State of the Economy (official)

[martinss01]

any chance we can get the word "fail" put in the subject of the thread?

[Ttown]

Do we have a false economy? This writer says so right along with everything Obama has done is worthless.
WSJ

"But I think what really bothers the market is that the structural problems that got us into trouble in the first place still exist. We took the easy way out and, with the help of Treasury Secretary Tim Geithner's loose "stress tests," swept banking problems under the carpet. We waved off mark-to-market accounting and juiced bank stock prices to help them recapitalize, but all those toxic mortgage assets on bank balance sheets are still there as anchors on lending. All the pump priming and stock market flows didn't get rid of them."

"Just about every policy move to right the U.S. economy after the subprime sinking of the banking system has been a bust. We saved Bear Stearns. We let Lehman Brothers go. We forced Merrill Lynch, Wachovia and Washington Mutual into the hands of others. We took control of Fannie and Freddie and AIG and even own a few car companies, pumping them with high-test transfusions. None of this really helped."

"
We have a zero interest-rate policy. We guaranteed bank debt. We set up the Troubled Asset Relief Program (TARP) to buy toxic mortgage assets off bank balance sheets. But when banks refused to sell at fire sale prices, we just gave them the money instead. Dumb move. So we set up the Public-Private Investment Program to get private investors to buy these same toxic assets with government leverage, and still there are few sellers. Meanwhile, the $1 trillion federal deficit is crowding out private investment and the porky $787 billion stimulus hasn't translated into growth.
At the end of the day, only one thing has worked -- flooding the market with dollars. By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the stock market but he didn't have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn't go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market."

[jimotis4heisman]

Second-Quarter GDP Lower Than Anticipated - WSJ.com

...
The economy contracted by only 1% at an annual rate in the quarter, but the Bureau of Economic Analysis report was even more interesting for its growth revisions in previous quarters. Last year’s third quarter was revised downward by a remarkable 2.2-percentage points, to a negative 2.7% rate. This means the recession began in earnest in July and August, which follows the spike to $145-a-barrel oil and the collapse of Fannie Mae and Freddie Mac, and it accelerated in September with the fall of Lehman Brothers and its aftermath.
...

it appears that the situation was not accurately portrayed at all. the major issue is as we came off the commodity spike last summer and suffered the collapse of fan/fred and lehman which resulted in many of the current issues. with the offset of the gdp numbers that directly tie to those factors it should be very interesting. with the likely inevitable adam smithish rebound will we return the george bush era of solid growth numbers of 1-5% annual growth? or have we failed to lay the groundwork for a durable expansion using an expansion of transfer payments. much like the great depression when we had a sizeable growth and expansion, that was halted to a stop when payments came due in a few years... obamanomics has shoveled record amounts of money out of the proverbial helo and eased monetary policy to the extent that bush and greenspan look quesy, what happens when the reflation hits us, with higher interest rates, higher taxes. it seems this summer that every obama failure (cap and trade, universal healthcare) result in a massive wall street rally. this should be telling to us...

[fourteenandoh]

The only part of GDP that grew was the government component. Without that, GDP would have been awful once again.


That which can not continue forever, won't.

Not sure why the market didn't sell off on this news. The bond market rallied, so it seems the bond traders realized what was going on.

[fourteenandoh]

Gloomy assesment here... (don't let reason #1 make you think this a political hit piece, 10 through 2 have nothing to do with politics)

Inner Workings ? Blog Archive ? Dave’s Top 10 Reasons the Recession Will Last Forever

[MaxBuck]

Originally Posted by fourteenandoh

Gloomy assesment here... (don't let reason #1 make you think this a political hit piece, 10 through 2 have nothing to do with politics)

Inner Workings ? Blog Archive ? Dave?s Top 10 Reasons the Recession Will Last Forever

Lots of faulty reasoning and chicken-littleism here. There may, of course, be some kernels of truth also. But I tend to regard pessimists as troublemakers; pessimism is typically self-fulfilling, much like optimism.

[fourteenandoh]

Originally Posted by MaxBuck

Lots of faulty reasoning and chicken-littleism here. There may, of course, be some kernels of truth also. But I tend to regard pessimists as troublemakers; pessimism is typically self-fulfilling, much like optimism.

(note to self, sunshine and loli-pops, sunshine and loli-pops and 401k will rip higher)

seriously though, you think that someone who looks at the economy through a realistic prism is a chicken little?

[matcar]

Originally Posted by fourteenandoh

(note to self, sunshine and loli-pops, sunshine and loli-pops and 401k will rip higher)

seriously though, you think that someone who looks at the economy through a realistic prism is a chicken little?

Some are. Not saying this one is, but some folks have called for doom & gloom for 10 years. Now that we're getting some of that, they're "right".

[mooktarr]

Originally Posted by matcar

Some are. Not saying this one is, but some folks have called for doom & gloom for 10 years. Now that we're getting some of that, they're "right".

They haven't been wrong up to today.

[fourteenandoh]

Originally Posted by matcar

Some are. Not saying this one is, but some folks have called for doom & gloom for 10 years. Now that we're getting some of that, they're "right".

the problem with calling for a debt bubble implosion is that you can't predict what the catalyst will be. the instability has been there for a long time, but it took an impetus for banks to withdraw credit and begin the chain reaction. from a trading standpoint, calling for a crash for 10 years will do no one any good, but that doesn't make them wrong.

[MaxBuck]

Originally Posted by fourteenandoh

(note to self, sunshine and loli-pops, sunshine and loli-pops and 401k will rip higher)

seriously though, you think that someone who looks at the economy through a realistic prism is a chicken little?

The pessimist sees this "prism" as being "realistic;" the optimist sees the "prism" as being chicken-little-like. We'll see in a few years whose Magic 8-Ball came up aces here.

BTW, my IRA is up like 30% this year. So there's that.

[BoxCar_Willie]

Euro Pacific Capital

?Experts? Never Learn


There is an inexplicable, but somehow widely held, belief that stock market movements are predictive of economic conditions. As such, the current rally in U.S. stock prices has caused many people to conclude that the recession is nearing an end. The widespread optimism is not confined to Wall Street, as even Barack Obama has pointed to the bubbly markets to vindicate his economic policies. However, reality is clearly at odds with these optimistic assumptions.

In the first place, stock markets have been taken by surprise throughout history. In the current cycle, neither the market nor its cheerleaders saw this recession coming, so why should anyone believe that these fonts of wisdom have suddenly become clairvoyant?

[jimotis4heisman]

Hall Says May Take More Than a Year to Deem U.S. Recession Over - Bloomberg.com

Declaring the U.S. recession over may take more than a year because of the risk that recent signs of stabilization will prove short-lived, according to the head of the group charged with making the call. “We are serious about being sure that the apparent upturn is not just a part of a longer decline,” Robert Hall, who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview. The group will “wait for activity to surpass its previous peak,” which may take 18 months or more to determine, he said.
Hall’s comments signal he’s less willing than other members of the committee to soon say the recession, which began in December 2007 and is the worst since the 1930s, has ceased. Fellow panel member Jeffrey Frankel last week said the smaller drop in employment and decline in the jobless rate indicated the slump may have ended in July.
“For an exceptionally deep recession, a longer waiting period makes sense,” Hall said. This time around, it is “more important” for the group to adhere to the principle of not calling an end to the recession until after economic growth has surpassed its previous peak, he said.
Declaring the 2001 downturn over was complicated by ongoing job losses, and that may happen again, Hall said. The group took until July 2003 to declare that slump had ended, 20 months after the fact.
Payrolls Important
“The committee will have to reconcile positive GDP growth with shrinking employment,” said Hall, a Stanford University professor. “I personally put substantial weight on employment, so I may be leaning toward a later date.”
Among the top indicators the group uses is payrolls, according to its Web site. Employment fell by 247,000 last month, the smallest decrease since August 2008, and the jobless rate dropped for the first time in more than a year, the Labor Department said Aug. 7.
Complicating a recovery call is the possibility that renewed declines in financial markets or home prices will cause the economy to shrink again, Harvard University economist Martin Feldstein, former head of the NBER and a member of the committee, said in an interview this month.
“There is a risk that we will have a couple good quarters and then suffer a temporary setback at the end of 2009 or start of 2010,” said Feldstein.

...

questioning the recession is over talk/justification and obama says stimulus is awesome worked great, nothing to fear after 8 years of pile driving the thing into the ground, but he needs time talk...

[BoxCar_Willie]

Euro Pacific Capital

September 4, 2009

A Failure of Capitalism?


Politicians often find scapegoats for America?s economic woes. It is understandable, but rare ? if ever ? that they point the finger at themselves. Yet, the basic cause of the current severe economic problem lies in the machinations of government.

It is clear to even a casual observer that Congress has abused its power to tax and spend. It has taxed success to subsidize failure. It has purchased votes by enacting an unending stream of entitlement programs, financed by taxation, foreign debt and a progressive degradation of the U.S. paper dollar.

This cynical boosting of consumption at the expense of production has resulted in the American consumer now accounting for some 70 percent of United States GDP. By consuming three times what it produces, America has become the largest debtor in history. The Administration now forecasts annual deficits of trillions of dollars for the next decade. This is all the direct responsibility of Congress.

[kinch]

Originally Posted by jimotis4heisman

questioning the recession is over talk/justification and obama says stimulus is awesome worked great, nothing to fear after 8 years of pile driving the thing into the ground, but he needs time talk...

English [censored]! Do you speak it?



I am impressed you are starting your pre-game early. . . I'm on my way!