It seems all of the previously relatively strong areas of the economy - consumer spending, investment in non-residential structures, and exports (and manufacturing) - are all in a steep slide.

Very steep slide - even Deere & Co. saying profits next year will be down [maybe a lot].

So it begins. If these bond deals were done as part of a criminal enterprise, the citizens of Birmingham out of the bond deals:

Birmingham Mayor Larry Langford arrested on federal charges | Breaking News from The Birmingham News - al.com

OT: Is there a connection between the Fed refusing to settle the repo market and the fixed 30 year. Deflation aside, how evil can the T market get??

From Harper's Magazine, 1932

Revolutions are an old story to the American Citizen. To the Russian, they are still a new and startling experience; the American knows the tale of revolution almost by heart. His national existence began with one, many of the most illustrious names in his history books are associated with that celebrated rebellion.

...

The country, with its institutions, belongs to the people who inhabit it. Whenever they shall grow weary of existing government, they can exercise their constitutional right of amending it, or their revolutionary right to dismember and overthrow it.

What is the American with the revolutionary birthright htinking about these days? His own country and the world are now in the midst of a vast economic upheaval. The systems of production and distribution have been badly jammed, and some of the parts will never again be of any use. You and I and the citizen begin to have a feeling that perhaps we shall have to deal with a number of problems that we have never touched before. This word revolution is heard at every hand; we seem to face revolutions of all sorts and kinds. We use what intelligence we have, not as experts of finance but as ordinary citizens, watching the news of the world as our neighbors and the newspapers give it to us.

For the most part, the men who now occupy our seats of government were there at the high tide of the boom. They were in office when the crash came and, barring the fatalilties of the last elections, they are still there. Mr. Hoover is, of course, the most obvious example. In business the same captains of industry, the same banking authorities, the same investment counselors are holding on to their jobs. It is true that the mortality has been great, but there are a good many fat, prosperous names left. When the storm came, these men, who had so industriously presdicted prosperity eternal and who had diagrams and charts to prove it, were helpless. We could have stomached their helplessness with far better grace, perhaps, if the great ones had been willing to admit it. But they were not. We ourselves had been crippled; so had our neighbors. It was impossible for us to conceal the consequences of our idiocy, and there was nothing to do but make the best of it and try to start again. But the captains and the senators and the cabinet members could not admit their folly or their helplessness. They had been omnipotent and omniscient for so long that a stepdown was impossible.

There's more... this is shockingly parallel. It's weirding me out.

Also - I've been having companies tell me their EAU forecasts (estimated annual usage) is dropping like a stone and are worried this will result in price increases [there really are higher costs associated with lower volumes in most mfg processes - ways to mitigate some but 'economies of scale' are real things that never go away]... so far falling raw material prices negated increases from lower volumes but we'll see that 'bottom out' too.

Once you see lower demand AND higher component part prices - that's when a lot of mfgrs scream 'uncle' and lay offs come in earnest.

BTW - midlevel white collar 'support function' jobs (IT, mktg, acctng, supply chain & logistics, engineering, finance) will get massacred - that's the only place they can cut enough to make a difference. Look for it coming to a company near you.

Whatever is driving it, the 3.3% 30-year bond yield is the most negative signal I've seen yet.

I believe it is due in part to insurance company and pension implosions.

These entities, with giant fixed income portfolios, can lose control of their own fates. They are mandated to slash default/price risk, and every day they invest in T-bills at zero they would just deepen their financial crisis.

A lot going on behind the scenes. So long as long bond yields keep falling, it is very negative for the stock market. Silent panic.

Ponyless in NJ(Good) writes:
It seems there is very little keeping this economy from freefall.. Fed/Treasury will need to pump a lot more money in to at least stabilize any remaining productive sectors. Not sure what those really are in the US economy anymore...
Ponyless in NJ | 12.01.08 - 11:58 am | #

Yup - and there is still more here than you realize. The problem is the jobs are in midlevel white collar - I think a lot of those are gone regardless.

Ask yourself - if I don't go to work today does the plant/company shut down? If the answer is 'no' - then you are expendable.

And even if you are 'essential' consider this - grave yards are full of people who once thought they were indispensable yet the world kept going around the sun.

This recession goes from 'virtual' to 'real' when the job loss kicks into hyperdrive.

...And so we were treated to a most extraordinary spectable. We saw these men, like a troop of savages, attempt with chanting and loud cries to abate the wrath of the storm. It is needless to rehearse their shibboleths and incantations, their magic words "optimism" and "just around the corner." We know them all by heart and we know they didn't work. But now, as we move into the third year of hard times, we discovers that these gentlemen are still positive, still knowing, still as farsighted as ever they were. We learn that they had no share of responsibility for the disaster. The eminent banker who declared twelve days before the crash that "the industrial condition of the United States is absolutely sound and our credit system is nin no way critical" is still authoritative and serene. Recently he appeared before a senate committee and testified that the extravagant lending of money to corporations and individuals for speculation "should have been stopped ten years ago." Stopped by whom? He declared that the bankers would never be governed by any code set up by themselves, and, when questioned about the possibilities of government control over unruly finance, was horrified. "We are frankly skeptical," said he, "That the ideal can be attained; freedom for the individual to engage in whatever business he chooses and to develop that business in accordance with his talent and judgment is a privilege which all Americans cherish. It involves freedom to make mistakes."

Freedom to make mistakes! A remarkable stetementi nthe face of an army of bankrupts and an ever-growing horde of unemployed. Is it for this freedom that he and his colleagues plead for public confidence and support while eveyr available means of publicity is invoked to cajole money out of hiding? What can the citizen think? .. The only trouble is that we won't believe it. And from this we can draw but one conclusion: The captains and the cabinet members have learned nothing... even the Dean of the Harvard Business School is willing to admit that "capitalism is on trial and on the issue of this trial may depend the whole future of western civilzation."

In my years of employment one thing has always stuck with me. EVERYONE is expendable...Take that to the bank, if it's still open for business...

don't expect BRIC to decouple from the global decline. the ecuadorian bond default is making central and south america very nervous -

ecuador press -
Brazil fears that other countries question their external debts

Google Translate

Brazilian press -

Google Translate

It's official - we're in a recession. NBER dates recession start to Dec.07. Just in case there was any doubt.

CR is the man! Perfect recession call!

anyone have a link for the NBER info?

Anybody else see the 3-month T-bill hit ½ basis point today?

No, but I'm not watching continuously. It's been 10 basis points or less for some time now anyway. It's amazing how quickly we have become inured to being in a liquidity trap. Every day at those numbers should be front page news, but nobody cares anymore.

Do you think NBER was waiting for the election to be over to announce the recession?

Is the Pope Catholic? Seriously, how blatant can you get?

Dec. 07, dang, i was off by 8 months in our mugs game here at CR back in 05.

Calculated Risk: The Mug's Game Challenge: Predict the Start of the Next Recession

UPDATE: Prize? The winners get their names mentioned, their comments featured, the admiration of their peers, and a free subscription to Calculated Risk!

UPDATE 2&3&4: Elaine is already a winner! Here are the picks so far (updates in bold):
Aug 2005 Kirk Spencer, wharf rat
Sep 2005 Vernon Bush
Oct 2005 BE, David Bennett
Nov 2005 David Yaseen, Fernando Margueirat, steve kyle, Nguyen Khuu
Jan 2006 Yusef Asabiyah, dryfly, Frank, redfish
Feb 2006 Mish, E.Robinson
Mar 2006 Colin H, ChasHeath, Alan Greenspend, Movie Guy, F.Hagan
Apr 2006 battlepanda
May 2006 Ken Houghton, navin
Jun 2006 DOR
Aug 2006 Jason Wright
Mar 2008 dilbert dogbert
Jul 2008 jl
Nov 2008 Elaine Supkis
March, 2011 Paul
NEVER Larry Kudlow's doppelganger

crispy&cole(Unrated) writes:
NBER MAKES IT OFFICIAL!!
crispy&cole | Homepage | 12.01.08 - 12:16 pm | #

In other news - NBER weather forecasting division are waiting for Dec 21 to announce 'winter has come to North America'... meanwhile residents of Minnesota continue to scrape ice & snow off their driveways.

Hoopajoops LTD | 12.01.08 - 12:12 p

Rest your fingers. thanks tho.

energyecon --

Great Googly Moogly indeed.

Short-term rates on government paper are essentially zero. I wonder how far the Fed is willing to go buying riskier and longer-duration assets.

Dryfly - nothin runs like a Deere!

In honor of the Recession call:

----"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

---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.

Next time a financial expert tries to tell you anything....remember those most in "the know"........DIDN'T!!!!

Liquidity trap from Wiki

The definition below makes perfect sense as an investment strategy. Why lose what you have? Yet, if everyone begins to believe that; you get a very bad result.

The only 2 ways out? If I understand it correctly is pay the consumer to consume. Or let the system crash and rebuild. Neither is really all the cool of an option...

In this kind of situation, people do not expect high returns on physical or financial investments, so they keep assets in short-term cash bank accounts or hoards rather than making long-term investments. This makes a recession even more severe, and can contribute to deflation.

(OT) Re: NBER recession call.

And for anyone who missed it a couple of weeks ago, my (continued) apologies to CR and all the other recession-callers. I was dead-wrong all the way with no excuses, and you were dead-right.

Sincerely,

Sebastia

Wow Sebastian, very classy of you, many people can never admit being wrong.

Average Joe,

Thanks for the trip down memory lane.

Money (mis)managers!

In other news - NBER weather forecasting division are waiting for Dec 21 to announce 'winter has come to North America'... meanwhile residents of Minnesota continue to scrape ice & snow off their driveways.

dryfly | 12.01.08 - 12:21 pm | #

I think NBER would be announcing that winter 2007 had indeed arrived last winter...

Nice apology Sebastian....although since you didnt take anyone's money for your investment skill (I assume), you don't need to apologize.

All those idiots who got paid as "financial" experts...who came on TV to encourage others to put their hard earned money where there mouth was...for all those who took a small piece of other people's investment money as a fee for their "financial prowess"....they should resign today and return every penny.

This was the easiest most obvious call in financial history.

Even the Average Joe, with no financial training could see it plain as day.

All you "financial experts" were frauds and we need the same media that held them in high esteem, to embarrass and shame them.

It's only fair.

And to all of you who have thanked me for saving and posting those quotes.

You are welcome.

Here's a good one I used to hear often from the CNBC dingbats:

Service eCONomies are more resilient.

HAHAAHAHAHA!

Pavel Chichikov(Unrated) writes:
"...grave yards are full of people who once thought they were indispensable..."

Something like: The cemeteries are full of indispensable people.
Pavel Chichikov | 12.01.08 - 1:17 pm | #

And de Gaulle should know - some of them are his neighbors.

[BTW I knew de Gaulle said that - I was too lazy to get the exact quote & citation - my bad. One of the best quotes ever though - especially for those with really 'big heads'...]