This article asks: Why so long to call a Recession?

[PaceAdvantage]

Simple answer: Because the data doesn't yet SUPPORT any such notion.....that's why....(goons stare in amazement with mouths wide open).

http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080518_499756.htm?chan=top+news_top+news+index _top+story

Robert E. Hall doesn't make predictions, at least not about the state of the economy. Hall is the Stanford University economist who chairs the committee charged with identifying when recessions begin and end. Over lunch at a sunny café on the school's Mediterranean-style campus in Palo Alto, Calif., he explains it's much too early to determine whether the current slump merits the "R" word. "All the members of the committee agree we're far from a decision point," he says. Until much more evidence comes in, he prefers to call this an "experience."

[PaceAdvantage]

Don't tell the goons to wait for evidence...they've already made up their minds with their highly accurate anecdotes.

Meanwhile, not one single quarter of negative GDP yet (let alone the TWO consecutive negative quarters that traditionally defines a recession), no massive job losses to speak of that have characterized every other recession in existence....none of that has happened....

Yet the goons continue to try and convince us that the USA is in a recession because "people are hurting out there." Yeah, ok....whatever....

[Valuist]

Gas at $4/gallon, rising food costs, and its virtually impossible for one to sell their rapidly depreciating home. Can we cue up the theme song to "Good Times"?

[chickenhead]

I subscribe to the importance of J-O-B-z. High prices might bum people out, but so long as they have jobs, everything gonna be irie. When people go jobless, then it gets upped to freak out mode.

So far, employment still strong....very strong.

[Lefty]

CA home sales up 22% in April. Some people havin it tough, no doubt, but still not a recession. And as for gas, simple logic is to build more refineries, liquefy our coal resources and make oil and drill for the oil we have all over the friggin place. If we had done it 20 30 yrs ago we might not be in this fix.

[PaceAdvantage]

Gas at $4/gallon, rising food costs, and its virtually impossible for one to sell their rapidly depreciating home. Can we cue up the theme song to "Good Times"?Nobody is claiming these are good times. Why is this often a response to one of my "recession" threads?

Am I writing something in an invisible font that only certain people can read that states "Whoopie, we're in a rockin' good economic time here in 2008!" No, I'm not.

[wonatthewire1]

Don't tell the goons to wait for evidence...they've already made up their minds with their highly accurate anecdotes.

Meanwhile, not one single quarter of negative GDP yet (let alone the TWO consecutive negative quarters that traditionally defines a recession), no massive job losses to speak of that have characterized every other recession in existence....none of that has happened....

Yet the goons continue to try and convince us that the USA is in a recession because "people are hurting out there." Yeah, ok....whatever....


Hey, I've always wondered - what "goons" are you referring to specifically?

[PaceAdvantage]

Hey, I've always wondered - what "goons" are you referring to specifically?Goons in the media who consistently claim (without merit) that this country is (and has been) mired in a recession.

Then there are the "way-out-theres" who claim that not only are we in a recession, but we're most definitely headed towards DEPRESSION.

[Valuist]

Warren Buffett said it best on CNBC recently "by any COMMON SENSE CRITERIA, we're in a recession." Virtually every economist says the same thing. Why? Because something like a total housing meltdown never is simply confined to just housing. It always ends up bleeding into other areas, because less discretionary spending.

Even I didn't realize how bad the housing situation was until I was talking to a realtor. In my distant past, I sold real estate for several years, and one of the towns I sold in was Arlington Heights, home of Arlington Park. Homes typically were on the market for 40 to 60 days to sell. 60 was a bad market. Do you know the number now for Arlington Heights? 270 days.....9 f-ing months. We aren't talking about Miami Beach or Malibu. Basically homes now are illiquid depreciating assets. People who were using their homes as ATM machines have had a dose of reality. The extra $30K or $50K in equity they expected to get each year isn't there. 4.6 million inventory in homes for sale right now which is 2 million more than we averaged a year for the past 25 years......and that doesn't even count the foreclosures. We talked about Wal-Mart on the other thread......which proves the point that people are trading down buying at Wal-Mart and the higher level retailers are doomed big time. The companies that are doing well on Wall Street now are the ones who do the majority of their business outside the U.S. (with the exception of the investment banks who've been given a ridiculously large safety net). The housing problem is long from over. Hopefully the next leg down won't be too severe.

[chickenhead]

what you're arguing is that a recession will happen due to home price declines, home price declines are occuring, thus we're in a recession.

All that means is you've redefined a recession to mean "home prices decline".

The next leg down will be the actual recession....assuming it comes.

[Light]

And as for gas, .. drill for the oil we have all over the friggin place.

The entire production of every oil producing region in the world including the U.S. has begun to decline compared to what it was a few years ago because we are 1)simply running out of oil and 2) have the emergence of India and China in their consumption of it 3) have a growing population of people, cars and industries needing it.

The only place left in the world that has not reached peak production and is still on an upscale mode is the middle east. If you understand this fact and that our entire country depends on oil for its economic well being you might understand me the next time I tell you we invaded Iraq for this precious resource and not the high and mighty ideals the government would like you to believe.Before you tell me how we are not recieving much oil output in Iraq, just keep in mind they are not concerned about immediate production. Ten years from now,Iraq's oil resources will be a goldmine.

[Lefty]

light, We have oil and coal all over the place. And if we invaded Iraq for the oil why do we not have it? Because the facts do not concur with your assessment that we are usurpers.

[Valuist]

what you're arguing is that a recession will happen due to home price declines, home price declines are occuring, thus we're in a recession.

All that means is you've redefined a recession to mean "home prices decline".

The next leg down will be the actual recession....assuming it comes.

No, thats only a part of it, although a big part of it. Most people aren't that affected by Bear Stearns going down or Lehman Brothers stock getting hit; they are affected by seeing the value of their homes get sliced and diced.

Wait until it hits the BRIC countries..THAT will be the next leg.

[Lefty]

Home prices rise and fall cyclically. Hang on, they're going back up. A lot of speculators get hurt when they buy too high and hope real estate goes higher. Happens every ten yrs or so.

[ddog]

Simple answer: Because the data doesn't yet SUPPORT any such notion.....that's why....(goons stare in amazement with mouths wide open).

http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080518_499756.htm?chan=top+news_top+news+index _top+story

Do you EVER really read these stories you link to?

If so are you so compromised that you don't understand that what's being said in short from your linked article is the following:

Some of the members think yes and some think no.
Feldstein , the pres thinks yes.

They mostly say it's too early to say for sure OFFICIALLY.(some of us goons have always had better insight! thus we do, not teach!)

This group is not in business to call when they start but to call after the facts and revisions to the revisions to the revisions are all in.

Also,what do you think the numbers would look like if held constant using say 1999 methods to "generate" the figures and held constant for inflation in non-seasonally adjusted terms(which is what you are really paying by the way)?

The whole, it is now or isn't , is actually less important than what the trends look to be and what would be a prudent way forward.

Here is a guy I have agreed with for a LONG time and not specifically on recession yes or no , but it all ties in.

If we were not in the beginning stages of a recession( I am sure we are), then the thoughts he lays out here would not be so sad.

I think we have a 60-70% chance of 08/09/10 being really tough.
Not a metldown, more like a dripdown for years.

If that happens then you will start to see real pain for the boomer class as their 401k will be hit hard and the wealth they thought they had in their house gets hard to realize.

Of course in the downdraft of revenues, tax rates and/or borrowings will need to skyrocket to pay for the foolish promises made in the past which can't be payed for or kept.

Oh, and notice small reference to Fannie/Freddie in the piece.
What would you say if I told you that in the last couple of days the LTV has been raised to 97% for the areas hardest hit(most wild and crazy speculation) and the max loan amts have also been raised.

This with home values still falling with no end in sight at least through 2010 in those areas.
Is this anyway to run a country?
We can't sell the homes so we will allow anyone that wants to hop back into known bad value areas with almost nothing down all over again.
This by a gvt backed loan pool that is rotten and mismanagaed already and getting worse.

The only hope is the lenders will not provide any type of support to this fraud(balance sheet too bad) and that people will understand it is nuts to sign up for this kind of trash.

It's just one in a long line of facts that show the country needs more and more EASY money to produce less and less of value to anyone.
With all the "assest" swaps and money poured out by the Fed , no way should a recession come, but it has and will.

I used to laugh at other countries that lived in this type of dream world.
Now the joke is us.

http://www.minyanville.com/articles/MER-lehman-buffett-C-citigroup-merrill/index/a/17212

[ddog]

Home prices rise and fall cyclically. Hang on, they're going back up. A lot of speculators get hurt when they buy too high and hope real estate goes higher. Happens every ten yrs or so.

Once again , every 10 years.
SO in 1996-1997-1998 we had a 10-15% home correction with around 150B write downs mainly from MBS?
3-4 year excess inventory and trend heading up.
Gee, I slept through that one.


100's of homebuilders out of business.
Homebuilders building but no sales, just because the lender and the builder don't want to see what happens if they just stop.
The money once committed gets built or bad things right then.
Kick the can is/was what accounts for any modest uptick you thought you heard about.



Or are you saying this one will take 10 years to shake out?
Or it will shake out in 10 years.


It used to be rates that were the sticking point , not the actual value of the homes.
People waited for rates which can lead to modest swings in sales, not in values that I recall.

[ddog]

light, We have oil and coal all over the place. And if we invaded Iraq for the oil why do we not have it? Because the facts do not concur with your assessment that we are usurpers.



The OIL is still there.
WE don't have it because THEY and US can't get it out.

I wonder why?

Ponder that a while and get back to me.

[delayjf]

Why is this often a response to one of my "recession" threads?
Because it's politically expedite to do so in an election year. PA, I do not mean to insult your intelligence, I'm know you’re aware of why they respond the way they do, It just needs to be stated so our friends on the left know, that we also know, why they are so adamant about accentuating the negative despite the economic reality.

[Light]

light, We have oil and coal all over the place..

I think Exxon and Shell know a little more about the biz than you.

And if we invaded Iraq for the oil why do we not have it? ..

It's not like they're not trying.

[46zilzal]

They are all ready to carve up their "prize."

http://www.iraqenergyexpo.com/invetation_letter.php

[ljb]

And more economic news.
snippet
"As gas and food prices continue to rise and housing market slows, consumers are facing increased financial pressure and reducing their spending, especially in discretionary categories," Target Chief Executive Gregg Steinhafel said on a call with analysts.
link.......
http://news.yahoo.com/s/nm/20080520/bs_nm/homedepot_results_dc_6

[chickenhead]

No, thats only a part of it, although a big part of it. Most people aren't that affected by Bear Stearns going down or Lehman Brothers stock getting hit; they are affected by seeing the value of their homes get sliced and diced.

I agree with all that. I guess it all depends on what your angle is. What I don't like is people being upset about their home prices and demanding something be done about it...that's just leads to an even more unhealthy environment. I don't think home prices returning to their long term trend line and staying there is a bad thing at all...and so long as that appears to be the prime driver of our woes, I'm not going to complain. The complaint should be about the bubble in the first place, not the bursting of it.

The pols are only going to try to do one thing, and that's spend our way out of it....and we don't want that. Those bad debts need to be taken. Bubbles are supposed to burst, they need to burst. It's healthy that they do.

Every time I see home prices decline, huge inventories, etc....I see that as a very good thing, long term. It's rationality being restored.

[ljb]

Here is a quote from a new book. (Not) Keeping Up with Our Parents: Just Being Middle Class Is Becoming out of Reach

By Nan Mooney, Beacon Press.

This thriving middle class didn't develop by accident. It emerged with the introduction of government and social policies designed to lift the country out of the Great Depression and sustain economic health in the postwar era. By the 1950s, a combination of social programs including Social Security, unemployment insurance, the GI Bill, and federal housing loans helped middle class salaries stretch. Employers supplied health insurance and pensions. A surge in suburban building made housing widely accessible. You no longer had to be a doctor or a businessman to afford a two-story Colonial with a dishwasher and a color TV. For a white male supporting a family -- the typical middle class profile at the time -- it was possible to work in an array of professions whereby you didn't necessarily get rich, but you could count on being fairly comfortable. A house, a job, a car or two in the garage, a fun summer vacation, these were absolute indicators of middle class success.
Ah the good ol days.

[chickenhead]

social security...unemployment insurance....fed housing loans....employer provided health insurance, retirement..........


sounds a lot like today to me.

[ljb]

social security...unemployment insurance....fed housing loans....employer provided health insurance, retirement..........


sounds a lot like today to me.
Well you can scratch employer provided health insurance for many and retirement is a thing of the past also.
Economic realities have undergone seismic shifts since our parents' and grandparents' generations. Education and housing cost more. Incomes have leveled off for all but a small minority. Employers and the government supply few social safety nets, cutting health insurance and pensions and replacing them with new "benefits" like 401(k)s and health savings plans that benefit only those with income to set aside. But many of those middle class expectations set in place back in the '50s still hold.

[chickenhead]

you're right, we're all f*ed. What was I thinking.

[wonatthewire1]

Do you EVER really read these stories you link to?

I used to laugh at other countries that lived in this type of dream world.
Now the joke is us.

http://www.minyanville.com/articles/MER-lehman-buffett-C-citigroup-merrill/index/a/17212

Nice catch with the Minyanville article - great site for investing and general money stuff - they are in tune despite the regular noise w/talking heads on CNBC

DePew has an interesting one for today on entrepreneurs of the future.

http://www.minyanville.com/articles/HD-PPI-home-producer-depot-entrepreneur/index/a/17241

Harrison (runs the show there - ran a $400 million hedge fund)
http://www.minyanville.com/articles/AAPL-GOOG-GS-BKX-apple-rimm/index/a/17244

[delayjf]

It emerged with the introduction of government and social policies designed to lift the country out of the Great Depression and sustain economic health in the postwar era.
I think most economist give WWII the credit for ending the depression.

[wonatthewire1]

Well you can scratch employer provided health insurance for many and retirement is a thing of the past also.


Perhaps in your world - some things I learned a long time ago is work with what you have, live below your means and invest the rest.

When we were without health insurance right out of college and before going to grad school, I bought a catastrophic plan with a $5,000 deductible. Worked with the providers when I had medical costs and paid them off a few dollars a month, but never missed a month. When I had a windfall, would send them more and paid off the debt. Was never that much, but I always had something in case something really bad occurred.


Live a bit below your means and retirement is quite easily to attain - we are on target to be done with the corporate world in 4-5 years (54 yr of age). And that is without a pension or any other huge financial windfall. Simply paying ourselves first in our 401K, 403B and 2 Roth IRAs. Plus having taxable investments for those first few years before 59 1/2...

[Tom]

Originally Posted by ljb
Well you can scratch employer provided health insurance for many and retirement is a thing of the past also.




Well, why should employers provide HI? Seriously.
Wouldn't it be better to give US the tax credits and let us have our own policies, independant of where we work or don't work? Then the employers could pay us more in cash money every payday. It would take some coordination, but it is just bass-ackwards right now, I get stuck with a generic policy my boss can afford and have to live with it. Why not help me pay for my own policy, shopped for to fit my health needs an independent of my job? Do I have the HCneeds at 57 as a 20 year old guy just starting out? Of course not. HC is set up to be ineffective and costly. Nasty Gov regs see to that. I have no need for my policy to cover pap smears, but it does.

I'll tell you why - it takes the opportunity for controlling not only our personal lives by congress, but also shuts them out of that huge mountain of dollars.

When you hear the moron candiates use the word mandatory, what they are really saying is "Stick 'em up!"

[PaceAdvantage]

Do you EVER really read these stories you link to?

If so are you so compromised that you don't understand that what's being said in short from your linked article is the following:

Some of the members think yes and some think no.
Feldstein , the pres thinks yes.

They mostly say it's too early to say for sure OFFICIALLY.(some of us goons have always had better insight! thus we do, not teach!)

This group is not in business to call when they start but to call after the facts and revisions to the revisions to the revisions are all in.Of course I read the article. But going by what has been reported in the media by the goons, and the attitudes of some on off-topic, one would think such an article, at this present time, could NOT EVEN EXIST. After all, the goons have been clamoring on for MONTHS on end about what a terrible recession we are in....despite the fact that the data does not support such a label.

Once again, please don't take the above and conclude that I am of the opinion that the U.S. economy is going well.

Thank you.