Fellas... you guys think we're in a recession?

[Rich]

Sticks and stones............I don't have the time nor energy to convince you of anything. I know very well and your post proves that what ever I dredge up, you will just discount it. So who the F-ck made you my judge and jury? No one, it's a game which can only be played if I allow it, and I don't - so there.

If you are as well read and intellegent as you see yourself HsvToolFool, then all you have to do is open your eyes and ears. Warning; you may not like what you see and hear, but the truth is just that way sometimes.

Cheers!

Come on, Kach. That kind of tone is really not necessary in a civilized debate. (We are capable of having a civilized debate on this forum, aren't we?) We all have drastically differing opinions on subjects like economics and politics, and we need to be able to express our opinions without disparaging those who hold the opposite opinion. The problem with politics in this nation is that we assume our position is absolutely right and the other side is absolutely wrong, and we will defend that notion with the most caustic rhetoric necessary.

Well, guess what? That's not the way it is. The truth is that both sides are absolutely right, from their own particular point of view. We all come from different backgrounds and view the world from a different perspective. That's why arguing with rhetoric is useless. If you have an opinion on economic or political philosophy, that's great. Share it. But if you are going to make accusations about what the "other side" is doing, then be prepared to be questioned about the source of your facts.

All Brian asked was that you provide a reference to back up your rather broad and damning statements. That's not too much to ask and ultimately, he is right. If you just make those sweeping statements without providing some references to back them up, then you have no credibility in a debate of this nature. And that is the whole idea of a debate like this. To express your thoughts and opinions and the facts on which they are based in the hope of illuminating others about your perspective and learning from others about their own perspective. If we all just said: "Yeah, Bush and Cheney suck!" and patted ourselves on the back with self-righteous glee, then what use is that? What have we learned? Nothing.

Personally, I tend to lean more to the liberal side of things. But I am not so blind as to think that the extreme ends of both parties don't lie through their teeth to achieve their objectives. Extreme left wingers are just as deceitful and treacherous and self-righteous as extreme right wingers, in my experience. In today's world, it is difficult to trust the "facts" spouted by anyone to support their political rhetoric. But in my opinion, there is a hell of a lot more to be gained from having a civilized philosophical debate on the issues that face us, than from just spouting off the same old political rhetoric and calling the other side closed-minded for not buying into it.

 

[kach22i]

Come on, Kach. That kind of tone is really not necessary in a civilized debate.

Back on page 2 is where the "tone" was set, and kind of superior or snotty sounding if you ask me.

Without proof, such arguments are pointless............subjective anecdotes ...............................


I'm more offended by how extreme the left-wing bias.............

Pointless and subjective anecdotes?

Left wing bias?

That sure set a tone.

What ever happened to no politics in the forum?

How far will this be allowed to go before this thread is shut down?

To be fair I've found one quote direct from the Whitehouse which is interesting - to me.

http://www.whitehouse.gov/omb/pubpress/2007/111307_jec.html

The report released today by Democrats on the JEC is an unfortunate example of the Congressional leadership attempting to manipulate economic data for public relations purposes.

Of course data is just data until it's in the hands of someone with a goal or agenda.

http://www.foxnews.com/story/0,2933,316370,00.html

WASHINGTON — The White House has systematically tried to manipulate climate change science and minimize the dangers of global warming, asserts a Democratic congressional report issued after a 16-month investigation.

And if not one thing it's another.

http://www.swamppolitics.com/news/politics/blog/2007/11/republicans_to_democrats_take.html

This morning, the Democratic members of the Joint Economic Committee issued a report saying that the total cost of the wars in Iraq and Afghanistan, taking into account veterans care, market disruptions, foregone investments and the costs of borrowing, could exceed $3.5 trillion over the next decade.

Now the Republican members of the panel want them to take it back.

....and it goes on and on.

http://www.slate.com/id/2085481/

The administration muzzles routine economic information that's unfavorable. Last year, for example, the administration stopped issuing a monthly Bureau of Labor Statistics report, known as the Mass Layoff Statistics program, that tracked factory closings throughout the country. The cancellation was made known on Christmas Eve in a footnote to the department's final report—a document that revealed 2,150 mass layoffs in November, cashiering nearly a quarter-million workers. The administration claimed the report was a victim of budget cuts. After the Washington Post happened to catch this bit of data suppression, the BLS report was reinstated. (Interestingly, President George H.W. Bush buried these same statistics in '92, also during a period of job losses. They were revived by President Clinton.)

The Bush economic team has snuffed its own reports when they reach conclusions that don't match the administration's rosy scenarios. The administration deep-sixed a study commissioned by then Treasury Secretary Paul O'Neill that predicts huge budget deficits well into the future.

................The administration also muffled a customary report whose findings would have forced key corporate supporters to pay more to their employees. The annual Adverse Effect Wage Rate establishes..........

Another administration trick is playing with the length of its economic forecast periods, which puts the best possible face on bad news while exaggerating the projected benefits of its own initiatives. For example, to heighten the impression that Social Security is running out of money (thereby strengthening the case for allowing workers to divert money from the system into private retirement accounts), the administration has predicted shortfalls far in the future by relying on preposterously long forecast periods.

Heck too many examples in just a single 2003 article to quote them all, it's a pattern of lies upon lies which has been repeated on many issues and topics.

And yes that's my opinion and it's the truth, what of it?

 

[Rich]

What ever happened to no politics in the forum?

Well, this thread was actually about economics, not politics. Now who was it that first injected politics into the thread? Oh, that's right, it was this quote:

Thanks GWB, it would not of been possible without you.

Up until that statement, the discussion had been solely focused on economic themes. So don't bring politics into the mix and then complain about it being there. That's like taking a dump in the living room and then complaining about the smell.

How far will this be allowed to go before this thread is shut down?

If we can get back to discussing economics rather than politics, I don't think there would be any need to shut this thread down. Or if we could discuss politics in a civil manner . . . but that just doesn't seem possible, does it?

And yes that's my opinion and it's the truth, what of it?

Yes, that is your opinion and that is your truth and you are certainly entitled to them, just as everyone else on the forum is entitled to theirs. But don't expect that everyone on the forum is going to agree with everything that you hold to be self-evident. And just because someone does not agree with your opinions and your truths, it does not mean that they are not educated and well-informed. It simply means that they subscribe to a different set of beliefs than you do and see the world in a very different manner.

 

[HsvToolFool]

"Whenever you find yourself on the side of the majority, it’s time to pause and reflect."
~ Mark Twain

"So who the F-ck made you my judge and jury?" What?! Obviously, I am judging the arguments you present rather than you personally. By definition, an open debate means that everyone participating has this shared right of judgement. Don't assume a personal attack when an opponent refutes your statements.

I appreciated your prior link because it then led me to the NBER web site which is an excellent resource. I'm sure the links you've posted below will lead to other intersting sources I can use.

You're not debating to change my mind. This is an exercise to prove you're right... to yourself. Constantly question your beliefs and be honest with yourself. If your stance can't bear casual scrutiny, then you must reevaulate. Make certain you're not just following a mob mentality.

Left wing bias?

In the mainstream media dude. I hope you didn't think I was accusing anyone here of being liberal, conservative, or worst of all, moderate. I actually went to a lot of effort to clarify and support my position regarding liberal media bias after Risabet challenged it. He didn't challenge me, mind you, he challenged my statement. I'm not offended (or surprised) that he disagreed with me. That little excercise I did took several hours, but it was very entertaining.

What ever happened to no politics in the forum?

Uh oh. Is that really a forum policy? I didn't know.

How far will this be allowed to go before this thread is shut down?

Well, unless you calm down and stop dropping sanitized F-bombs, I'm certainly not going to participate any longer.

Besides, it will take some time to digest the links you posted. I scanned them and could see they were editorials from left-of-center periodicals rather than direct sources. Rah-rah pieces for the left. I'll have to find the original studies and stories to make a judgement on the matter.

 

[kach22i]

If your stance can't bear casual scrutiny, then you must reevaulate.

HsvToolFool, one thing I now think, which I did not think before, is that the deliberate changes by the GWB administration to the way data on the economy is acquired, released or delayed and suppressed and or canceled was mostly if not all done between 2002 and 2004.

I said they were most likely still doing it (or words to that effect), that comment was based on their past and is still a valid suspicion, unless you think all government is above suspicion.

I have not had much luck finding these types of activities in the economic sector since the election of 2004, which leads me to believe that the bushies only cared what the public thought before the election and not after. Of course the pattern of cooking the books on all other things such as spending, trade, budgets, sustainability of the war and political progress in Iraq have taken on even higher levels perversity and absurdity.

I leaned something, so I take back that the bushies are still cooking the books on the economic indicators, the election of 2004 is over.

I'm not sure if they tried to influence the 2006 mid-term elections though the same methods, but I sure have a reason to keep and eye out for it now.

I guess one advantage of having scandal after scandal in your administtion is that people just become snow blind from it and begin to tune it out. Who can keep track of it all? Don't we all have real jobs?

And Rich, if GWB and his gang were not cooking the books (which I have proven) then politics would have never entered a topic on economics.

 

[Rich]

Well, now that we are back (sort of) on topic, I have some interesting information to add to help answer the original question, which was whether or not we think we are headed toward a recession. I had the opportunity recently to read a pamphlet by Wachovia Securities on their outlook for 2008. They think that due to the bursting of the twin bubbles (housing and credit), that there is a real risk we will head into a recession. They put that risk at about 40%.

However, they think a more likely scenario is an extended period of very slow growth, from 0% to 2% of real GDP growth. They coined a term for this, calling it a "grocession." They define that as a hybrid between a standard mid-cycle growth slowdown and an actual recession. They put the probability of such a period of slow growth at 50%. The probability of a standard mid-cycle slowdown comprises the other 10%.

The reasons they think we may avoid recession are several. Corporate balance sheets are generally healthy; they think employment growth will remain positive; and they believe positive income growth should sustain consumption growth. Also, the Federal Reserve still has plenty of room to cut rates if necessary to ward off recession.

They don't, however, think we are entering a standard mid-cycle economic slowdown because they think the bear market in housing prices will unfold slowly over a long period of time. This will put a damper on consumers (particularly baby boomers) being willing to leverage their home equity and spending that extra cash. This will, in turn, end up not necessarily sending us into a full-blown recession, but causing an extended period of stunted economic growth. Thus, they don't expect a typical correction/recovery cycle, but more likely a longer term (several years?) of very slow but positive economic growth.

They say that while a recession is still highly probable, that Federal Reserve policy will be critical to avoiding that outcome. Thus we can see the importance to the financial markets of the Fed's rather extreme and unorthodox between-meeting 3/4 point rate drop a few weeks ago.

Their outlook on the stock markets is that we will most likely see a pretty tight trading range for 2008, with a breakout below the bottom only if we head into a recession, and a breakout to the top only if the economy really shows signs of improving. For longer term investors, they say the market is fairly evenly valued now. In other words, for someone planning on investing for a long term, stocks are not overpriced or underpriced in relation to their long-term averages, but are instead in the middle of their fair value range and should return average returns over the long term. They think in general that over the short term growth stocks will outperform value stocks and large cap stocks will outperform small cap stocks.

So there you have it. That's the take of a professional financial services corporation on whether or not we are headed toward an economic recession. Their view: maybe, but probably not a full blown recession -- just an extended period of very slow growth.

 

[Rich]

They say that while a recession is still highly probable, that Federal Reserve policy will be critical to avoiding that outcome. Thus we can see the importance to the financial markets of the Fed's rather extreme and unorthodox between-meeting 3/4 point rate drop a few weeks ago.

Apparently the Fed understands just how critical their policy is and are working really hard to avoid a recession, because they dropped rates again today another 1/2 a point. According to the news article I was reading about it:

"The cumulative 1.25 percentage point reduction in the interbank overnight rate in less than two weeks ranks among the most abrupt rate-cutting sprees in the modern history of the U.S. central bank."

The Fed is obviously running scared and thinking a recession is a strong probability and they are doing whatever they can to stave it off. The only problem with that comes when inflation starts to rear its ugly head some more because of the low rates.

As for last year, the economy only grew at 2.2% for the year. With the housing market worsening and the credit crunch still causing issues, I think the idea of very slow growth (under 2%) for this year and next is highly probable, even if we are able to avoid an actual recession (by the strict definition of the term).

 

[twich54]

Well regardless of what your definition is, per Mr Buffet "The Billionaire Next Door" we are in a rescession ! Did anyone see his interesting interview on CNBC today ??

 

[kach22i]

I missed it despite all the commercials about it.

Is it on YouTube already?

 

[CLS2ASTAT]

Recession

CAP and Dreamer, you hit the proverbial nail on the head. I live in Mi and have been unemployed since the end of October 07. The situation looks bleak but I thank God for his Word and his Son. It is one undeniable truth that I hold on to. My life on this earth is but a blip on the oscilliscope compared to eternity.

Jerry

 

[Rich]

I live in Mi and have been unemployed since the end of October 07.

Perhaps you should consider moving to an area that has a better employment outlook. I know in my county in north Alabama, the unemployment rate right now is only running about 3%! A year-and-a-half is a long time to go without a job.

 

[kach22i]

Perhaps you should consider moving to an area that has a better employment outlook. I know in my county in north Alabama, the unemployment rate right now is only running about 3%! A year-and-a-half is a long time to go without a job.

I know of several people in the same situation, it's hard to get out from underneath your house. Affording two households on no or just one income is hard to do. People are trapped without an escape route.

Bush: 'Economy has slowed'
http://money.cnn.com/2008/03/07/news/economy/bush_econ/index.htm?cnn=yes

The deer-in-headlights look says it all:

 

[CLS2ASTAT]

Recession

Perhaps you should consider moving to an area that has a better employment outlook. I know in my county in north Alabama, the unemployment rate right now is only running about 3%! A year-and-a-half is a long time to go without a job.

I would consider it if 1: My new employer would pay for relocation 2: My old house would sell for its appraised value and not the devalued amount dictated by the market here in MI and furthermore sell quickly,(I certainly can't afford two house payments) and 3: That it would be beneficial for my family in the long run. The only scenario that could possibly pan out would be the first point. Doesn't give me a warm and fuzzy feeling.

Jerry

 

[Rich]

I would consider it if 1: My new employer would pay for relocation 2: My old house would sell for its appraised value and not the devalued amount dictated by the market here in MI and furthermore sell quickly,(I certainly can't afford two house payments) and 3: That it would be beneficial for my family in the long run. The only scenario that could possibly pan out would be the first point. Doesn't give me a warm and fuzzy feeling.

Jerry

I feel your pain. You are certainly caught in a catch-22 situation. The difficult questions that follow that analysis are: Can you continue to make your current house payment without employment, and for how long? Do you see any hope for improvement in the employment outlook where you are located in the near future? Do you see any hope for your local housing values to rebound in the near future? If the answers are negative, I don't see how relocating wouldn't be your best bet.

I know guys that moved down here from Boston in the early nineties when the bottom fell out of that market. Their houses up there sat on the market for years and when they finally sold them, they lost a lot of money. But at least down here they had a decent job making good money so it worked out for them in the long run. I wish you the best of luck, whatever path you take.

 

[congers]

Well, now that we are back (sort of) on topic, I have some interesting information to add to help answer the original question, which was whether or not we think we are headed toward a recession. I had the opportunity recently to read a pamphlet by Wachovia Securities on their outlook for 2008. They think that due to the bursting of the twin bubbles (housing and credit), that there is a real risk we will head into a recession. They put that risk at about 40%.

However, they think a more likely scenario is an extended period of very slow growth, from 0% to 2% of real GDP growth. They coined a term for this, calling it a "grocession." They define that as a hybrid between a standard mid-cycle growth slowdown and an actual recession. They put the probability of such a period of slow growth at 50%. The probability of a standard mid-cycle slowdown comprises the other 10%.

The reasons they think we may avoid recession are several. Corporate balance sheets are generally healthy; they think employment growth will remain positive; and they believe positive income growth should sustain consumption growth. Also, the Federal Reserve still has plenty of room to cut rates if necessary to ward off recession.

They don't, however, think we are entering a standard mid-cycle economic slowdown because they think the bear market in housing prices will unfold slowly over a long period of time. This will put a damper on consumers (particularly baby boomers) being willing to leverage their home equity and spending that extra cash. This will, in turn, end up not necessarily sending us into a full-blown recession, but causing an extended period of stunted economic growth. Thus, they don't expect a typical correction/recovery cycle, but more likely a longer term (several years?) of very slow but positive economic growth.

They say that while a recession is still highly probable, that Federal Reserve policy will be critical to avoiding that outcome. Thus we can see the importance to the financial markets of the Fed's rather extreme and unorthodox between-meeting 3/4 point rate drop a few weeks ago.

Their outlook on the stock markets is that we will most likely see a pretty tight trading range for 2008, with a breakout below the bottom only if we head into a recession, and a breakout to the top only if the economy really shows signs of improving. For longer term investors, they say the market is fairly evenly valued now. In other words, for someone planning on investing for a long term, stocks are not overpriced or underpriced in relation to their long-term averages, but are instead in the middle of their fair value range and should return average returns over the long term. They think in general that over the short term growth stocks will outperform value stocks and large cap stocks will outperform small cap stocks.

So there you have it. That's the take of a professional financial services corporation on whether or not we are headed toward an economic recession. Their view: maybe, but probably not a full blown recession -- just an extended period of very slow growth.

It's kind of interesting that we have all missed a very important underlying factor impacting our economy - GREED. Greed of corporations that use leveraged financing to make profits far beyond those that might be sustainable (and then whine for government intervention [cheap money] to bail them out). Greed of institutional investors that bet on the collapse of companies that will ultimately yield billions of dollars in profits on the backs of ruined lives. Greed on the part of people who bought homes they cannot afford and who did not think of the impact of rising interest rates and are ready to run out on them (not those people who lost jobs and had no choice).

The economic bubbles that we have seen since 1990 seem to have a common theme. Greed and market domination. I am not suggesting that we introduce government regulation in any great way, but look at what happened when we deregulated banks, airlines, telecommunication companies, etc.

My point is that unless there is a paradigm shift back towards common sense and long term government and business planning, these cycles will continue and possibly get more volatile. I am not an economist, but rather an observer of people and history.

Mike

 

[Rich]

I am not an economist, but rather an observer of people and history.

And as an observer of people and history, you are surely aware that this is not just a modern trend. It is in fact a constant theme in any free market throughout history. There have always been cycles of boom and bust in every market, driven in large part by greed.

I would argue that greed is an inherent value of any investment market. Instead of being content with the money we have earned and put it in the bank, we instead invest it in the hope of making a positive return on that investment. Ultimately, that is a basic form of greed. For that matter, starting a business in the hopes of making more money than you can by just working for someone else is a basic form of greediness. Wanting to buy a new stereo system or car vs. using the one that you have that works just fine is another form of greediness. Ultimately, greed is what drives the economic engine of this country.

The problem comes when people's greed outweighs their common sense and they start making riskier and riskier short-term investments that cannot be sustained. It becomes a pyramid scheme and eventually the bubble bursts and the folks holding the bag at the end get all upset that they are financially ruined -- often without any acceptance of responsibility for their own ridiculous behavior.

This has happened throughout history and will continue to do so. Gov't regulation can help some, but it will always eventually be circumvented by those who are greediest. I believe it is just inherent in the nature of the human condition for people to let their greed overtake their common sense. And our country appears to be based upon the principle of rewarding folks who are the most greedy. We are definitely a nation where the needs of the few take precedence over the needs of the many. I am not saying whether this is good or bad; I am just stating my own observations.

 

[asindc]

It's kind of interesting that we have all missed a very important underlying factor impacting our economy - GREED. Greed of corporations that use leveraged financing to make profits far beyond those that might be sustainable (and then whine for government intervention [cheap money] to bail them out). Greed of institutional investors that bet on the collapse of companies that will ultimately yield billions of dollars in profits on the backs of ruined lives. Greed on the part of people who bought homes they cannot afford and who did not think of the impact of rising interest rates and are ready to run out on them (not those people who lost jobs and had no choice).

The economic bubbles that we have seen since 1990 seem to have a common theme. Greed and market domination. I am not suggesting that we introduce government regulation in any great way, but look at what happened when we deregulated banks, airlines, telecommunication companies, etc.

My point is that unless there is a paradigm shift back towards common sense and long term government and business planning, these cycles will continue and possibly get more volatile. I am not an economist, but rather an observer of people and history.

Mike

Mike,

A few of us have commented on the corrosive effect that greed has on the long-term health of our economy (for instance, take a look at my first post in this thread). It seems rather sensible to me that multi-national corporations would not want a top-heavy economic inbalance, given that it means there are many fewer people who can afford to buy their goods and services.

Bottom line, greed indicates short-term thinking, sometimes at the expense of long-term financial stability. The economy seems to work best when more people can viability participate in it.

 

[congers]

Rich - There is one mitigating factor that is modern (post 1990) and leads to more volatile swings - The ability for interested parties to use information technology to manipulate what we used to feel were normal business cycles.

The reference to a "pyramid scheme" is quite accurate. In todays markets, you have seen institutional investors attempt to correct bad decisions by manipulating markets to cover their losses. It's kind of like going to Las Vegas and betting black on the roulette table time and time again and doubling up on your bet to eventually make a profit.

In today's world, the "gamblers" ran out of funds and guess what - black did not come up until they ran out of funds. The result is a fed bailout to make sure our banks and investment firms are rated as insolvent.

Our economy seems to be less driven by building things and providing services and more driven by the ability to manipulate markets.

While the nature of greed is not new - there are amazing new tools available to play the game.

Mike

 

[congers]

Point Well Taken - Those who (in my opinion) have exacerbated this mess are in the financial services world (banking, brokerage, investment management, insurance companies, etc.). Have you read about the fund manager (whose name escapes me) who is angry at the state of New Your because he wants bond insurers to fail because he sold them short and stands to make a huge profit.

While I can understand the logic behind his decisions, how many people suffer from this type of greed. Lets not forget that it is the same bond insurers who got into this mess by taking increased risks to generate more profit.

What kind of society do we live in where this behavior is admired. While we may not all love the likes of Microsoft they actually sell goods and services in order to make a profit.

 

[Rich]

Rich - There is one mitigating factor that is modern (post 1990) and leads to more volatile swings - The ability for interested parties to use information technology to manipulate what we used to feel were normal business cycles.

. . .

While the nature of greed is not new - there are amazing new tools available to play the game.

Again, I would say that this is nothing new. New technology has been used in the furtherance of capitalism and greed since long before Henry Ford invented the production line. During the gold rush, they developed hydraulic jets which devastated the landscape in order to get more gold faster.

Business cycles are still "normal" business cycles. They are no more volatile now than they have ever been. And no more or less devastating when the bust comes. It just seems worse now because you are living through it and watching it unfold painfully slow. Things that happened thirty or sixty or a hundred years ago never seem quite as bad or as painful as what is happening right now. But they were.

While we may not all love the likes of Microsoft they actually sell goods and services in order to make a profit.

And utterly destroy or assimilate anyone who dares try to compete with them, using any tools at their disposal (anyone used netscape browser recently?).

Those who (in my opinion) have exacerbated this mess are in the financial services world (banking, brokerage, investment management, insurance companies, etc.).

And don't forget about all the regular joes in every housing market that was skyrocketing who decided they would start making a quick buck by buying and quickly turning houses to take advantage of the rising markets. Don't forget about all the average folks who decided to take on the risk of a larger mortgage than they could truly afford just because they could get approved for it. Don't forget about all the folks who have no savings accounts but three or four maxed out credit card accounts. The problem isn't just greed at the corporate level, although that is always an easy target. The problem is the pervasiveness of greed throughout our society and a total lack of personal responsibility and personal financial management.