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Deep "recession"
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| atbell |
The Financial Times has reported that "Data signal deep global downturn"
and that the US has been in recession since 2007 (how'd it take that long to surface?).
I think it's time to start considering that this might be a depression, that this might be something worse then what happened in 1929.
I'm not saying it IS, I just want to consider what it would mean if this was the case.
Any takers on this speculation?
PS. Here's the FT article:
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Data signal deep global downturn
By Chris Giles in London and Geoff Dyer in Beijing
Published: December 1 2008 19:47 | Last updated: December 1 2008 22:17
Evidence of a global slide towards a deep recession mounted on Monday with severe strain reported by manufacturing companies around the world, large falls in car sales across Europe and bad construction figures in the US.
So clear were the signs of downturn in the US that the National Bureau of Economic Research, the most prestigious US independent economic authority, said the country had been in recession since December 2007.
http://www.ft.com/cms/s/0/edaeb336-...00779fd18c.html
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| Sunsnail |
There was a 25% unemployment rate during the Great Depression.
That is all I've got to say |
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| jerZ07002 |
| quote: | Originally posted by Sunsnail
There was a 25% unemployment rate during the Great Depression.
That is all I've got to say |
and people could not clothe or feed themselves, let alone watch a satellite TV. |
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| Capitalizt |
| You think this is bad? We aint seen nothing yet. Governments are borrowing and printing dollars at record levels to buy their way out of this mess. I think they will succeed. We will reinflate the bubbles around the world..but when the bill comes due in 10-20 years and governments begin to collapse under their massive debt, then the fit hits the shan. |
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| Dupz |
| quote: | Originally posted by Capitalizt
You think this is bad? We aint seen nothing yet. Governments are borrowing and printing dollars at record levels to buy their way out of this mess. I think they will succeed. We will reinflate the bubbles around the world..but when the bill comes due in 10-20 years and governments begin to collapse under their massive debt, then the fit hits the shan. |
'Solve the problem of indebtedness, with further indebtedness'. It seems that governments are embracing the ‘stimulus’ option (which seems too similar to a band-aid method for my liking), rather than a long term sustainable growth option. Our government here is giving out a Christmas cash bonus (to low income earners and pensioners etc etc), in order to maintain positive GDP growth – because, hey, no one wants negative GDP figures in their first year of government, following a generation of positive growth. Don’t mind spending that $10 billion dollars on something productive, like education... but yeah, the benefits of that won’t be seen for another 20 years :rolleyes:
If this really were a new great depression, we are sure taking a different approach to dealing with it. In the 1930’s the US built the Hoover Dam and Australia built the Sydney Harbour Bridge. Both projects created many jobs (the stimulus, if you must), but also allowed future generations to prosper (and they’ll still be around for another 100 years). What are we doing now???? Bailing out fukwit car makers, making boxes. I’ll let you know what my future grandkids will think of this generation of decision makers. :rolleyes:
fukn : rolleyes:: |
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| atbell |
| quote: | Originally posted by Sunsnail
There was a 25% unemployment rate during the Great Depression.
That is all I've got to say |
Forcasts are at 7.5% in 2009. With the record the forcasters have I'd expect that to be closer to 15%, but that's even a high end bet for (pesimistic) me.
Unemployment around the world looks like:
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From the Nov. 1st, 2008 Economist
Unemployment Rates
US - 6.1% (Sep)
China - 9.5% (2007)
Britan - 5.7% (Aug)
Euro Area - 7.5% (Aug)
Belgium - 10.9%(Sep)
France - 8.0% (Aug)
Spain - 11.3% (Aug)
Hungary - 7.7% (Sep)
Poland - 8.9% (Sep)
Turkey - 9.0% (Q3)
India - 7.2% (2007)
Indonesia - 8.5% (Feb)
Argentina - 7.8% (Q3)
Brazil - 7.6% (Sep)
Chile - 8.2% (Aug)
Columbia - 11.1% (Aug)
Venezuela - 7.5% (Q2)
Egypt - 9.0% (Q1)
Saudi Arabia - not available
South Africa - 23.2% (Sep)
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As you can see the numbers are high already and this is before the grim Oct/Nov news. For instance it doesn't include the 50,000 odd citi workers recently laid off or the fact that one of the car companies just might go under. |
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| atbell |
| quote: | Originally posted by jerZ07002
and people could not clothe or feed themselves, let alone watch a satellite TV. |
I think you might be able to find examples of people choosing satallite TV over food or clothing.
Check out some of the documentaries about parents neglecting to feed thier kids because it would interupt thier video game playing. (there's one on WoW I've heard of along with one called 'King of Kong' or something which is about one man's struggle to become a king kong champion) |
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| atbell |
| quote: | Originally posted by Dupz
'Solve the problem of indebtedness, with further indebtedness'. It seems that governments are embracing the ‘stimulus’ option (which seems too similar to a band-aid method for my liking), rather than a long term sustainable growth option. Our government here is giving out a Christmas cash bonus (to low income earners and pensioners etc etc), in order to maintain positive GDP growth – because, hey, no one wants negative GDP figures in their first year of government, following a generation of positive growth. Don’t mind spending that $10 billion dollars on something productive, like education... but yeah, the benefits of that won’t be seen for another 20 years :rolleyes:
If this really were a new great depression, we are sure taking a different approach to dealing with it. In the 1930’s the US built the Hoover Dam and Australia built the Sydney Harbour Bridge. Both projects created many jobs (the stimulus, if you must), but also allowed future generations to prosper (and they’ll still be around for another 100 years). What are we doing now???? Bailing out fukwit car makers, making boxes. I’ll let you know what my future grandkids will think of this generation of decision makers. :rolleyes:
fukn : rolleyes:: |
+1
But it's not the governments of the world who are choosing the print and print and print economic stimulous, Oz, US, UK are the worst offenders, while other western governemts are also guilty.
China, Russia, India and Brazil along with other South American countries, Japan, Indonesia and a handful of others have been able to adjust thier accounting and regulation regimes while using reserves to inject liquidity.
The depression is an Anglo problem, the recession will be global.
Great comments about the car companies.
We, North Americans, can't afford to simply loose those jobs but can't just throw money at stupidity. Trains and green power generation offer areas to suck up people laid off from car companies while a switch to electric cars would help what's left.
The management needs to go though, not be 'restructured', get them out. Althought the Unions and labour have been complacent, arrogant, ignorant, and over paid they are not responsible for the problems that management has brought uppon the industry. |
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| Krypton |
| From what I've heard, this is the longest recession since the Great Depression. Officially at 11 months and not expected to get any better any time soon. |
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| jerZ07002 |
| quote: | Originally posted by Krypton
From what I've heard, this is the longest recession since the Great Depression. Officially at 11 months and not expected to get any better any time soon. |
82 was 15 months, and it was worse than what we are going through now. There was a period when inflation was high (about 20%) and unemployment was almost 11%.
EDIT: we will be out of this in about the same amount of time it took in 82 (if i had to guess). As everyone is aware, the main cause of this recession is banks not wanting to lend money. That can't last because a bank has only one function, to make money by lending money. Eventually, the yields on low risk assets will be so low (which they should be considering the treasury yields are the lowest in decades) and the potential yields on *riskier assets (normal care loans, qualified mortgages)* will be enough to tempt banks that this credit situation will break. This cycle can't sustain itself. It's just a short period of mistrust between banks and borrowers. Normal lending has to return or banks won't survive.
EDIT: today treasuries hit the lowest yields in 50 years. this is a sure sign that we're about to hit a bottom of this credit crunch. banks and investors need to start receiving higher returns on their investments because the yields on treasuries do not even cover inflation.
The banks right now are acting like a person who won't eat because he's afraid he will get food poisoning from anything he touches. Eventually that person will become so hungry he will say give in and eat. With people we can predicate that as being one to two weeks. With banks, it will last until the cash reserves are below a level at which the bank can meet its operating expenses. Paradoxically, the cash infusions by the government may have given banks reason not to lend for a longer period of time. |
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| atbell |
| quote: | Originally posted by jerZ07002
82 was 15 months, and it was worse than what we are going through now. There was a period when inflation was high (about 20%) and unemployment was almost 11%.
EDIT: we will be out of this in about the same amount of time it took in 82 (if i had to guess). As everyone is aware, the main cause of this recession is banks not wanting to lend money. That can't last because a bank has only one function, to make money by lending money. Eventually, the yields on low risk assets will be so low (which they should be considering the treasury yields are the lowest in decades) and the potential yields on *riskier assets (normal care loans, qualified mortgages)* will be enough to tempt banks that this credit situation will break. This cycle can't sustain itself. It's just a short period of mistrust between banks and borrowers. Normal lending has to return or banks won't survive.
EDIT: today treasuries hit the lowest yields in 50 years. this is a sure sign that we're about to hit a bottom of this credit crunch. banks and investors need to start receiving higher returns on their investments because the yields on treasuries do not even cover inflation.
The banks right now are acting like a person who won't eat because he's afraid he will get food poisoning from anything he touches. Eventually that person will become so hungry he will say give in and eat. With people we can predicate that as being one to two weeks. With banks, it will last until the cash reserves are below a level at which the bank can meet its operating expenses. Paradoxically, the cash infusions by the government may have given banks reason not to lend for a longer period of time. |
If I had to guess... you're wrong!
If it's been 11 months already then that means we'll be through it by the summer. None of the forcasters, who are conservative / optimistic / on crack, even think that this will be done by Dec 09. Most have changed thier tone to say that 09 is going to be worse then 08.
On this I don't have to guess, the main cause is not that the banks don't want to lend, the main cause is that business models around the world have evolved such that they assume opperating with perpetually increasing debt levels is a 'profitable' business model.
The 'short period of mistrust' is going to be a lot longer then you expect as continued failures of companies and bond issuing organizations keep destroying any gains made to the collective 'trust'.
So if the yields on treasuries don't cover inflation what does that tell you?? Maybe that investing in the US government is a loosing bet???
Your analogy about a person who won't eat is quite flawed. It assumes that the sustinance of the economy is predicated on investing in markets. This is another part of the massive set of things that have contributed to the depression. Economic activity is moved not by financial assets and paper transactions but by physical companies and production. Financials simply increase efficiency but if there is nothing to make more efficient then it is a sunk investment. It is more likely that what will pull world economies back in line is the direct investment and intervention of people like venture capitalists who don't simply provide money but also take a direct stake in makeing sure the business they invest in work. |
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