The recession will be over sooner than you think.

[bamacre]

Originally posted by: GTKeeper
Greenspan, who can be viewed as a great economist or someone who is very knowledgable on the economy said 'I thought the free market would be able to police itself' WRONG.

LOL, why give merit to anything this guy has to say? For him to even refer to his actions as "free market" is laughable. The deregulation was irresponsibly done. And his keeping interest rates so low for so long totally contradicts free market ideals. [/quote]

Keynesian economics and behavioral economics are making a strong comeback

Greenspan's Keynesian economics is what got us into this mess.

 

[JMapleton]

Originally posted by: GTKeeper

Yes, Buffett is in stocks, but his 'stocks' are quite different than what you and I buy. When he bought a few billion of Goldman Sachs, it was a) preffered shares, b) with a massive 10% dividend on his investment. Definitely not a deal that you and I can cut with our E-Trade account.

Incorrect. His article was in regard to his personal investments outside of Berkshire Hathaway, which he trades in regular accounts just like you and I.

 

[StageLeft]

Good points dullard about equity being a milestone that won't be repeated and the second being the more general economy.

 

[blackangst1]

Originally posted by: GTKeeper

Originally posted by: blackangst1

Originally posted by: heyheybooboo

Originally posted by: Kadarin
Sometimes I think these "economists" (assistant professor + PhD candidate in this case) pull this stuff out of their asses.

This.

I need something more definitive than the ""implied volatility on the S&P 100"" with banks functionally insolvent, home values still falling, foreclosures increasing, retirement savings crushed, job losses mounting ...

Originally posted by: JMapleton

I understand it's the "cool thing" to be a pessimist and claim you know "what really goes on."

I have no idea what this means. Is this your invention? Don't tell me ...

We are in a mental recession, right?

Go out and shop and everything will be fine ...

I think what he means is, especially on this board, many like to armchair quarterback the economy and think they can look at an overall picture of a few indicators and assess the situation accurately. When in fact, like it or not, economists at Stanford have more insight and knowledge of econ than we do. Agree or disagree, they are MUCH more qualified to comment on things than most of us.

I disagree with all these 'great economists'. If they are so fucking right, then how come only a few people saw this shit coming down the pipe? Do you know why? Because these guys are good at coming up with theories that SOUND good and win them nobel prizes. The guys I trust are the few guys that did see this, and do you know what they invest in right now? Cash!

Greenspan, who can be viewed as a great economist or someone who is very knowledgable on the economy said 'I thought the free market would be able to police itself' WRONG. Keynesian economics and behavioral economics are making a strong comeback because in any market you have people running it who are greedy, naive, and stupid at times.

I can tell you that in the consulting space, i.e big 5 and smaller firms, there is VERY little work coming down the pipe beyond Q1 of this year. I don't see how firms, people, and small businesses will suddenly see demand rise so the economy will start growing again.

My question is, who DIDNT see this coming? AFAIK everyone KNEW the bubble was going to burst....not sure what you mean by implying so few didnt know this would happen....

 

[JMapleton]

Originally posted by: blackangst1
I think what he means is, especially on this board, many like to armchair quarterback the economy and think they can look at an overall picture of a few indicators and assess the situation accurately. When in fact, like it or not, economists at Stanford have more insight and knowledge of econ than we do. Agree or disagree, they are MUCH more qualified to comment on things than most of us.

Moreso, I think there is culture of pessimism on most political boards because of our society's exaltation of people who blow the whistle on "things done incorrectly." I think it's fashionable to sit back and speak of how incorrect decisions are finally coming around to bite them in the rear.

 

[Special K]

Originally posted by: GTKeeper
GM and Chrysler are 1 step away from BK (don't be surprised of GM BKs this week)

Don't you think this is a bit extreme? I know the big 3 are due to report their restructuring plan to congress this week, but GM has already stated the last loan they were given should last them through the end of March at least. Even still, I would guess the government would extend them yet another loan before allowing them to enter BK.

 

[JMapleton]

Originally posted by: GTKeeper
I disagree with all these 'great economists'. If they are so fucking right, then how come only a few people saw this shit coming down the pipe? Do you know why? Because these guys are good at coming up with theories that SOUND good and win them nobel prizes. The guys I trust are the few guys that did see this, and do you know what they invest in right now? Cash!

The very nature of your posts drains away all credibility. You strike me of having a very 2 dimensional view of things, like a drunk in a bar rambling on after hearing of facts and figures he could not understand.

 

[LegendKiller]

Originally posted by: Skoorb

Originally posted by: JMapleton

Originally posted by: Skoorb
That's it? He bases this all on some fear index. Like that's basically all of it. Not convinced, however he has a promising career working for the Federal Reserve with attitudes like his.

I understand it's the "cool thing" to be a pessimist and claim you know "what really goes on."

However, if such an index has been correct in all previous recessions, why should it be different?

On the outside, a fear index may seem to be not very telling of the where the economy truly is. But the point made in the article is that companies fear uncertainty and freeze hiring when no end of a recession is in sight, thus prolonging recessions.

It should not be long until the dwindling of uncertainty becomes noticeable and companies begin to hire again, which would create a ripple effect that will end the recession. I give it until next holiday season when holiday sales rebound and consumer confidence rebounds and creates a clear message to companies that it's safe to hire again.

BTW the authors to this essay are an "assistant professor" and a "PhD Candidate".

I would guess that more credibility than you have or almost everyone else on anandtech.

And that's why it will be so much funnier to lawl when they get this wrong, won't it. Being an assistant professor and aspiring to get a PhD hardly merits one as a captain of industry, if we're going to measure dicks, and even if we were there are plenty of people with magnitudes more credentials than these guys who fvcked up in this.

And you have any credibility at all? At least they are putting a theory out there with their own evidence and such. All you've got is some prognostications in your sig line about the oil bubble (lol, you're not the only one) and the bailout (guarantee ROI? Nobody ever said there was one and to even calculate an alternate universe where there was no bailout is stupid). You don't even work in finance/economics, so what the fuck do you have backing your shit up?

Ohh, that's right, the wind.

 

[Jaskalas]

Originally posted by: Kadarin
Sometimes I think these "economists" (assistant professor + PhD candidate in this case) pull this stuff out of their asses.

Those are administration quality economists then. As for the OP - HAH, this has to be some sort of joke. Get back to me when unemployment has peaked and housing prices are on the rise again. We haven't hit bottom until that happens.

 

[GTKeeper]

Originally posted by: JMapleton

Originally posted by: GTKeeper
I disagree with all these 'great economists'. If they are so fucking right, then how come only a few people saw this shit coming down the pipe? Do you know why? Because these guys are good at coming up with theories that SOUND good and win them nobel prizes. The guys I trust are the few guys that did see this, and do you know what they invest in right now? Cash!

The very nature of your posts drains away all credibility. You strike me of having a very 2 dimensional view of things, like a drunk in a bar rambling on after hearing of facts and figures he could not understand.

So answer this for me. Are you doubling down on equities right now because Buffett said so?

I bought put options Jan 2010 exp. on Citi, Sovereign bank, HSBC back in October of 2008. Do you think I lost money on that? Sold out of Citi after it tanked from 12 to 3, when Soverign 'wouldn't go any lower but it did from 3 to 2. HSBC went from a 7 to a 3 handle and guess what? Its probably not even done. So ya, my econmic doom and gloom is making me some money, how's is your economic optimism treating you?

 

[Budmantom]

Originally posted by: chess9

Originally posted by: JMapleton
http://www.voxeu.org/index.php?q=node/2785

Let's hope their model is right.

-Robert

I think that "hope and spend" is the official plan to get out of this recession, Tim Geithner outlined it the other day.

 

[Zebo]

My Dad think this too he is buying up homes on auction block right now .... Contrarian investing is nothing new.

 

[LegendKiller]

Originally posted by: GTKeeper
To the op.

If you think that we are more than half way through this recession you are out of your mind. If its 12 to 18 months then either a) we are out of it, or b) we will be out of it in June of this year.

Good luck with that.


Let's look at recently reported numbers and see how 'magically' they will start correcting themselves in the next 6+ months (as per your argument that the recession will be 18 months at max)

Germany just posted a -2.1% GDP growth for Q1 = 8.4% annualized = 1.6% away from what we call a depression

Germany has many other problems, they have their own subprime crisis. This is actually the 2nd one they went through.

China exports are down 17% from Q1 of last year
Japan exports are down 34% from Q1 of last year

Reports are already out that China seems to be recovering pretty quickly.

The US banking system is essentially insolvent, and even a republican this morning Linsdey Graham said that nationalization is still on the table.

They are "insolvent" because liquidity premiums are sky-high, not because credit losses. Two very different items.

US is still losing 600k jobs a month

Look at historical events and how quickly that reverses itself.

House prices are still falling

The biggest losses are already over. According to S&P/C/S, many areas are already back to 2003 prices and falling towards 2000 prices quickly. It won't be long until they hit those.

GM and Chrysler are 1 step away from BK (don't be surprised of GM BKs this week)

Chrysler can die and it matters little. GM will need more money but are on a track to recovery. Once financing starts up again they should be able to recovery pretty quickly, especially in such a streamlined manner. This is actually good for them.

Commerial Real estate is on the verge of collapse (think sub prime mortgage crisis part deux)

I know this is pretty popular to run around with. However, CRE was never in as much of a bubble and the financing was never as crazy was RRE.

The Alt A Near Prime / Teaser / Jumbo Loan bubble worth about as much as sub prime is going to burst this year, with aftershock next year.

Depends. If they can refinance at a decent rate, it won't. The figures seen in the market (mostly credit suisse data) are based on origination volume, not refinancing volume (I spoke with the analysts putting it together, did you?).

And if thats not 'rosy enough' for you, think of this. Once house prices bottom out, what we will see is that ALL THE HOUSES bought between 2003-2006 (if not more) that had HONEST borrowers who put 20% down on a fixed mortgage end up being upside down because on 'average' houses will have fallen more than 20% from those year's levels.

No amount of reduction of this so called 'fear index' will fix this crap. Get ready for a once in a lifetime experience.

Based on your research here, I am assuming you are doubling down on the market right now? Buy some equitites, go ahead, see where you are at at the end of the year.

It's easy to sell a ton of fear, far more difficult to sell a modicum of rationality.

 

[Budmantom]

Originally posted by: Zebo
My Dad think this too he is buying up homes on auction block right now .... Contrarian investing is nothing new.

It's a great time to buy.

 

[Genx87]

Originally posted by: Budmantom

Originally posted by: Zebo
My Dad think this too he is buying up homes on auction block right now .... Contrarian investing is nothing new.

It's a great time to buy.

Indeed, sadly in a negative equity position on my current home means I cant partake in the buying

 

[LegendKiller]

Originally posted by: GTKeeper

Originally posted by: JMapleton

Originally posted by: GTKeeper
I disagree with all these 'great economists'. If they are so fucking right, then how come only a few people saw this shit coming down the pipe? Do you know why? Because these guys are good at coming up with theories that SOUND good and win them nobel prizes. The guys I trust are the few guys that did see this, and do you know what they invest in right now? Cash!

The very nature of your posts drains away all credibility. You strike me of having a very 2 dimensional view of things, like a drunk in a bar rambling on after hearing of facts and figures he could not understand.

So answer this for me. Are you doubling down on equities right now because Buffett said so?

I was out at the beginning of last year, I went in in September. I've lost some, but I've also gained in some areas.

You pick your horses and you run with them. Hell, I took my wife's whole IRA and shoved it into GOOG at 251. Look at that sucker go.

 

[Jaskalas]

Originally posted by: LegendKiller
It's easy to sell a ton of fear, far more difficult to sell a modicum of rationality.

Here, have a healthy dose of rationality.

Why we are in a depression.

Read the link in the OP there.

 

[LegendKiller]

Originally posted by: Genx87

Originally posted by: Budmantom

Originally posted by: Zebo
My Dad think this too he is buying up homes on auction block right now .... Contrarian investing is nothing new.

It's a great time to buy.

Indeed, sadly in a negative equity position on my current home means I cant partake in the buying

There's a reason why Buffet and many others are contrarian investors. There's a good reason why there's the saying of be greedy when others are fearful and be fearful when others are greedy, or when there's blood on the streets, buy. It's because people like GT Keeper can never see the mitigating factors of a downturn, or even an upturn. He's a "here and now" guy.

 

[LegendKiller]

Originally posted by: Jaskalas

Originally posted by: LegendKiller
It's easy to sell a ton of fear, far more difficult to sell a modicum of rationality.

Here, have a healthy dose of rationality.

Why we are in a depression.

Read the link in the OP there.

If he predicted this in 2006, then why is Merrill now owned by a BoA? If he predicted it in 2006, then why did Merrill lose billions? If his rationale was so convincing then that nobody listened to him, why is it any more convincing now?

Now he's being a bear? Please. That article is so full of fail it's not even funny.

What's funny is one of the very few banks who DID predict it and got out, has taken less than $1bn in total losses, was UniCredit, although they did their own stupid stuff by acquiring CEE at high premiums.

 

[Genx87]

Originally posted by: LegendKiller

Originally posted by: Genx87

Originally posted by: Budmantom

Originally posted by: Zebo
My Dad think this too he is buying up homes on auction block right now .... Contrarian investing is nothing new.

It's a great time to buy.

Indeed, sadly in a negative equity position on my current home means I cant partake in the buying

There's a reason why Buffet and many others are contrarian investors. There's a good reason why there's the saying of be greedy when others are fearful and be fearful when others are greedy, or when there's blood on the streets, buy. It's because people like GT Keeper can never see the mitigating factors of a downturn, or even an upturn. He's a "here and now" guy.

I hear you. Taking what money I have and plowing it into the stock market. If I cant get in on a house. I think there is good profit to be made by this low valued market. Sure I think it may fall some more through this year. But I have a feeling the worst will be over by the end of 09. Buy in at 7-8K and see it appreciate back to 11-13K in 2010-11.

 

[Schadenfroh]

I absolutely see no reason why the recession will last longer than another 12 to 18 months. These economists think even sooner.

The northeast ivy league educated businessmen that run my a relative of mine's place of employment (a business that is closely related to new housing starts) say that the housing market will recover in 10 months and that when the recovery starts, it will recover quickly. No real reason for them to lie since it is a profitable private company with no shareholders / investors to reassure. Not saying that I believe them (I do not doubt that they think that themselves, just doubt that it will come to pass), but they likely know more about it than me (1 macroeconomics class in college).

 

[GTKeeper]

Originally posted by: LegendKiller

The biggest losses are already over. According to S&P/C/S, many areas are already back to 2003 prices and falling towards 2000 prices quickly. It won't be long until they hit those.

Just like in 1991 prices will overshoot on the bottom, so expect a dip.

Chrysler can die and it matters little. GM will need more money but are on a track to recovery. Once financing starts up again they should be able to recovery pretty quickly, especially in such a streamlined manner. This is actually good for them.

I think this is being optimistic.

I know this is pretty popular to run around with. However, CRE was never in as much of a bubble and the financing was never as crazy was RRE.

Have you seen SPG and VNO stock prices over the past year? Lets see what happens at the end of this year. We can Resurrect this thread then.

 

[GTKeeper]

Originally posted by: LegendKiller

Originally posted by: Genx87

Originally posted by: Budmantom

Originally posted by: Zebo
My Dad think this too he is buying up homes on auction block right now .... Contrarian investing is nothing new.

It's a great time to buy.

Indeed, sadly in a negative equity position on my current home means I cant partake in the buying

There's a reason why Buffet and many others are contrarian investors. There's a good reason why there's the saying of be greedy when others are fearful and be fearful when others are greedy, or when there's blood on the streets, buy. It's because people like GT Keeper can never see the mitigating factors of a downturn, or even an upturn. He's a "here and now" guy.

LK, are you saying we hit bottom then? Because that is not the 'here and now' point that I am taking. I do not think we have hit bottom, and we can discuss this later this year as well.

 

[miketheidiot]

Originally posted by: Genx87
Uncertaintly does play a role in the markets. Does this mean we will start to see growth by mid 09? I hope so but am not that optimistic.

I'd like to go back and correlelate recessions with change in administrations that will have differing economic policy.

Carter --> Reagan
Bush -->Clinton
Clinton-->Bush
Bush-->Obama

Recessions landed right through the transition or within a stones throw. I think there is something to be said about uncertaintly in the private sector. And it probably has to do with a change in economic policy in the executive branch.

Recessions may even be able to predict presidential elections. Business's can sense when a change in the guard is going to happen. For instance as bad as Bush looked in 04 he survived and our economy was hot in 04. The economy took a dump in late 07 as the republican primary was wrapping up and it was obvious a democrat was going to be in the white house. And with it a change in policy.

in 1992, was it clear the presidency was going to change? In 2000, was it clear that bush was going to win?


personally, i just see this as the cycles lining up over the last 20+ years. Not to mention that recessions tend to cause the opposition to be voted in.

 

[shira]

Originally posted by: GTKeeper

I disagree with all these 'great economists'. If they are so fucking right, then how come only a few people saw this shit coming down the pipe? Do you know why? Because these guys are good at coming up with theories that SOUND good and win them nobel prizes. The guys I trust are the few guys that did see this, and do you know what they invest in right now? Cash!

Greenspan, who can be viewed as a great economist or someone who is very knowledgable on the economy said 'I thought the free market would be able to police itself' WRONG. Keynesian economics and behavioral economics are making a strong comeback because in any market you have people running it who are greedy, naive, and stupid at times.

I can tell you that in the consulting space, i.e big 5 and smaller firms, there is VERY little work coming down the pipe beyond Q1 of this year. I don't see how firms, people, and small businesses will suddenly see demand rise so the economy will start growing again.

The economists that "did see this" were probably just lucky. It's like looking at historical results in a mutual fund: A few funds inevitably do much better than all the rest, but that doesn't mean they'll do better in the future.

To put this another way: At any point in time you have economists making predictions all over the map, from extremely pessimistic to extremely optimistic. Thus, at whatever point the economy tanks or takes off, a few outlier economists are going to look like geniuses. That doesn't mean they know jack about what happens from there (or here) on out.

As to your "geniuses" in cash: What happens if the markets zoom up 25% over three or four trading days, and everything starts looking rosy again? Thinks those people in cash will have been the smart ones?