times but people just don't believe it.." Bloomberg TV interview/ Dow at 12,279.
---03/11/08 David Sewerby on Bloomberg, "there are some attractive valuations out there and the fed is easing. I think we are at the bottom for stocks." (Dow was up 400 to 12,140 on that day)
---03/14/08 Barton Biggs on Bloomberg, (after the Bear Stearns blow-up), "The markets are trying to make a bottom here. (DOW at 11,951) We think we could see a 1000 point rally soon. Sometime you have to make a stand. This is just panic and you have to buy when it's the at the worst. We are in (the market) right now.
---03/14/08 Jerry Jordon on Bloomberg, (Dow at 11,951), I think you load up on (stocks) Monday, and on Tuesday....This may sound crazy, but I think we hit all time highs (for stocks) this year(2008)!
---03/17/08 Jim Paulsen on Bloomberg, "The S&P is still expected to earn double digit profits, I think it's already priced in." S&P at 1276.
---03/20/08 Punk, Ziegel & Co.'s Richard Bove says "now is the time to invest in banks, any more bad news will be meaningless. The financial crisis is over and investors should take advantage of the "once-in-a-generation opportunity" to buy banking stocks"
---03/20/08 Brian Wesbury on CNBC "We are not going to have a recession. A recession is highly unlikely. We see 2.0% this quarter. We don't see anything close to a recession."
---03/22/08 Moe Ansari calls the bottom of the market on his radio show. Dow at 12,361, S&P at 1329.51 Nas at 2258.
---05-07-08 Brian Wesbury on CNBC says "I predict Dow 15,000 by the end of the year" (2008) Dow at 13,000 when he said it. He also reitterated his "no recession" call.
---05-07-08 Frequent CR poster Sebastian said (In response to the above Wesbury comment): "I don't know what model(s) he uses, but the fact of the matter is that DJIA at 15,000 by the end of the year isn't really out of line.
Sebastian
Sebastian | 05.07.08 - 12:39 pm | #
---05/08/08 Barton Biggs on bloomberg encouraging going long saying "The economy is just not that bad off...we are talking to companies and aren't hearing the gloom and doom that others think is out there."
---05/11/08 After Meredith Whitney sasy Citi is the most overvalued financial stock at $23, Charles Peabody on bloomberg sees Citi in the mid 30's by mid 2009, thinks many are too pessimistic on economy.
---05/11/08 On bloomberg Charles Lemonidas says MBIA is a good buy at $10 and sees a near future stock price from $25-$40. He also liked Boeing(BA) at $85, Lemonidas also recommended Freddie and Fannie the Friday before they essentially went to zero.
---06/30/08 Ron Rimcus of BB&T Financial recommends KBH at 17$ a share on Bloomberg. He says there is $17 on KBH's books so you are getting it for free. He sees healthy returns a "few years out".
---07/01/08 Phil Orlando on Bloomberg says the second half of the year will show positive growth and the current weakness in the market will be a good buying opportunity.
---07/03/08 US Treasury Secretary Henry Paulson said here on Thursday that the US economy would most likely be stronger at the end of 2008, even as oil prices surged to new records above 146 dollars."I think there is a very strong possibility that we will be growing at the end of the year. We will have stronger growth at the end of the year than we have right now," he said during a press conference after talks with his British counterpart Alistair Darling. "http://www.breitbart.com/article.php?id=080703120512.75gtwijc&show_article=1
---07/07/08 UBS among others came out with 1650 year-end call on the S&P500. At the time of the call the S&P was at 1245. They were calling for an 18% rally in the index in 6 months.
YouTube
- Peter Schiff & Don Luskin - CNBC - Kudlow & Company - 7/2/2007 Awesome peter schiff clip
---07/29/08 Win Smith of WHS Holdings on Bloomberg says the financials are making a bottom (VFH at 39.12) and said he is starting to buy Merryl (MER 24$) after they raised 8 billion for cash they previously said they didn't need.
---08/05/08 Thomas Lee, Equity Strategist, says stocks will be higher by year's end and the S&P500 will be at about 1450 by the end of 2008. (S&P at 1289 at the time).
---08/11/08 James Chessen, American Bankers Assoc, on Bloomberg laughed at the prospect that the FDIC is facing a crisis. He pointed out that we are "no where near" the crisis on the 1990's and that the FDIC is adequately funded to handle the coming bank failures.
---08/27/08 S&P 500 at 1281 Sebastian writes:
Just looking at the chart, the closest "match" to the current numbers looks like about mid-1982...a huge rebound out of a major generational low, also coinciding with the beginning of a major new secular bull market in stocks.
But I'm sure it's different this time.
Sebastian
Sebastian | 08.27.08 - 6:14 pm |
Cyber Monday now extending to equities.
Where is Sebastian?
Crow is served.
Oh my.
I was coming back to see if my guess, lo those many years ago, about when the recession would start, was closer than the it's-summer-2008-and-your-guess-that-it-would-start-just-after-greenspan-departed-was-WRONG-WRONG-WRONG, ex post facto, might have been in the running for at least a tin star.
My condolences for those close to Tanta.
Average Joe - great list. We need a wall of shame.
Where is Sebastian?
Crow is served.
If you actually paid attention, you'd know he's already dined.
Sebastian already admitted he was wrong and was quite nice about it on the previous thread.
And this just in from NBER:
Water is wet! Stay tuned for more breaking news
11 months of recession, and yet no major homebuilder BK's. But maybe a big 3 omen over in Germanay where Porsche, Audi and Volkswagen are taking some downtime.
German carmakers make fresh move to cut output
UPDATE 1-German carmakers make fresh move to cut output
| Reuters
Despite the sobering pronouncement from the NBER and the terrible numbers from the ISM, there is no capitulation, yet. Volumes are still low:
Shark Investing - Volume Charts
Only when we have a high volume (2X normal) down day can we say that we are at an intermediate bottom in the stock market.
Until then, I intend to hold my shorts.
Sports Guy Lafleur writes:
11 months of recession, and yet no major homebuilder BK's. But maybe a big 3 omen over in Germanay where Porsche, Audi and Volkswagen are taking some downtime.
German carmakers make fresh move to cut output
Not to worry. I've heard that they're ratcheting up Sham-Wow!! exports.
Circuit breakers anyone?
Confirmation of the obvious. But makes all these news reports still talking of the "looming recession" look all the more ridiculous, now that we've "officially" been in recession for a year--which all of us knew already anyway.
the WORST part in my opinion:
all of the people who failed to see the recession, will now say "well we're already a year into the recession so we're likely over half through with it!"
It's disgusting that they go from denying something could happen, to denying that it is happening, to then saying "OF COURSE it is happening, but it's almost over"
yech.
Circuit breakers anyone?
Nah.... they're set way too wide.
From a contractor friend's journal.
"my job just told me that Giant Banking Company that I'm currently contracted to till 12/31 has reduced the hourly rate that they pay contractors. across the board. 15%. I get a % of my hourly rate. so theoretically my salary would drop 15% How's that for a x-mas bonus/raise.
Happy Fucking Holiday."
Loose %15 across the board... you have 30 days!
OkieLawyer writes:
Now if you could just predict when we will come out of this recession!
...and head into the greater depression.
retest the low this week? today? say 7800. big bounce again? lookin' kind of crummy today so far. Seems like if we break into the 7000's this month, could be looking at another 1000 point drop. ppt where are you?
Typical. We here at Calculated Risk know things anywhere from a few months to a couple of years before they become accepted by the mainstream. It's good to know that the Federal Reserve has been lurking here lately.
So I didn't waste any blue ink printing out your charts.
Great call!
Cover story for a PPT stick save today will be, 'Recession was declared 'here,' but, based on historical averages, folks realize it is almost over --> and they buy, buy, buy into the close.
The recession was also called by the Chigaco Fed National Activity Index as early as March-2008
http://www.chicagofed.org/economic_research_and_data/files/cfnai_march2008.pdf
Finally. Vindication.
and the baltic dry index is at a 22-yr low - nasty
I can almost hear Kudlow saying that NBER is wrong, because their call wasn't based on conventional measures, and that the market turnaround begins in January.
Well if the white house wants to mask it with tax rebates, you got to find a new way to measure it!
CR,
While calling a recession at some point was a gimme,
You nailed it cold, timing and everything.
Congratulations. You are a true Professional.
And again, our hearts go out to you and Tanta's family. As the funeral is private please send all our regrets in person (if you go).
I'm still sticking with Oct 6th, 2007 shortly after breakfast like I have since Oct 6th, 2005 shortly after breakfast when my bi-weekly housekeeper announced she had bought a house. This gave me a year (2006) to reallocate and divest of all non-personal use real estate. Seems a little early but remember this is Southern California and we are 6-8 months down the curve ahead of the rest of the nation. The Central Valley of California has been 4-6 months ahead of us so look to them for the future. Try home prices anywhere from Merced to Bakersfield.
My guess is that the recession started in June 07...oh well
Nope, Kudlow and others on CNBC are now saying because recession began earlier we'll bet out sooner, good news. These guys are beyond redemption.
You know, I'm getting a little tired of all this economic whining.
kudlow on cnbc, just declared that we are more than halfway through the recession, because they only last a year. he's so funny!
vix is only 64 so far today.
They were always correct, now it's just official.
Rob Dawg writes:
I'm still sticking with Oct 6th, 2007 shortly after breakfast like I have since Oct 6th, 2005 shortly after breakfast when my bi-weekly housekeeper announced she had bought a house.
LOL! Thanks I needed a laugh!
Good thing we heaved $160B stimulus last spring to keep the country out of recession. What a waste.
When do we learn that the time to manage economic cycles is when they are expanding rather than contracting. During contraction the amount of effort and capital required vs results hardly justifies bothering.
I've frequently said that CR gives us a 12 month window into the future. This comes in quite handy when investing. Looks like this confirms my premise with some more data.
TSX just getting whuupped!
I can almost hear Kudlow saying that NBER is wrong
Nah. I think Kudlow along with Ben Stein has switched from "denial mode" to "beg for money printing mode".
It really shows you the stuff these people are made of.
The sun is shining in Portland in December, so the recession MUST be over.
"some investor guy writes:
Typical. We here at Calculated Risk know things anywhere from a few months to a couple of years before they become accepted by the mainstream. It's good to know that the Federal Reserve has been lurking here lately."
It is funny to see the Fed and Senate visit my blog--of course I don't know if they like it or were just bored with playing Minesweeper.
And only a year after the fact.
Not bad for government work.
I can almost hear Kudlow saying that NBER is wrong, because their call wasn't based on conventional measures, and that the market turnaround begins in January.
I've been watching the great K on and off of late.
over the last few weeks he has admitted that we are in recession.
this will bolster his case that we are nearing an END to the recession.
although I disagree with a large portion of his ideals (he is quite the supply sider) he also does have a brain and some things to say.
not that I think he should be a respected financial journalist... just that some of his economic analaysis is intriguing.
and he is a funny guy. (really)
calling these recessions is real hard work, as Bush often says about his job.
So all we need is six more months and we'll achieve the required 6 consecutive quarters need to be declared a depression!!
Congratulations, CR, on the accurate recession call. Maybe if all economists were unpaid enthusiasts, the quality of their output would improve!
I also hope you're right about an 8 percent cap on unemployment nationally. But I fear you won't be.
The White House commented on the news that a second downturn has officially begun on President George W. Bush's watch without ever actually using the word "recession," a term the president and his aides have repeatedly avoided.
Above all, keep your eyes closed and your head tucked neatly in the ground.
Good thing we heaved $160B stimulus last spring to keep the country out of recession. What a waste.
Bearly:
I am personally very divided about what to do with this mess. i agree wholeheartedly that the problem needed to be solved prior to it getting so large.
but how about now? are stimulus checks a bad idea? I can't think that they'd be any more worse than the Wall Street bailouts.
the problem as always is the method of implementation, specifically that they will give stimulus/bailout but use debt to do it.
Don't worry, the rest of the world is not in recession, and will keep us all going! That's what GS says...
"BRIC Shoppers Will Rescue World Goldman Sachs Says"
BRIC Shoppers Will ‘Rescue World’ Goldman Sachs Says (Update1) - Bloomberg.com
I love it! I feel so much better! A new air conditioner for all the BRIC world!
"Senator Everette" is me; better clear cache.
Good job, CR. We all knew it smelled and tasted like a recession/depression. Didn't need the confirmation of NBER to know you were right. I'm looking for the bottom. See it for housing starts in a year. Housing prices should bottom in late first quarter 2010. The overall economic bottom is still unclear. Could be a long haul.
A small clarification, and nice response from NYT writer. (Details count)
Me:
Nice obit on Doris Dungey. You should explain though that the recommendations that you cite at the end come straight from personal bankruptcy procedure in Federal Courts.
Me: Thanks for responding. If the reader doesn't know, it sounds like her idea is to punish the executives, when her point is they should be held to the same standard as the common man.
A year late? I wonder how much pressure Bush and Paulson put on NBER to not disclose accurate information.
CR:
it will be most interesting to me when you (and others I trust) start posting that they see a bottom and/or early recovery.
interestingly, it will take a lot more faith by me to believe/act on a bottom/recovery call than it was to believe/act on a recession call.
I think Elvis is early on House Prices bottoming.
the larger Alt-A wave of recasts doesn't finish until Dec 2011.
some of those will of course recast/default/refinance prior to this... but I still think that puts the house bottom later than 1Q2010.
OT - Winner of today's Oxymoron contest - Family Finance - Kiplinger.com "Safe Havens in Real Estate", for your viewing pleasure.
If it takes a year to acknowledge parentage of a recession it will undoubtably take 4 or more to admit paternity for a depression.
The classic two-step was to belatedly see a recession and preemptively forecast a rebound but this time is different. Part 2 wasn't in the cards so they were forced to admit to part 1.
the problem as always is the method of implementation, specifically that they will give stimulus/bailout but use debt to do it.
Yearning to Learn
Your right.
Why not a tax holiday Jan-June you work four weeks but only taxed for three...unless you earn over 500k year.
A year late? I wonder how much pressure Bush and Paulson put on NBER to not disclose accurate information.
Republicans are TRAITORS
and the GOP machine, including McSlime.
"It's disgusting that they go from denying something could happen, to denying that it is happening, to then saying "OF COURSE it is happening, but it's almost over"
Yearning,
The scariest part is that the group of people you refer to includes some who have been authorized to spend $700 billion, virtually unsupervised, to 'correct' problems they were - and probably still are - totally ignorant of. They don't have any idea what they are doing, and we are all expected to pay enormously for their ignorance.
mp writes:
CR, your accuracy is amazing!
mp | 12.01.08 - 12:35 pm | #
That is quite a compliment coming from the person that relate the amazing conjure clock to us
Obviously a recession of a far different nature than the past 25 years.
73-75 a good match for some analog?
The White House commented on the news that a second downturn has officially begun on President George W. Bush's watch without ever actually using the word "recession," a term the president and his aides have repeatedly avoided.
I wonder if there's some behind the scenes political maneuvering to associate this thing squarely with GWB. This release seems uncharacteristically early for the NBER.
I can't exactly say I disapprove though I'd find it a bit distasteful if so.
As a nation we punish ourselves by blaming presidents for economic problems created by their predecessors.
On the plus side, maybe this will limit the ability of douchebags like Rush L. to "blame" the recession on Obama in the coming year.
The scariest part is that the group of people you refer to includes some who have been authorized to spend $700 billion, virtually unsupervised, to 'correct' problems they were - and probably still are - totally ignorant of. They don't have any idea what they are doing, and we are all expected to pay enormously for their ignorance.
Yes it is sad.
I find it intriguing and depressing that there would have been ways to mitigate this disaster, but they were not implemented at the correct times.
Indeed, imagine how different things would have been if Monetary policy and regulation were carried out by CR/Tanta and the bloggers from 2005 when CR started to present.
not that we all agree (we don't). however, our implementation of things would have been quite different, and also more informed. also less biased.
it is sadly clear that all the regulatory bodies and the govt itself have been captured by the financial firms
It just struck me:
What happens when (not if) those laid off start cashing in their 401K.
Suddenly DOW 5000 does not seem out of the realm of possibility.
CR:
We are waiting for Tanta's charity of choice. I feel I owe at least 1 credit worth of tuition to the charity.
(one credit is measly, I have probably learned couple of semesters worth of education from Tanta and all the commentors here)
sbarrkum
many thanks CR and mp (and conjure of course)
"Safe Haven in Real Estate" = a piece of property THAT IS PAID FOR that you can pull your RV to - having a well & electric and sun enough to grow a veggie garden.
"So all we need is six more months and we'll achieve the required 6 consecutive quarters need to be declared a depression!!"
YES, we can!!!
Pardners,
WE will see the bottom when the CRVIX reaches the population of the western world.
WE will have a depression as soon as the NBER declares a recession....oops they just did!
Giddyup!
To the CR Posting Gang -
What leading indicators are you looking at to determine that things are starting to recover? Is it housing prices? Starbucks same store sales? Serious responses please.
I wonder if there's some behind the scenes political maneuvering to associate this thing squarely with GWB. This release seems uncharacteristically early for the NBER.
I can't exactly say I disapprove though I'd find it a bit distasteful if so.
Based on this article, the usual time frame to announce has been 6 to 18 months. Therefore this is quite in line, especially because it is so obvious now that we are in a recession.
Why So Long to Call a Recession?
... The NBER usually takes 6 to 18 months to decide when a recession starts or ends. Hall's committee didn't announce the end of the 2001 recession until a full 20 months after the fact. ...
The technical definition of a depression is:
a severe recession
and prolonged recession
characterized by inefficient economic productivity
high unemployment
falling price levels
I don't want to argue any of the arcana. I don't even want a better definition. Yes, they'd be welcome additions but what I want is simple: What can we do? AFAICT the only aspect within the power of intervention is "productivity." That means justified infrastructure and basic R&D investments. Pretty small potatoes for the size of the problem and only effective in the long term.
This is a very unique day... First we hear about Tanta and now it's the formal declaration that CR "got it right". On November 30th you both were honored to a degree that is great, and you deserve even more.
Rob Dawg writes:
The classic two-step was to belatedly see a recession and preemptively forecast a rebound but this time is different. Part 2 wasn't in the cards so they were forced to admit to part 1.
So true. Last time I saw him on the boob tube, Eddie Lazear was saying the economy was experiencing a mild downturn and would return strongly in early 2009 unless new policies dampened "risk taking" or over taxed.
"What leading indicators are you looking at to determine that things are starting to recover?"
When food banks apply for TARP.
omrade sbarrkum(Unrated) writes:
It just struck me:
What happens when (not if) those laid off start cashing in their 401K.
Suddenly DOW 5000 does not seem out of the realm of possibility.
The other fallout will be the end of 401Ks as a retirement model - look for something FAR MORE compulsory & 'regulated' coming out of this. I'd bank on it.
,i>AFAICT the only aspect within the power of intervention is "productivity."
could a New Deal II not change/improve unemployment numbers?
"I think Elvis is early on House Prices bottoming.
the larger Alt-A wave of recasts doesn't finish until Dec 2011.
some of those will of course recast/default/refinance prior to this... but I still think that puts the house bottom later than 1Q2010.
Yearning to Learn"
You could be right. 16 months seems about the right amount of time to me for a price bottom, but I could be early. My sense is that prices will continue to drop rapidly next year, and the Alt-A issues beyond to 2011 will just result in price stagantion.
""What leading indicators are you looking at to determine that things are starting to recover?"
Steadily rising employment, with increased activity in real and productive output; and either increased purchasing power or declining consumer debt in the working and middle classes.
calculatedrisk == Bill McBride ...... was this public knowledge ?
I just saw this here
I will miss Doris "Tanta" Dungey, Arnold Kling | EconLog | Library of Economics and Liberty
Nice call, CR! Mind telling us when it will all be over?
-Jaso
"What leading indicators are you looking at to determine that things are starting to recover?"
It's difficult to even contemplate the start of a recovery when we have no information as to how deep or wide the cds/cdo blackhole is.
Circuit breakers anyone?
Comrade Kristina | 12.01.08 - 12:57 pm
Circuit Breakers are still set back at the end of September quarter numbers. So we would have to experience a serious Wile E Coyote dropoff before they would kick in.
My condolences to Tanta's family, and to the entire CR community. I am still in shock.
...weren't unemployment figures reduced due to accounting changes during Clinton?
What leading indicators are you looking at to determine that things are starting to recover? Is it housing prices? Starbucks same store sales? Serious responses please. - nipsy russell
You chose that avatar and also want a serious response?
Serious. The return of non-distressed housing sales breaching 2/3rds of total sales is a good point to catch the inflection to start bouncing along the bottom. At that point lots of money rushes in to acquire real estate assets at cash flow justified pricing. That is the bottom. Demographics is the only thing to lift off that bottom. Either household formation or average household size reductions will do it. Too early to predict demographics.
Endings of recessions differ. You could argue the early 00's downturn didn't end to mid-03. Ditto the early 90's downturn didn't end to mid-92.
Usually it is the post recession struggle when people are at their most bleak. It is the actual chugging of the labor market that seems to lift peoples spirits.
dryfly | 12.01.08 - 1:32 pm | #
FAR MORE compulsory & 'regulated' coming out of this. I'd bank on it.
I agree. I think the future isnt going to be a replay of the immediate past.
From an economic standpoint, stocks maybe going back to a dividend model as against growth in value.
Society, no clue except that consumerist /throwaway society will be thrown into history (about time too). Hopefully an economic model based on equilibrium /sustainable will evolve.
We are passing out horns and hats in the bar now.
Spunkmeyer writes:
On the plus side, maybe this will limit the ability of douchebags like Rush L. to "blame" the recession on Obama in the coming year.
You've gotta be kidding. Since when did such a trivial thing as the Truth ever stop right-wing demagogues like Rush?
LOL HARM, I'm sure Mark Levin will capitulate now as well...
The other fallout will be the end of 401Ks as a retirement model - look for something FAR MORE compulsory & 'regulated' coming out of this. I'd bank on it.
How would this differ fundamentally from social security?
I'd think part of the lesson we would learn from this whole episode is that governments and regulated systems are just as fallible as individual and private systems.
How are these state run pension plans doing these days?
Becoming ever more the cynic these days I find myself reading "FAR MORE compulsory & 'regulated'" as "FAR MORE easily abused by special interests and political agendas".
Nobody ever explains how these things will lead to more foresight and accountability.
Interesting table of previous US recressions to compare our to (for length, etc) as historical perspective. See table 1 and chart 1 at
Recessions, by Geoffrey H. Moore: The Concise Encyclopedia of Economics | Library of Economics and Liberty
1st: Leave CR alone!
A little respect please.
Okay, that vented:
could a New Deal II not change/improve unemployment numbers? - YTL
Two part answer. Personally I don't consider government employment to be a net benefit to the general economy. More of a shuffling than a stacking. Second, we can easily improve the "numbers" like we have for decades; change the measures. No, U-6 is U-6 and it doesn't respond to intervention. It does respond to incentives. You know, like, dare I say it?, lower freakin' taxes which means lower freakin' spending.
If someone bothered to go through all of the old posts, they would discover that most of the long-time posters on this site knew the recession started in Dec07 or Jan08.
It feels good to be validated, ha ha ha.
... Indeed, imagine how different things would have been if Monetary policy and regulation were carried out by CR/Tanta and the bloggers from 2005 when CR started to present. ...
Just for the fun of it, here are the headers of a few posts from CR before 2005 on Russ Winter's forum...
http://www.freeimagehosting.net/uploads/19738a4f28.png
Rob Dawg -thx. I didnt have the courage to vent that.
"What leading indicators are you looking at to determine that things are starting to recover? Is it housing prices? Starbucks same store sales? Serious responses please."
Well, the index of leading indicators is a longstanding attempt to do this. The components are:
-Average number of initial applications for unemployment insurance
-Number of manufacturers' new orders for consumer goods and materials
-Speed of delivery of new merchandise to vendors from suppliers
-Amount of new orders for capital goods unrelated to defense
-Amount of new building permits for residential buildings
-The S&P 500 stock index
-Inflation-adjusted money supply (M2)
-Spread between long and short interest rates (the yield curve)
-Consumer sentiment
-Average weekly hours worked by manufacturing workers
In the current environment, I think we should add the spread between AA or AAA corporate credit and treasuries, a similar spread for municipal debt, and a reduction in credit card delinquincy rates.
"How would this differ fundamentally from social security?
I'd think part of the lesson we would learn from this whole episode is that governments and regulated systems are just as fallible as individual and private systems.
How are these state run pension plans doing these days?
Becoming ever more the cynic these days I find myself reading "FAR MORE compulsory & 'regulated'" as "FAR MORE easily abused by special interests and political agendas".
Nobody ever explains how these things will lead to more foresight and accountability.
ac | 12.01.08 - 1:43 pm | # "
You sound anti-pony.
Yearning to Learn writes:
it is sadly clear that all the regulatory bodies and the govt itself have been captured by the financial firms
Yearning to Learn | 12.01.08 - 1:25 pm
It is time that this kind of statement graduates from being ridiculed, to being developed more explicitly. If true, it renders most of the usual civic discourse perfectly futile nonsense- a fantasy world- Orwellian.
Why do so many, who are better thinkers and writers than I, shy away from this task, and continue opining as though the old debates are still meaningful? Some are promising, with regard to blaming both "sides", but few are saying it explicitly...
You know, like, dare I say it?, lower freakin' taxes which means lower freakin' spending.
Oh, Rob, if only that were so. Unfortunately, lower government spending = higher government borrowing. And we all know how well that's likely to end...
Pardon me, I meant lower taxes = higher government borrowing.
Unfortunatley, nothing seems to be able to get government to actually spend less.
You sound anti-pony.
I am not anti-pony.
I'm just sick of promises and broken dreams every time the postman shows up.
I'm watching Ben Bernanke live on CNBC. The poor guy looks like a president in year 7 of his term.
Pardon me, I meant lower taxes = higher government borrowing.
"Deficits don't matter."
Love,
-Dick
This must be an important speech because somebody turned up the reverb on Bernanke's voice.
Interesting development in the "Treasury" fund market.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aMP9ebGxJDdc&refer=home
Yields Next to Nothing Lure Funds to Riskier Assets (Update3)
Dec. 1 (Bloomberg) -- In the best year for Treasuries since 2002, fund managers who only buy government bonds are seeking permission to invest in corporate debt they considered toxic just a month ago.
...Treasury funds are receiving permission to buy debt of Morgan Stanley, JPMorgan Chase & Co. and Goldman Sachs Group Inc. after the Federal Deposit Insurance Corp. finalized plans on Nov. 21 to guarantee their debt.
Makes sense to me. We have been in a recession for a year and we will be in a Depression for the next 2-3 years...
And then we will be flat for a bunch of years after that.
while everybody gradually stops reaching behind themselves and patting on their back, you have to admit there is a difference between forecasting, predicting, guessing, prophesizing or observing directly that a recession seemed to be underway or about to be underway and the process of confirming said phenomena based upon analysis of the statistics produced by the economy, necessarily a retrospective process
Be PatRIOTic:
Shop !
Cordially,
Kilgore
CR, are you still reading here? Because I don't want to toot my own horn, but I will. Ol' Outsider who doesn't know nuthin about economics, and I called it almost first:
Outsider writes:
We're already in recession, CR. Our business is tied to the home decorating industry around NYC. It's been a very reliable recession indicator for 20+ years. Housing slump or no housing slump, this year was the best ever until 3rd quarter. December is deader than a doornail. Unless this is the 1st time our orders don't jive with the economy in general, which I highly doubt, we're in it, and it's a doozy.
Outsider | 12.27.07 - 12:53 pm | #
AND
Outsider writes:
...
Anyway - CR, will you hat tip me when statistics finally show that a recession started in Nov/Dec of this year?
Outsider | 12.30.07 - 9:00 pm | #
JimPortlandOR writes:
Well, at least we get to properly name this the George W. Bush recession, war and incompetence binge.
**
No, no NO, Jim! The new Democratic majorities in Congress had been in office for a whole year, so clearly it's Pelosi and Reed's fault. We would be in a total depression if it weren't for the inspired leadership of our beloved President and the filibuster power of the glorious Senate Republicans. Do I sound sarcastic?
OT:
"The lawsuit, which seeks class-action status, was filed against Bank of America (BAC), which bought Countrywide in late 2007. It argues that most of the Countrywide loans are not Countrywide's or Bank of America's to modify, but rather are owned by trusts that bought them through securitizationthe process of financing home loans through the public markets by parceling them out to investors. "
Investor Sues to Block Mortgage Modifications - BusinessWeek
HARM,
No prob. I'm a lot mellower with all the new plumbing.
I am actually long term hopeful about California. It comes from two unlikely sources. Recent arrivals are not expecting gilt services while neither are we long term residents. As the bubbleheads either buy in or cash out increasingly we are left with stakeholders.
A new California will emerge with a foundation in fiscal restraint. At first it will be necessary and then imposed and ultimately desirable.
Please forgive me. I am in a foul mood. Besides the obvious, Cyber Monday has been an ugly bust for me. No big deal, except my ego.
The bad news, for me at least, is the predection of a depression by those who sucessfuly called for a recession.
Depressions are not anything to look forward to with antcipation. You may be looking down on the flood plain but you will still feel the pain.
irreverent,
That is bang on, though most here probably don't have any experience in collecting large datasets and then analyzing them...while it has been bone simple clear we were in a recession, it is a bit like in a courtroom setting - what you know vs. what you can prove.
Getting good data is usually 80% or more of the struggle.
from up thread
yeah i understand that sebastian owned up (some) on a previous thread
what some here may not recall is
i challenged seb to a gentilemans bet
that cr was correct in his call and would be proven right 2 or 3 quarters later
the bet was a 50$ trip to the tip jar
sebastian wrote at this site that he believed i (mock turtle) would loose and then fail to live up to my pledge
i took this as an insult
to prove him wrong i hit the jar right away and pasted the paypal receipt number in the comments section to prove i would have been willing to pay
SO SEBASTIAN....ARE YOU OUT THERE
im calling out
you may redeem yourself by hitting the tip jar and withdrawing you insult to me and if you do i will accept
otherwise my opinion of you stands
The only thing that is going to get stimulated in this new economy...is what will be affected by old farts that still have cash to buy Viagra. It's 4th and 10 on our own 1 yard line with 1 second left in the game. Too bad the recievers are all double covered downfield. The admission of faulty policy and rigged numbers will just crush market confidence further...prolonging the malaise. Look for the new Obama Deal to ensure souplines and poor houses for all. Good luck and God bless....We need HIM now more than ever before.
I hope Ben's blather makes him feel better about being a socialist. I thought this was supposed to be a speech on monetary policy. This is just bass-ackward explaining of what he thought he was doing.
SHHHHH! Can you people keep it down. Ben is telling me how he is better than free markets. We must suspend free market capitalism and replace it with his market manipulations. Free markets will resume when he has total legislative, executive and judicial powers.
Please don't besmirch Socialists by including Ben in that category. This is not Socialism at all, it's Fascism with a splash of oligarchy...
Ben Stein equates believing we're in a recession is like believing in UFOs.
01/21/2008
Why is this guy on TV?
You want Free Markets? You want depression as well. They go mutually together.
"This is just bass-ackward explaining of what he thought he was doing"
FUNNY!
Anyone have good numbers on the weekend sales that are not from the Retail Federation or Shopper Trak?
Rob Dawg writes:
"I am actually long term hopeful about California... A new California will emerge with a foundation in fiscal restraint."
I'll have whatever he's having.
ova,
Some of us will be wisecracking on our way to the gallows...it took me awhile but I learned not everyone appreciates that perspective. My greatest concern in the unfolding disaster is what kind of world are we building for my four year old daughter.
Care to elaborate on your Cyber Monday dustup?
Regards the Fed Chair's ongoing comments:
Mr. Chairman: "How would you distinguish your current spate of economic interventions from socialism?"
[crickets]
OT, but... I have tried to pull up the SSA web page for three days....said I'd help the hub begin applying for his money. They have been down for three days. The only phone number listed for ANY SSA office (in any town) is (wo)manned by an automatic voice, allowing no opportunity to speak to an agent. If you say you want to speak to an agent, the voice first says you might have to wait, then says you need to call back at another time, and "goodbye". What's going on?
I'll have whatever he's having.
Comrade V
lol
You want Free Markets? You want depression as well. They go mutually together.
--Samual Jackson
Sorry Samual, I'm not susceptible to fear mongering.
Make me one too.
Rob Dawg, did you happen to catch this last election. Spendifornians voted for billions and billions of bond issues.
"You want Free Markets? You want depression as well. They go mutually together." -Samual Jackson | 12.01.08 - 2:07 pm |
That's a good point and very worthy of discussion.
@prairiedog
Social Security Online - The Official Website of the U.S. Social Security Administration
loaded up fine here.
mock turtle, my unsolicited advice is to let it go. Being wrong is its own punishment and he was wrong.
Subsequent events can change disputes and attitudes for the better. For example, now that the election is over, I'm enjoying Rob Dawg's posts again.
I'm also struck by how ironic it is that CR's bold prediction (the shading on his charts) was proven correct the day after he lost his partner here. Some victories really are pyrrhic in nature.
10 yr at 2.78?
this isn't bigger news for what reason?
USTs: 2 Y .88; 10 Y 2.72
i would rather CR was dead wrong about everything and Tanta was still with us...
barley - you must have espn!
" ac writes: I am not anti-pony. I'm just sick of promises and broken dreams every time the postman shows up.
ac | 12.01.08 - 1:52 pm | # "
I agree with your 1:43 post.
Comrade V writes:
Rob Dawg writes:
"I am actually long term hopeful about California... A new California will emerge with a foundation in fiscal restraint."
I'll have whatever he's having.
LOL! Okay, okay. "Long term" is the olde guy idea of "long term." We have to fall on our faces first. What? This is bad? We HAVE to fall on our faces no matter what. It isn't the stumble, it is the recovery.
Actually, I would argue that the recession started the day that the first subprime blowups were revealed, but that is just me. By the commonly accepted guage, the recession started this summer, but what difference does it really make. We have flattened since the end of last year, and this fall we have started over the cliff. Now the NBER will serve as bottom enablers who will claim it is over in January.
sportsfan
you are right
and i wanted seb to know that if he hit the jar and owned it i would consider "it never happened"
but you are right..accounts are even already
if Sebastian invested as he argued, he's paid a much higher price and i bid him peace
espn??
monta's ankle --
10 yr at 2.78?
I'm seeing 2.726.
It broke through the tough resistance at pi percent and is working on e...
Yeah something bad is happening
Brontide | 12.01.08 - 2:08 pm | #
Brick and mortar numbers are slower to pull together, IIRC Thursday we should get some real stats...otherwise, the only hard data is Comscore on the online shopping to date which has been nothing short of disastrous IMNSHO...the key being that they put YoY holiday spending to Thanksgiving at -4%, while in the preceding five years plus that has run at over 20% growth annually.
Cyber Monday will tell a lot I think, in that it has also run at YoY growth rates in excess of 20% and it is a data point we will get quickly...
I quoted a comment from 'BC' on Mish Shedlock's site to a friend of mine who knows DC well.
"A bearish structural factor bearing down on the US economy and equity
market will be tens of millions of Boomers (retiring and being "retired"
involuntarily) being involuntarily fired from employment at peak
earnings, many of whom will never again earn anywhere near their peak
earnings (and medical and life insurance benefits).
Boomers by the millions will be forced to draw down on assets (declining
in value) at a much faster rate than they or most economists imagined in
an attempt to maintain the Boomer consumer lifestyle.
Hedge fund withdrawals are occurring as many financial services types
(hedgies, mutual fund mismanagers, bankers, etc.) are seeing their
livelihoods and a large share of their net wealth evaporate at an
alarming amount and rate. Private schools, private clubs, religious
institutions, charities and not-for-profit entities, etc., are now being
negatively affected by the meltdown in financial assets, including
leveraged real estate.
The deleveraging/liquidation process is still underway for hedge funds
and barely just beginning in the overall US and global financial systems."
The friend's comment:
"These people drive to skirmishes in the class war in their Porsches. Their children gather on the playing fields of National Cathedral School and Saint Albans waving red flags."
Market reacting negatively to the recession admission. Weird.
citizen energyecon | Homepage | 12.01.08 - 2:09 pm
I am an author, abeit a rather unsuccesfull one. About 1/2 my books are sold through the different Amazons. Primarily US, UK, and Germany. My big sales period is now until Christmas.
I noticed my Amazon sales dropping completely off about 2 months ago. I posted, on an authors blog, if anyone else had noticed this? Yes, they sure had.
My sales numbers are not just down. They are almost zero. I am fortunate in that I do not make a living from my writing. It just an interest and a way of paying for my kids college.
I can also tell by how slow I fall through the numbers that Amazon is not moving anywhere near the books they did at this time last year.
Yeah something bad is happening
Nemo
I agree. Wierd!
RD +1 - stumbles are guaranteed, it's what comes next that counts!
Speed writes:
Ben Stein equates believing we're in a recession is like believing in UFOs.
01/21/2008
Why is this guy on TV?
Speed | 12.01.08 - 2:07 pm | #
Well I personally believe in UFOs, but I don't necessarily believe that their origin is from beyond our atmosphere. So I guess Ben Stein is right. Those who know what UFO means are capable of believing we are in a recession because we also know what recession means.
ova - Depression themed books are hot right now
just say'
Becoming ever more the cynic these days I find myself reading "FAR MORE compulsory & 'regulated'" as "FAR MORE easily abused by special interests and political agendas".
Nobody ever explains how these things will lead to more foresight and accountability.
ac | 12.01.08 - 1:43 pm | # "
They won't - just different set of masters & agendas.
The main reason behind social security was the belief that people were too stupid or selfish or shortsighted to manage their own money well and when they fail they put all of society at risk [hungry mobs are angry mobs]... so don't give them the choice of starving. Relative poverty fine - destitution & starvation not fine
The earliest 'social security' model was a support level really little more than 'three hots and a cot'... over time that coupled w/ the 'ownership society' expanded into the expectation of an early retirement into a mini-McMansion on the 18th hole.
We will see a return to the earlier model but more compulsory & regulated.
It won't be all bad but will take time to recalibrate expectations. Poverty is a great tool for resetting expectations - believe me.
10 yr at 2.78?
This isn't bigger news for what reason?....Ya default on behalf of the US government coming to a theater near you.
I got the popcorn...you bring the soda.
Something bad is happening
"I noticed my Amazon sales dropping completely off about 2 months ago. I posted, on an authors blog, if anyone else had noticed this? Yes, they sure had."
I too, although I write poetry, and in the memorable words of a monk at a monastery bookshop: It's poetry. It just sits there.
ova - Depression themed books are hot right now
Naw, I just write depressing books.
I understand Bernanke is leaving the Fed to go into acting...he's be cast to be Maynard G. Krebs in the Dobie Gillis reunion movie...
CR-
You called the top (or the start of the bottom). Well done.
But can you
10 yr at 2.78?
I'm seeing 2.726.
It broke through the tough resistance at pi percent and is working on e...
Yeah something bad is happening
does this factor into it?
Bernanke: lower interest rates are 'feasible'
Bernanke: lower interest rates are 'feasible'
robdawg,
Demographics are easily predictable, but how the boomlet handles the downturn isn't. All things being equal you'd expect it to have a serious sustained period of growth after the pig passes through the university python, but grad school/ hiring environment may smooth that effect out.
Economy should reboot by march/April 2010 but be anemic in recovery until 2014.
AllenM,
RE lawyers I know in PHX are looking/praying for a bottom of august next year. They don't know downside risk but I'm guessing another 15% drop in the "stable" parts of town. At this point if I could arrange financing I'd be buying up city blocks along the light rail beyond 19th ave. You can buy houses with decent lots for under $30k in maryvale.
Something bad is happening
borkafatty
ur thoughts nemo, bork, ma??
ova - thanks, and good luck - writing is a calling.
Comscore link if anyone wanted it:
Black Friday Sees $534 Million in E-Commerce Spending, Up 1 Percent Versus Year Ago - comScore, Inc
Sure, they claim the recession started a
year ago, all the while denying it existed. They try to push it back in time now to rush it along getting us to
believe recovery is sooner to come. The
frauds never end.
"Well I personally believe in UFOs, but I don't necessarily believe that their origin is from beyond our atmosphere."
I wish this were not off topic.
CR-
You called the top (or the start of the bottom). Well done.
But can you now call the bottom?
How strange. It will not load on any of our computers.
"You want Free Markets? You want depression as well. They go mutually together." -Samual Jackson | 12.01.08 - 2:07 pm |
That's a good point and very worthy of discussion.
mp
Well I think there may well be a fundamental relationship between free markets and business cycles. I.E. you can't fundamentally take the recession out of the free market.
That said I would also note that,
a) Highly authoritarian and centrally managed economies also experience all sorts of calamities (amongst the worst in history when the wrong guy takes charge).
b) It seems that the worst problems in "free markets" have occurred when governments have stepped in to promote the excesses that seem to naturally arise in these markets (e.g. Greenspan and his promotion of sub prime home loans in an environment already rife with excess).
"Stocks Fall Sharply on Consumer Spending Worries"
I wish news agencies would stop trying to place cause to market ups/downs - they are most usually wrong. How about just:
"Stocks Fall Sharply"
My thoughts....Are we setting ourselves up for perma freeze on rates?
I noticed my Amazon sales dropping completely off about 2 months ago.
nova, I noticed the same thing in my totally unrelated business. September was bad, but October fell off the chart.
mock turtle, thanks for the kind words. Think I'll go check in to what used to be my day job.
Later,
Want financial security for you and your kids/grandkids?:
Pay for a piece of land (1 acre minimum) that has a good well, electricity, and plenty of sun and weather to grow veggies. Keep an RV available to drive there.
(BTW, what is: IIRC)
Rob Dawg, did you happen to catch this last election. Spendifornians voted for billions and billions of bond issues. - Republicans are TRAITORS
You don't see the problem? "Republicans are traitors." You have no idea how much that has annoyed me. Make no mistake, I'm not saying wrong. I'm only saying annoying.
Yes, the mob ruled and voted bread and circuses aka healthcare and transit. Still I view this as the last gasp of progressive politics started in the early 1900s. The new paradigm is two phases. First a failed pay-go and then seconda as a real ongoing enterprise.
My thoughts....Are we setting ourselves up for perma freeze on rates?
Agreed.
my concern over the 10 yr is that the massive rise in price/drop in yield signals that the US spending its way out of this mess is regarded as a non factor: either because
a.) it won't work
b.) compared to the massive sums being churned in other regions, it really is true that the US economy is still the best one out there
if a is true = bad
if b is true = really really bad
(BTW, what is: IIRC)
If I Recall Correctly.
"a) Highly authoritarian and centrally managed economies also experience all sorts of calamities (amongst the worst in history when the wrong guy takes charge)."
Both kinds of economic systems experience 'calamities." So what can you conclude from that?
"perma freeze on rates" is baked in at ZIRP.
oh, and as I've said elsewhere, i'm of the belief that the 10yr will touch a sub 2% yield before beginning a brutally painful readjustment to over 7% over the next decade...
It broke through the tough resistance at pi percent and is working on e...
Nemo
OMG, the "Golden Ratio!"
Thought CR was saying there was no recession earlier this year based on the available 'data'.
Now we see why govt numbers can't be trusted. As for the numbers being released right now, it must be worse than it appears based on the wrong calls of the past by bulls & govt sources..
Comrade K. Trout writes:
Be PatRIOTic:
Shop !
Cordially,
Kilgore
actually, yes but shop only...
for that which you will need to get you thru the depression
small, rural piece of land, paid for in cash, with rototiller and a well and a single wide...(or cabin)
throw in a bird dog and a double barrel 12 if you like
a friend, a lover and a bottle of whiskey are extras
Long bond going nuts @131.24
It appears Mr. Market would like Ben to STFU...
...thnx eric....
oh, and as I've said elsewhere, i'm of the belief that the 10yr will touch a sub 2% yield before beginning a brutally painful readjustment to over 7% over the next decade...
monta's ankle
Wez is on the same page - except I see the US 30 year up to 4-5 by Spring/Fall 2009. This will compell BB to cap long term rates.
Sam Jack,
You want manipulated markets:
Japan 1989 Nikkei 39000
Japan 2008 Nikkei 8000
Russian breadlines.
Cuba.
Manipulated markets are ruled by self interested greedy people like Paulson, Bernanke, Bush and Puten.
we have the rare "mouth of the volcano" formation on the chart between 1pm and 2 pm, tectonic plates are shifting and the market opens in less than 1 hr
Holiday sales may be worse than thought: researcher
By Brad Dorfman
CHICAGO (Reuters) - Holiday sales are likely to be worse than thought based on surveys taken over the Black Friday weekend, according to America's Research Group.
The group's founder and CEO, Britt Beemer, had already forecast 2008 would see the first decline in sales in almost a quarter century of holiday spending surveys as the U.S. economy shrinks.
Beemer told Reuters on Sunday he expected to lower his forecast this week after seeing how consumers responded to his group's survey during the three days following Thanksgiving, the traditional kickoff to the holiday shopping season.
Holiday sales may be worse than thought: researcher
| Reuters
Me thinks we might have an ugly EOD...
"Sam Jack,
You want manipulated markets:
Japan 1989 Nikkei 39000
Japan 2008 Nikkei 8000
Russian breadlines.
Cuba.
Manipulated markets are ruled by self interested greedy people like Paulson, Bernanke, Bush and Puten."
Putin. In Russia there is always plentiful bread, cigarettes and vodka. Otherwise...
"Nova: I am an author, abeit a rather unsuccesfull one."
Just curious, what kind of books you write?
the guest writes:
Now we see why govt numbers can't be trusted. As for the numbers being released right now, it must be worse than it appears based on the wrong calls of the past by bulls & govt sources..
I expect them to keep saying everything is fine on television, even to the point where the people are at the door with torches and pitchforks.
CR: could you make a link to all of Tanta's posts?
I still can't believe we won't have her around anymore! What a sad, sad loss.
Comrade Lurker, kinda like Baghdad Bob?
Simply irrelevant such "official" diagnosis. And Why, WHY, was such "official" statement not be done before the presidential elections?
Chris Martenson | chapters - The Crash Course - chapters, Crash Course, Economy, Energy, environment, Peak Oil, videos
WTH just happened? Straight up?
"expected to lower his forecast this week after seeing how consumers responded to his group's survey"
The initial, "better than expected consumer spending" is 93% manure.
Just curious, what kind of books you write?
Hilipatihippa | 12.01.08 - 2:28 pm
Holocaust History. Click the homepage link if you feel moved enough to read more.
Pilgrims Pride Seeks Bankruptcy on High Grain Costs
By Erik Larson and Choy Leng Yeong
Dec. 1 (Bloomberg) -- Pilgrims Pride Corp., the largest U.S. chicken producer, sought bankruptcy protection along with five affiliates after rising grain costs and a poultry surplus led to four consecutive quarterly losses.
The company, the second largest chicken producer in Mexico and supplier to Wal-Mart Stores Inc. and Yum! Brands Inc.s KFC restaurant chains, listed assets of $3.75 billion and debt of $2.72 billion in a Chapter 11 petition filed today in U.S. bankruptcy court in Ft. Worth, Texas. Pilgrims Pride said it will seek $450 million in financing arranged by Bank of Montreal to fund operations during its reorganization.
Maybe they can become a bank holding company.
ok, try this....sigh
Amazon.com: Police Battalions of the Third Reich (Schiffer Military History) (9780764327711): Stephen Campbell: Books
WTH just happened? Straight up?
VIX is high. Expect prices to fluctuate.
Nova, I read much on the topic back when I was in high school. Perhaps it was my "dark" stage but I read an inordinate amount on the subject. I have a set of book called the Dr.s of Death. It's a four book series that effected me greatly.
Comrade Kristina writes:
Comrade Lurker, kinda like Baghdad Bob?
Exactly! Didn't even think of that...
Nova- You homepage link is 404 at amazon.
Hilarious 'technical' read, irr-.
I guess we can't call it "chickenfeed" any more
Comrade Kristina | 12.01.08 - 2:32 pm
Yes, it would. We were at Auschwitz and touring the original gas chamber. I was runnning my hand against the wall, I like to touch, and came across some gouges. They fit perfectly for my fingers. Thats when I realized someone had clawed them in their death agony.
Speed,
That is a misrepresentation of this particular survey - the revision downward is from a forecast of negative sales growth for the first time in 20+ years - please be more accurate.
No beef with your statement on the happytalk, but that is not the case with ARG (the NRG shilling fair game IMNSHO).
Samual Jackson,
Endings of recessions differ. You could argue the early 00's downturn didn't end to mid-03. Ditto the early 90's downturn didn't end to mid-92.
I'm tempted to argue that the early 00's downturn still hasn't ended. All we did was attempt to postpone it by trying to borrow our way out of it. That's what I've been tempted to argue since 2004 anyway (when I sold all my stocks), assuming I was the sort of person to be tempted and/or argue.
I might also be tempted to argue that we never stopped trying to borrow our way out of it and the borrowing numbers keep getting much, much bigger. $700 billion here, $800 billion there, pretty soon we're talking real money.
These are just a few of the things I might be tempted to argue.
Those that know me also know how tempted I was to change my name to Deflationary Mark this year. I just can't get myself to the point where I want to bury paper fiat dollars in my backyard as a long-term store of value though.
Therefore, most of my nest egg still sits in inflation protected treasuries at a time when inflation protection seems rather silly. So be it. I'm also not cancelling my fire insurance simply because my house isn't currently on fire. Call me silly!
C. Alexei You nearly have me howling with laughter in my office!
Spouse is a real estate land use zoning attorney.
In 2006 she went to work for a very well funded suburb at my suggestion to escape billables.
In hindsight it was an absolutely masterful move.
The bottom in Phoenix will take a while, there are still waaaaay too many folks trying to catch knives.
It will become more obvious when the lenders are willing to rewrite mortgages to keep folks from walking because it is much cheaper than facing a total meltdown market. BTW- did I mention that I will be whacking my mortgage with Citi soon;-?
In short, we have a long way to go, and a short time to get there.
Someday this war's gonna end...
"One option is for the Fed to buy longer-term Treasury or agency securities on the open market in substantial quantities, Bernanke said. This approach might influence the yields on these securities, thus helping to spur aggregate demand.
Treasury prices rose on Bernankes remarks, with yields on 10-year Treasuries tumbling about 10 basis points to 2.74 percent and two-year notes dropping to 0.85 percent. One basis point is equal to 0.01 percentage point. "
These the same treasuries that people are now admitting might be bogus?
Bernanke Says Fed May Buy Treasuries to Aid Economy
By Scott Lanman and Vivien Lou Chen
Dec. 1 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said he has obviously limited room to lower interest rates further and may use less conventional policies, such as buying Treasury securities, to revive the economy.
The U.S. economy will probably remain weak for a time, even if the credit crisis eases, Bernanke said today in a speech in Austin, Texas. While the Fed cant push interest rates below zero, the second arrow in the Federal Reserves quiver -- the provision of liquidity -- remains effective, he said.
Bernanke has created more than $2 trillion of emergency lending programs in the past year, using the Feds balance sheet and money-creation authority to cushion the economy from the worst financial crisis in seven decades. The central bank may lower its benchmark interest rate to zero and pump even more funds into the banking system, economists said.
Although further reductions from the current federal funds rate target of 1 percent are certainly feasible, at this point the scope for using conventional interest-rate policies to support the economy is obviously limited, Bernanke said in prepared remarks to the Austin Chamber of Commerce.
One option is for the Fed to buy longer-term Treasury or agency securities on the open market in substantial quantities, Bernanke said. This approach might influence the yields on these securities, thus helping to spur aggregate demand.
Treasury prices rose on Bernankes remarks, with yields on 10-year Treasuries tumbling about 10 basis points to 2.74 percent and two-year notes dropping to 0.85 percent. One basis point is equal to 0.01 percentage point.
New Credit Programs
Last week, the Fed announced two new programs aimed at unfreezing credit for homebuyers, consumers and small businesses. Those include a commitment to buy as much as $600 billion of debt issued or backed by government-chartered housing-finance companies and a $200 billion initiative to support consumer and small-business loans.
It is encouraging that the announcement of that action was met by a fall in mortgage rates, Bernanke said of the Feds decision to buy housing debt.
The Federal Open Market Committee next meets Dec. 15-16 in Washington. Economists surveyed by Bloomberg News forecast a quarter-point reduction in the target overnight interbank lending rate to 0.75 percent, with some expecting a half-point cut.
Interest on Reserves
The Fed will continue to explore ways to keep the market federal funds rate closer to policy makers target, after paying 1 percent interest on banks reserves failed to stabilize the rate, Bernanke said. The average daily rate has been below the central banks target every day since Oct. 10.
Thats because Fannie Mae and Freddie Mac, which are large suppliers of funds, arent eligible to get interest from the Fed and thus lend below the Feds target, Bernanke said.
The Fed also aided the rescue of Citigroup Inc. last week by agreeing to backstop a $306 billion pool of distressed assets after the company, the Treasury and the Federal Deposit Insurance Corp. shoulder the first losses.
Bernanke reiterated his defense of the governments decision to let Lehman Brothers Holdings Inc. fail, which intensified the financial crisis.
Unavoidable Lehman Bankruptcy
Lehmans bankruptcy was unavoidable, he said. Since then, authorities have gained the tools to address any similar situation that might arise in the future. Bernanke noted that the funds to aid Citigroup came from the $700 billion financial rescue passed by Congress in October.
The U.S. economy officially entered a recession in December 2007, the panel that dates American business cycles declared today. The National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts, said the economy was last in a recession from March through November 2001.
Our nations economic policy must vigorously address the substantial risks to financial stability and economic growth that we face, Bernanke said.
The Feds balance sheet will eventually have to be brought back to a more sustainable level, Bernanke said. However, that is an issue for the future; for now, the goal of policy must be to support financial markets and the economy.
Signs are increasing that the recession may be the worst in a quarter-century.
Manufacturing Contracted
A private report earlier today showed manufacturing in the U.S. contracted in November at the fastest pace in 26 years, putting American factories at the forefront of the global industrial slump resulting from the lack of credit.
The Institute for Supply Managements factory index dropped to 36.2, the lowest level since 1982, the Tempe, Arizona-based group reported today. A reading of 50 is the dividing line between expansion and contraction. Similar measures from China, the U.K., euro area, and Russia all dropped to record lows.
Erin is giddy now on cnbc, Ben said there is no comparison between the GD and this Recession. What he failed to say Erin, is this one is going to be much, much worse you giddy dingbat...
Rob Dawg,
I agree with you to an extent, but the timeline IMO is way out. I don't know if we will be here to see it and there will be incredible pain to usher in the changes. New "leaders" like Ron Paul will have to be voted into office and purge the system.
If the fed is sanitizing its money injections by balancing them off with a sale of treasuries, then what the FUCK happens when the fed starts buying treasuries?
And resistance at e percent has now been violated too.
I am seeing the 10-year Treasury yielding 2.683 percent. 30-year 3.21 percent.
Hoopajoops,
Monetary velocity has cratered, so not much...for now - as soon as velocity picks up though, inflation could roar - though the Fed will then 'mop up' excess liquidity (so goes the conventional wisdom).
Hoopajoops LTD - They are looking at all options...I guess?
Nova,
Your homepage link is a malfunction. Just offers a general link to Amazo
The Dark Valley: A Panorama of the 1930s by Piers Brendon
This was a book that has influenced a lot of what I think might be possible in our future. Scared people are people that scare me. Stabilty at all costs is much too high a price.
Beard keeps talking about tools, "We have new tools", "the tools at our disposal", etc.
Just call a spade a spade, your throwing money around like its paper hoping people will catch it and go spend it
Amazon.com
Police Battalions of the Third Reich
SS-Polizei: Memories of Poland
Stephen Campbell
Guess I can let go of Nova...
Rob Dawg writes:
Something about horses and barn doors. I forget.
Rob, you always get me. Pure brilliance.
hey, read your book nova got it at the library though
Also look at Pavels poetry. He is very good...
He won't link or mention it either.
Mysteries and Stations in the Manner of Ignatius
by Pavel Chichikov
hey, read your book nova got it at the library though
irreverent
Wow, I am in a library? freakin amazing.
ova,
No keep nova!
With the downward economic slope so steep now, this economic crisis will most likely go out of control, especially in the USA.
There is nothing now to stop it, the last ones were manufacturing sectors and those are now also in big trouble. Engine number four is out...
Even miracle man Obama will not be able to do jacks**t, most likely he will be the last president of USA before it breaks up smaller, more manageable states.
I think this crisis probably will be bigger than for most part relatively peaceful collapse of USSR.
Does anybody care to recommend a good book on the technical workings of the Fed?
I will energycon. I also feeling embarrassed. This is not the place for "All about me."
I think GDP has been over-stated for years as well as the entire Treasury yield curve. We have been deceived for many years with falsified statistics and manipulated government data, so what now, do we simply fall back to the mean and ignore the lies, or do we engineer a system that will be more truthful?
Looks like the afternoon shift might be early with the 'yentervention'...
Bernake speech from 2002: Deflation: Making Sure "It" Doesn't Happen Here
Speech, Bernanke --Deflation-- November 21, 2002
Under "Fiscal Policy" subtitle:
Of course, in lieu of tax cuts or increases in transfers the government could increase spending on current goods and services or even acquire existing real or financial assets. If the Treasury issued debt to purchase private assets and the Fed then purchased an equal amount of Treasury debt with newly created money, the whole operation would be the economic equivalent of direct open-market operations in private assets.
ova,
Scared people are people that scare me.
It could be worse.
Scared AND desperate people are people that terrify me.
I forget. Is it still okay to say "terrify" in public? I don't mean to scare you, but I'm scared I may have said something I'll later regret.
Yes, I always thought velocity of the change for the worse would be so much greater this time. Way too many varibles...
Does anybody care to recommend a good book on the technical workings of the Fed?
safe_as_apartments
Helter Skelter?
"a) Highly authoritarian and centrally managed economies also experience all sorts of calamities (amongst the worst in history when the wrong guy takes charge)."
Both kinds of economic systems experience 'calamities." So what can you conclude from that?
Well I think we have to look at more fundamental and structural causes.
For example I'm starting to think that large scale synchronized economic activity is inherently prone to collapse.
Again, I've noticed in many other types of systems both natural and artificial the tendency for highly integrated complex systems to be inherently brittle is compensated for via massive redundancy and replication.
Something we maybe don't/can't do with economies.
Currently I think we might all need to go back to subsistence farming.
ova,
yeah it can be quite the shark tank - my WAG, literary accomplishment is valued by most of this crowd - and you are suitably modest
The 30-year T bond action today is basically predicting depression.
There's only one reason to buy a 30-year T bond yielding this low.
You think Treasury yields are going even lower, and they ain't coming back for a long time. And you aren't prepared to settle for zero yield.
Today isn't just the first day on which the recession has been official. It's the first day of the ZIRP era in the U.S.
There is no reason to own any stock in this environment except a gold/silver stock. And there is every reason to own a gold/silver stock.
Rob Dawg | Homepage | 12.01.08 - 1:07 pm | #
Right on.
jo6pac
We will see a return to the earlier model but more compulsory & regulated.
It won't be all bad but will take time to recalibrate expectations. Poverty is a great tool for resetting expectations - believe me.
dryfly | 12.01.08 - 2:18 pm | #
Absolutley correct, and this will be the end of most investment management firms. Their primary sources of growth were meant to be 1.) defined contribution assets, and 2.) overseas institutions, and both of those engines are aggressively in reverse. Couple that with collapsing asset bases for revenues and you have a recipe for a massively shrinking industry.
Nova - you should keep the name! You invented it, it's your persona here, and there's no reason to change it really. Just my worthless two cents. But congratulations on completing two books - that's really impressive.
ova: sorry mixed it up with Browning's book
I think far to many "scared" people own guns. To many have to have their information feed to them in predigested bites. People like that, I think, have the potential volatility of old fashioned nitro.
rich --
There's only one reason to buy a 30-year T bond yielding this low.
You think Treasury yields are going even lower, and they ain't coming back for a long time.
Or you think the Fed intends to clamp them.
Bernanke's speech today is remarkable...
Does anybody care to recommend a good book on the technical workings of the Fed?
Star Fleet Technical Manual?
Amazon.com: Star Trek Starfleet Technical Manual: Training Command Starfleet Academy (9780345495860): Franz Joseph: Books
Nova
Read hundreds of books on that "topic".
Finally decided it was time to move on.
Meanwhile, $ down 2.2% to the yen.
The 30-year T bond action today is basically predicting depression.
I'm thinking more that like all other markets in this country it merely represents massive government intervention and bears increasingly little relationship to reality.
Our "free" markets reflect manipulation not the real world. As such they are becoming useless for their intended purpose.
Our economic "nervous system" is so doped up that it serves little practical value anymore. Hence the ensuing economic malaise.
How many old folks went to Treasuries to peserve income? A lot, is my guess. That is not working out real well for them.
Check out: The Federal Reserve System Purposes & Functions:
FRB: The Federal Reserve System Purposes and Functions
irreverent--thank you!
Comrade Kristina writes:
Please don't besmirch Socialists by including Ben in that category. This is not Socialism at all, it's Fascism with a splash of oligarchy...
Comrade Kristina | 12.01.08 - 2:06 pm | #
THANK YOU
jo6pac
The yield curve is melting fast, this is amazing! What did Congress think, TARP was going to help yields? We have transfered the tsunami of cheap and easy credit to our Treasury and now, they are dumping the TARP burden into US debt, so now that we crashed the economy with credit fraud, why not fucking crash The Treasury with debt fraud?
Get ready for the introduction of 100yr T-bills.
Kona, it almost seems like a plan, no?
Green coming soon!
perpetual gilts
perpetual gilts
irreverent | 12.01.08 - 2:58 p
WWI UK Bonds?