Many Now predicting Double-Dip Recession

[rudder]

We have ample access to credit markets.

hmmm time to fill up all those zero balance credit cards I have. I have one that will give 0% interest for 6 months. So lets say I max out a $15,000 credit line. Ooops in 6 months the cost of this credit goes up and I have trouble making payments. Oh well, I always have another credit card I can transfer the balance to.

Ample access to credit markets... are you sterile? That is the only logical explanation is that you don't have kids and you really don't give a damn other than the now moment.

The democratic Tennessee governor has increased the states budget at twice the rate of inflation over his 8 years in office. We have a balanced budget, but things do not look good. We are facing layoffs. Should the State take Federal money (ample credit that my children will be on the hook for) to avoid layoffs? Or should the State budget be brought back inline with where it is supposed to be?

Having the Government borrow money to get the economy rolling through stimulus payments does not work. Can you cite some examples of it working? Japan would be a good case study for you.

 

[brencat]

The housing market bottoming out was for these two reasons. Homes were overvalued beyond what it cost to build them, this is not sustainable. Home values went up far beyond the increase in household income, pricing itself out of the market. Home values have to drop back into the range of income, or income has to be inflated to match current home values.

And home values went into a bubble due to the excess availability of credit brought on by cheap money (i.e. too low interest rates). Excessively low rates (read: the Fed) are the root cause of most of our problems today. Fed Funds should never be below ~ 2% IMO.

As can be seen, there is a limit to what stimulus can do. Eventually you rack up so much debt that simply adding to credit availability is not going to give the boost it might have once done. The debt has to be either 1) paid off, or 2) deflated. Both are bad in the sense that the first takes time (more time than people and politicians have patience for) while the second harms the future availability of credit as creditors get wiped out. But regardless, the net result is less spending or less credit availability, both of which are deflationary.

This is why in the end Deflation will win. On the cusp of a 3rd Great Depression -- my call.

 

[Acanthus]

hmmm time to fill up all those zero balance credit cards I have. I have one that will give 0% interest for 6 months. So lets say I max out a $15,000 credit line. Ooops in 6 months the cost of this credit goes up and I have trouble making payments. Oh well, I always have another credit card I can transfer the balance to.

Ample access to credit markets... are you sterile? That is the only logical explanation is that you don't have kids and you really don't give a damn other than the now moment.

The democratic Tennessee governor has increased the states budget at twice the rate of inflation over his 8 years in office. We have a balanced budget, but things do not look good. We are facing layoffs. Should the State take Federal money (ample credit that my children will be on the hook for) to avoid layoffs? Or should the State budget be brought back inline with where it is supposed to be?

Having the Government borrow money to get the economy rolling through stimulus payments does not work. Can you cite some examples of it working? Japan would be a good case study for you.

You actually haven't studied the lost decade then.

Read an economics book before you comment on economic topics.

 

[IGBT]

you'll see another round of lay off's next year when "the obama" tax hikes kick in.

 

[Anarchist420]

We're soon going to enter the 2nd Great Depression, then comes WWIII. Everyone who lives past WWIII will live in a one world government. Plain and simple.

Why Obama wants this to happen is beyond my comprehension. Dr. Paul and the Austrian School were right and I've completely believed that since 2007.

 

[sandorski]

We're soon going to enter the 2nd Great Depression, then comes WWIII. Everyone who lives past WWIII will live in a one world government. Plain and simple.

Why Obama wants this to happen is beyond my comprehension. Dr. Paul and the Austrian School were right and I've completely believed that since 2007.

Fell on your head?

 

[StageLeft]

I've always thought the possibility of a double dip was way overstated, especially where our government took the correct remedial action by stimulus spending. But the unforeseen Gulf Oil spill has intervened and in my view that is going to put a huge whammy on both employment and the economy in general. It's like the Dust Bowl occurring during the Great Depression.

Sorry you don't get to blame this on the oil spill. All of this has been in the works well before that explosion. E.g. the greece implode or europe implode threads are older than the oil spill as are the terrible and stubborn unemployment numbers, bad housing data.

We have ample access to credit markets.

So do I. My credit score is fvcking awesome but I'm not blowing my wad at the car dealership. Credit comes at a cost. This spend spend more talking point is really getting old.

Ample access to credit markets... are you sterile? That is the only logical explanation is that you don't have kids and you really don't give a damn other than the now moment.

I concur with this. My parents, your parents are the ones who've put us in this fvcking mess, are we going to exacerbate it to our kids? They've been sucking on the credit teat for decades now making the problem worse and worse. Let's be better. The economy needs a complete overhaul and recalibration.

You actually haven't studied the lost decade then.

Actually it's two lost decades now. Japan is STILL reeling from their turmoil from two damn decades ago.

 

[Acanthus]

Actually it's two lost decades now. Japan is STILL reeling from their turmoil from two damn decades ago.

So you don't think Nikkei might have been just a tad high at 35000? Is that the metric you are using? or some other metric?

Yeah, they really seem to be hurting right now with their unemployment rate that is half of ours.

http://www.wikinvest.com/wikinvest/...e:Unemployment_(Japan)&format=html&comments=0

Exports have driven Japan’s recovery from recession but recent data showed the pace of shipments was losing steam amid anxieties over both the impact of global stimulus withdrawal and European debt on exports.

lol

 

[StageLeft]

So you don't think Nikkei might have been just a tad high at 35000? Is that the metric you are using? or some other metric?

Yeah, they really seem to be hurting right now with their unemployment rate that is half of ours.

http://www.wikinvest.com/wikinvest/...e:Unemployment_(Japan)&format=html&comments=0



lol

http://www.indexmundi.com/japan/gdp_real_growth_rate.html There are also jobs in Japan that are simply make-to-work, like paying a guy to simply press buttons on an elevator so that he can feel happy with himself; the employment culture is not the same as here.

 

[Acanthus]

http://www.indexmundi.com/japan/gdp_real_growth_rate.html There are also jobs in Japan that are simply make-to-work, like paying a guy to simply press buttons on an elevator so that he can feel happy with himself; the employment culture is not the same as here.

yes, their staggering 0.2% increase in unemployment.

We will be killing for that when the "tea party" gets their way.

silly comments aside, japans real estate market was just stupid in the 80s.

Much like California and NYC now.

I don't agree with propping up real estate prices with incentives, I do agree with stimulus that puts people to work and eases some of the pain of the recession while contributing to GDP.

 

[alkemyst]

double-dip the new buzz word.

Sadly just talking about it will cause it.

 

[Genx87]

double-dip the new buzz word.

Sadly just talking about it will cause it.

I wouldnt say it is a new buzzword. It has happened in our past and has been talked about since last summer.

 

[Thump553]

Sorry you don't get to blame this on the oil spill. All of this has been in the works well before that explosion. E.g. the greece implode or europe implode threads are older than the oil spill as are the terrible and stubborn unemployment numbers, bad housing data.

Greece and the rest of the PIGS was a foreseen problem. Also, they matter to the world economy and put a damper on US companies exporting to Europe and financiers, but not a whole lot of effect to the general US. The gulf spill OTOH unexpected slammed an entire region of the country's employment, shutting down a lot of decent jobs for which chain gang work cleaning up beaches isn't really a good substitute. Without a doubt the gulf will cause quite a whammy in my view on employment, killing or greatly setting back a weak recovery.

 

[werepossum]

I'm hearing three big problems right now. First two are cap-and-tax and health care reform - businesses still don't know how badly those are going to hurt them, so they have to hang onto cash. Second is commercial credit - it is TIGHT! We've got business that are decades old and are making money and wish to expand, but right now for a $1 million expansion the banks are requiring $400,000 to $500,000 cash ($500,000 to $600,000 loan on a $1 million project.) The companies either don't have that much liquidity, or they have it but are afraid to invest it for fear of how badly the government is going to hurt them in the next few years plus the threat of a renewal of the recession. I don't know if it's that government borrowing is taking all the available funds or that banks are still really hurting from the mortgage/derivatives bust or the persistent rumor that commercial real estate is about to take a dive to dwarf that of the home market, but I haven't seen commercial credit this tight since the Carter era.

If the government is going to have another stimulus (and frankly I think that's probably a bad idea) then I'd like to see it invest in projects that decrease government's appetite. Government at all levels have old buildings that are energy inefficient. Replacing or renovating those buildings would reduce operating costs if done right.

 

[alkemyst]

I wouldnt say it is a new buzzword. It has happened in our past and has been talked about since last summer.

Yeah...but now everyone is knowing it.

Much like buying homes for resale. Once the general public knows it's too late to do anything but mess things up.

Unfortunately we have to always outdo ourselves today even in failure. It makes a good story.

 

[shira]

who is Klugman? Krugman?
IMO, he thinks we need more stimulus, that's why he's beating the recession drum.

Yeah, what does Krugman know? He's just a Nobel prize-winning economist who's clearly just a tax-and-spend liberal. And he seems to have issues with those who think that now - in the midst of a financial crisis - is the time for fiscal austerity:

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

 

[charrison]

Yeah, what does Krugman know? He's just a Nobel prize-winning economist who's clearly just a tax-and-spend liberal. And he seems to have issues with those who think that now - in the midst of a financial crisis - is the time for fiscal austerity:

Well just remember, he thought inflating the housing market was a good idea at one point too.

 

[shira]

Well just remember, he thought inflating the housing market was a good idea at one point too.

Are you sure you're referring to the correct Paul Krugman?

From August, 2005:

http://www.nytimes.com/2005/08/29/opinion/29krugman.html

But as recently as last October Mr. Greenspan dismissed talk of a housing bubble: "While local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely."

Wait, it gets worse. These days Mr. Greenspan expresses concern about the financial risks created by "the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages." But last year he encouraged families to take on those very risks, touting the advantages of adjustable-rate mortgages and declaring that "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage."

If Mr. Greenspan had said two years ago what he's saying now, people might have borrowed less and bought more wisely. But he didn't, and now it's too late. There are signs that the housing market either has peaked already or soon will. And it will be up to Mr. Greenspan's successor to manage the bubble's aftermath.

How bad will that aftermath be? The U.S. economy is currently suffering from twin imbalances. On one side, domestic spending is swollen by the housing bubble, which has led both to a huge surge in construction and to high consumer spending, as people extract equity from their homes. On the other side, we have a huge trade deficit, which we cover by selling bonds to foreigners. As I like to say, these days Americans make a living by selling each other houses, paid for with money borrowed from China.

These are NOT the words of someone who thought the housing bubble was a good thing.

 

[Special K]

I predicted a double dip great recession months ago.

People are fools to think the economy will just recover magically. 5 years is what it will take, at least.

The sad thing is we will probably see another recession before 5 years have elapsed. I'm not sure how close one recession has to occur to another for it to be considered a "double dip", but I read an article today that speculated that recessions will occur more frequently in the future due to increased volatility and uncertainty, and that the labor market will not fully recover before the next recession.

It also speculated that we will never return to 4% or less unemployment for the same reasons:

http://money.cnn.com/2010/07/02/news/economy/jobs_gone_forever/index.htm

Of course those are just the opinions of an economist at Wells Fargo, but I think the points he made are interesting.

 

[Jaskalas]

due to increased volatility and uncertainty

The very nature of a government run economy.

 

[Acanthus]

The very nature of a government run economy.

One could argue that a stark lack of regulation and unfair trade create volatility.

Slave wages and slave conditions make all of our stuff. We just don't call it slavery so it isn't.

Our labor market can't compete with that, because we have laws.

Hefty import taxes on nations that have unfair trade practices would remedy most of our manufacturing issues.

 

[soccerballtux]

Yeah, what does Krugman know? He's just a Nobel prize-winning economist who's clearly just a tax-and-spend liberal. And he seems to have issues with those who think that now - in the midst of a financial crisis - is the time for fiscal austerity:

he misses basic, self-evident concepts of macroeconomies, so yes, I think he's foolish.
The Nobel prize has been overwhelmingly proven and accepted to be a joke now anyways-- means nothing more than a pat-on-the-back for agreeing with certain political ideologies.

 

[charrison]

Are you sure you're referring to the correct Paul Krugman?

From August, 2005:

http://www.nytimes.com/2005/08/29/opinion/29krugman.html



These are NOT the words of someone who thought the housing bubble was a good thing.

Go back farther. He was discussing inflating the house boom to soften the blow of the dotcom bust if memory serves me correctly. But dont worry, it is not hard to find contradictory statements from krugman. One only has to read what he has to say about deficits during a republican admin vs democratic admin. Krugman may be a good economist, but he is also a partisan hack.


http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

He also said a double dip was coming from that recession. That never happened either.

 

[Carmen813]

Drop cap and trade.
actually address health care costs.
drop min wage back down to encourage business to hire low wage workers again.(the youth have not been helped by min wage increase at all at this point)

streamline the tax code, both corp and personal.

Cap and trade could lead to substantial economic growth, but people would need to get past the fact that in the short term their energy bill would rise slightly.

 

[GeezerMan]

Cap and trade could lead to substantial economic growth, but people would need to get past the fact that in the short term their energy bill would rise slightly.

Obama: My Plan Makes Electricity Rates Skyrocket

http://www.youtube.com/watch?v=HlTxGHn4sH4

"Under my plan of a cap and trade system, electricity rates would necessarily skyrocket."