When Will the Recession End?
According to a survey of business economists, the recession in the U.S. “will probably end in the third quarter.”
Of course, these are the same folks who said there would not be a recession. Given their track record and ill informed opinions, we can safely ignore the noise that passes for their analysis. In its place, lets use a variety of readily available metrics that will provide a more objective measure.
Let’s look at the Conference Board’s Leading Economic Indicators, the ECRI LEIs, and the Ratio of Coincident to Lagging Indicators. They imply sometime in the first half of 2010.
1) Conference Board’s Leading Economic Indicators: Historically, when we see the LEIs jump a full point (to 99 in April), that is a positive sign for the end of a recession. David Rosenberg, now Chief Economist & Strategist at Glusking Sheff, notes that going back to 1960, “the only times we have seen increases of this magnitude in recessions were at the very tail end of the downturns.” However, he warns that “even if the LEI has bottomed, it typically takes another six months for the recession to come to an end and that lag time has been known to be as long as 10 months.” Given the severity of this downturn relative to prior recessions, we are likely to be on the longer end of the range.
2) ECRI LEIs: The Economic Cycle Research Institute (ECRI) leading index has risen to -11.5% — that has been a significant point in past recessions. On average, it takes five months from the time this index hit -11.5% til we reach the end point of a recession. Again, the average can be misleading, and the range is what matters. In the past, the minimum was one month and the maximum was 12 months. Again, givent he depth of this recession, and then credit destruction it has had, expect the longer end of the range.
3) Ratio of Coincident to Lagging Indicators: The coincident-to-lagging ratio almost always bottoms at the lows in the S&P 500, usually within a 2 month range. Look at levels around 93 (range of 90.9 to 94.2).
The chart below is from Summer 2008; I will update it later today . . .
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Coincident-to-lagging indicator in recession terrain
Chart via Haver Analytics, Merrill Lynch
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Sources:
U.S. Recession May End Next Quarter, Business Economists Say
Shobhana Chandra
Bloomberg, May 27 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=a62f_EptgAT0&
May 27th, 2009 at 7:22 am
Other than Bloomberg, I do not know of any easy way to identify the Ratio of Coincident to Lagging Indicators
May 27th, 2009 at 7:33 am
Comes down to their definition of ” end of a recession”. All you need to do is have one Q with 0% growth and the recession is over. In an L shaped recovery, (Japan) how long did the recession last? We know that GDP needs to grow with 2-3% to keep unemployment rate flat.
May 27th, 2009 at 7:40 am
How long before we are creating 100,000 jobs/month? As I understand it, this is the minimum number to just keep the Unemployment rate steady…
May 27th, 2009 at 7:59 am
SUMMARY: “While the overall tone remains soft, there are emerging signs that the economy is stabilizing,” according to NABE’s latest survey and its president, Chris Varvares, who is also president of Macroeconomic Advisers. “The survey found that business economists look for the recession to end soon, but that the economic recovery is likely to be considerably more moderate than those typically experienced following steep declines. Moreover, despite encouraging signs seen in the last several weeks, the NABE panel downgraded the economic outlook for the next several quarters, compared with the previous survey,” he added. According to the survey, the key downside risks remain continued large job losses, no improvement in credit conditions, and further sharp declines in home values. These same forces are causing consumers to remain cautious, a feature that NABE panelists think is here to stay. Following a sharp 6.1% (annual rate) contraction in the first quarter of this year and another 1.8% drop in the second quarter, NABE forecasters expect real GDP to rise at a subpar 1.2% rate in the second half. This would result in a hefty 1.2% decline in 2009 (on a fourth-quarter over fourth-quarter basis), on the heels of a 0.8% decline in 2008. The unemployment rate is forecast to rise to 9.8% by year-end; and inflation is expected to moderate, as economic slack builds and as oil prices are forecast to remain relatively depressed. “The good news is that the NABE panel expects economic growth to turn positive in the second half of this year, with the pace of job losses narrowing sharply over the remainder of this year and employment turning up in early 2010,” Mr. Varvares said.
Highlights
The NABE forecast panel expects a further decline in economic activity during the second quarter, making for the most severe economic contraction in over half a century.
The near-term weakness is largely due to a sharp retrenchment in business investment.
Rising government spending will provide vital support to the economy, as the only major expenditure area posting positive growth in 2009.
A modest second-half rebound in real GDP is still expected.
Growth in 2010 is slated for a return to near its historical trend, with real GDP rising 2.7% on a fourthquarter- to-fourth quarter basis.
Labor productivity remains impressive and is expected to improve.
As has been discussed here the NABE does NOT use back to back qtrs of negative GDP to define a recession. Does anyone know how they call the end of one? I looked all of the site and could not find this explanation anywhere.
May 27th, 2009 at 8:03 am
here is a chart of the nabe forecast
http://www.nabe.com/graphweek/2009/gw090524.html
May 27th, 2009 at 8:16 am
“…On a technical basis we have seen a significant drop in the number of outstanding crude futures contracts as they have plunged to the lowest level in over seven months signaling that this year’s crude rally could be on its last leg. Open interest on the NYMX has dropped 13-14% in the past week to 1.094 million contracts. This indicates that a 20% surge in crude this month that has pushed prices above $61 a barrel is likely to end, and we could see crude dropping back towards $40.00-45.00 I’m not sure at this point due to the huge inventories that the crude market is necessarily buying into the green shoots premise as the number of short positions to be covered is usually finite, so support for prices isn’t as strong as when you’re adding new positions. [Open interest is defined as the quantity of contracts bought that have not been cancelled by corresponding orders to sell; and the open interest level for crude on the Nymex is at its lowest since 10/29/08]. Crude has recovered from a four-year low of $32.40 a barrel in December as rebounding equity markets foster speculation that government stimulus measures will spur economic activity and as such demand for energy will increase as well; and this flies in the face of data where U.S. crude oil inventories remain near their highest in nearly 19 years because of lower demand from consumers. In addition to the stockpiles held in the U.S., traders are storing 102 million barrels of crude and 19 million barrels of refined fuels on tankers, according to London-based shipbroker E.A. Gibson…”
http://www.financialsense.com/fsu/editorials/tetreault/2009/0526.html
+ http://www.financialsense.com/editorials/schmidt/2009/0519.html
May 27th, 2009 at 8:20 am
Romer is about as painful to listen to as Kneale.
May 27th, 2009 at 8:23 am
It will end when the whole thing collapse in a heap of burning ashes.
http://theburningplatform.com/economy/aint-no-rest-for-the-wicked-1
May 27th, 2009 at 8:28 am
jqui Says:
May 27th, 2009 at 8:23 am
It will end when the whole thing collapse in a heap of burning ashes.
http://theburningplatform.com/economy/aint-no-rest-for-the-wicked-1
++++ 1 I agree 100%. The debt is NOT sustainable, nor are the deficits (as of current). Jim Quinn has it nailed.
May 27th, 2009 at 8:35 am
Let me get this straight…
The ‘RECESSION IS OVER” because we “might” get +.0000000000001% growth in Q3′09 (due to unprecedented QE measures from the FED, coordinated efforts around the globe, our own government pouring and/or promising trillions of dollars to keep unemployment benefits coming, and a MSM media blitz which emanates from larry Summers office to the White House press corps, to CNBC, to brokers, to “tools” at Memorial Day BBQ parties), and ostensibly into the remaining millions of BAC shares that they have to CLEAR INVENTORY on “everything must go”!…
Anyway, what were we before? something like 14 trillion GDP?
So the 6% “contraction in Q4 ‘08 (you know, the one with GS’s “orphan month) lops 800 billion off our potential…We’re down to 13.15 trillion right?
Next quarter, the same…we’re down to a $12.35 trillion dollar economy (and jobs are still being lost at a 500k – 600k pace each month, AND, the 4 week MA of CONTINUING CLAIMS [Rick Santelli's favorite], is still steadily rising…
So here we are…We’ve turned the corner right? We’re going to support the “bubble” in real estate assets and a DOW in the 10,000 – 14,000 range with a ’stinkin’ $12 trillion dollar economy…
Now do that same multiplier on ROW and see what you get…
Bottom line…even with a steady 1% rise in GDP (for the next 10 years straight), we only get back to out production as it stands today…15-20 years to get back to the ‘07 salad days…
May 27th, 2009 at 8:36 am
The guy from ECRI has been on tv beating the drum that the recession is basically over and growth is forthcoming.
May 27th, 2009 at 8:39 am
It doesn’t really matter when it ends. This is a balance sheet recession, which is totally different from the ones experienced in past years. Unlike past years, assets declined in value by huge amounts, but loans against those assets remain at full value. This decreases the propensity to consume since disposable income is required to continue to pay for overpriced assets. Or Uncle Stupid prints money to pay for it.
We have become like Japan.
Once the economy bottoms, it will probably go sideways for years, maybe a decade, or more. Thus, the end of the recession will only be a point in time because an upturn will not be a part of this recovery.
On a second note, the absence of sellers and low volume yesterday confused me. The buyers were, apparently, computers talking to each other. Given some of the crap I read on the internet, it would appear that the large brokerages (GS, MS, UBS) are putting a floor on the market by trading IWS and SPY in massive volumes. When they buy, is it to start a rally and sell to a greater fool? Where is their capital coming from? For example, some of the trades would take $1/2 billion or more in the aggregate. That’s huge.
How can a market fall in the above described environment? It certainly can’t go up. If it can’t fall appreciably, then why consider buying at any time? It appears to be a rigged game in some capacity.
I would appreciate it if someone knowledgeable of trading in large volumes could explain away some of my concerns.
May 27th, 2009 at 8:40 am
And let’s not forget that 20 years into the future will be just about the time that Social Security runs out of money and can no longer pay out…
May 27th, 2009 at 8:43 am
ben22 Says:
May 27th, 2009 at 8:20 am
Romer is about as painful to listen to as Kneale.
reply:
————
She’s worse in my opinion. Despite years of business reporting, she still offers a very shallow, mainstream, textbook explanation of everything she encounters. At least she’s not as vapid or vacuous as Trish Regan.
May 27th, 2009 at 8:45 am
@dead hobo
I don’t know if this is the correct answer, but I suppose from a PURE TECHNICAL perspective, what you describe (if it is indeed happening), could go on as long as the market hasn’t reached critical points (such as the 200 day MA), or something like that…
Some of those points I describe are quickly coming onto the horizon…we’re not there yet, but within the summer (if nothing changes otherwise), we’ll be there…
May 27th, 2009 at 8:45 am
Hmmmm. This is either the big head fake which will drive the market higher for 2-4 months, or real improvement which will drive the market sideways 2-4 years.
May 27th, 2009 at 8:48 am
hobo,
you are exactly right about her.
Did you see her this morning? The tone of her voice is enough for me but she trotted out some of the following today:
“well usually after a large decline you get a big bounce” waving her arms while she says it
” renewed consumer confidence backs up our optimism”
“people haven’t bought anything for about 18 months so there must be some pent up demand”
May 27th, 2009 at 8:50 am
@ben22
I know that my “holiday” (TOP or BOTTOM) thesis isn’t very scientific, but I HAD predicted last week that gold would see a temporary top and not crash through to the upside just yet…
Here’s “punctuation” for that thesis…This kinda stuff is right up your alley…
http://www.nationalpost.com/todays-paper/story.html?id=1633851
May 27th, 2009 at 8:53 am
cvienne,
I don’t think hobo is speculating about the computer trades. This is being pretty widely discussed and you can see a video on the topic over at ZH.
As an aside though, the latest data show that mutual funds have been pretty big buyers in the last few weeks as well.
http://1.bp.blogspot.com/_FM71j6-VkNE/ShrHvEJATCI/AAAAAAAAC0A/EWW7ezLq1OU/s1600-h/6+gs+5.25.09.jpg
May 27th, 2009 at 8:59 am
“…“When good people in any country cease their vigilance and struggle, then evil men prevail.”
–Pearl S. Buck
There are many good people in our country. I would even venture to state that the overwhelming vast majority of our 306 million citizens are good people. The problem is that the good people have let their guard down and allowed evil men to prevail. By delegating their civic responsibility for their own well being to corrupt, power hungry, evil men, we have traded liberty and freedom for a false sense of security. The military industrial complex, healthcare industrial complex, media industrial complex and now the banking industrial complex and auto industrial complex are now in command of our lives. By following the false prophets of government solving all the ills of society, we have allowed the hangman’s gallows to grow and loom ever larger over our every day existence. The examples of evil infiltrating the halls of government, banking and industry are many.
Evil Words & Actions
“False words are not only evil in themselves, but they infect the soul with evil.”
– Socrates
from http://theburningplatform.com/economy/aint-no-rest-for-the-wicked-1 above..
~~
“hobo,
you are exactly right about her.
Did you see her this morning?…” — y’all are feeding the beast by paying it mind..
Tune in to your own Programming, “All the News that’s Fit to Print”, isn’t Fit.
http://www.thefreedictionary.com/fit see: adj. def #3 for def. of second usage..
May 27th, 2009 at 9:05 am
@ben22
Yeah…
At this point (with about 4 weeks left to go to close the quarter), I’d bet there will at least be a modest effort to GET THIS HORSE INTO THE BARN with a positive print (on a quarterly basis)…
That would mean that the S&P has to stay ABOVE 798 for the close on June 30…
There have been 6 STRAIGHT quarterly drops going back to ‘07…I think that streak will get finally broken…
May 27th, 2009 at 9:12 am
Average foreclosure loss of $201K in CA per Mr Mortgage (now field check group). What happens to green shoots when banks unleash FC sales after various moritoria end – they already have a shadow inventory of 80K homes in CA alone.A recovery with CA home inventory being dumped at unimaginable losses (think 80% loss on peak year puchases with most losses falling on the big banks)
http://www.fieldcheckgroup.com/2009/05/26/5-25-ca-home-sales-more-buyers-and-sellers-needed-now/
May 27th, 2009 at 9:14 am
The “recession” will begin ending no sooner than 2017 (2030 until it’s fully stabilized).
jqui:
Great link, thanks.
May 27th, 2009 at 9:14 am
Mark,
so should I get into politics?
Wasn’t it Plato that warned that by not participating in it I’d be ruled by my inferiors?
May 27th, 2009 at 9:16 am
cvienne Says:
May 27th, 2009 at 9:05 am
@ben22
Yeah…
At this point (with about 4 weeks left to go to close the quarter), I’d bet there will at least be a modest effort to GET THIS HORSE INTO THE BARN with a positive print (on a quarterly basis)…
reply:
—————
I suspect you’re right. It will probably go sideways until next earnings season. Then the ‘beat expectations’ crowd will re-emerge and the ones holding a floor will drive it higher. Mutual fund managers will go along out of fear of missing a rally and having to explain themselves. The spin meisters will keep a story or two in the news that shouts ‘green shoots’ or something evolutionary based on green shoots.
The only problem is that this type of hyping, no matter how well meaning, is not compatible with a balance sheet recession, especially if consumption is further inhibited by commodity inflation. Eventually, the market will fall off another cliff from wherever it is made to rise to. The stock market is not a place for honest people to hang out. I really believe that, years from now after the dust settles, people will find out that Uncle Stupid is using the large brokerages to floor the markets. While well meaning, it just takes new cash from those who still had trust in the system.
May 27th, 2009 at 9:19 am
@MEH – “When good people in any country cease their vigilance and struggle, then evil men prevail.”
–Pearl S. Buck
I think there is a problem at this point with the power being concentrated in areas beyond the reach of “good people.” Currently, good people get chewed up and spit out by the system. It seems a little late for mere “vigilance and struggle.” Unless you are talking about… well, BIG STRUGGLE.
Also, a huge percent of the population, I cannot call “good” because they are too lazy to think, and they are too lazy to struggle for their own lives (let alone go against evil), and they have bought into the cushy ameriscam(TM) consumerism and government caretaking (and still, even now, want more). After all, where is the population looking to get out of the economic crisis? Government! That’s not vigilance and struggle.
Ideals have lost out to payola, bribes, and corrupt plutocracy supported by propaganda.
May 27th, 2009 at 9:20 am
ben22,
we’re “in Politics” every day of our lives. my point wasn’t to “Drop out”, it was to “Tune in”–to someone/something that isn’t actively lying to you/wasting your Time..
May 27th, 2009 at 9:25 am
@dead hobo
You’d think at SOME POINT this year though (if the Treasury is acting as a cohort with the large brokerages flooring the market), they’d engineer a temporary SELLOFF so they could scare some people into selling and collect some capital gains revenues…
Don’tya think?
May 27th, 2009 at 9:26 am
hopeImwrong,
I hear you, this: “Ideals have lost out to payola, bribes, and corrupt plutocracy supported by propaganda.” is tide to be tacked.
whether we remember/learn how to do so, or not, will write the Script of the Days ahead, or the Daze in our Head.
May 27th, 2009 at 9:28 am
The top story on Yahoo this morning was “90% of Economists Say Recession Will End This Year.” And yesterday I met with my dissertation director — a really smart, common-sense guy, but no economist — and he believes that things will have turned around by the time I’m on the job market in 1-2 years. What I’m saying is that most people don’t read The Big Picture (thought they should;-)) and most people believe what everyone else is saying and believing. In other words, the rally in stocks and “consumer confidence” could go on longer than it “should” because it’s not just Joe Average who believes whatever 90% of economistst tell them. It’s also PhD’s, doctors, lawyers, money managers and the POTUS. Even so, I imagine the disappointment will be that much greater in the end. Next Christmas could be a real sentiment changer. For the worse.
May 27th, 2009 at 9:28 am
Does it matter when the recession ends? The “crisis” of the past roughly 9 months has trampled our individual liberties. We have state control of large swaths of our manufacturing base and the federal government has attempted to invalidate contractual rights of bondholders and business owners. We already had legal processes established for the orderly unwind or restructuring of these businesses, but the federal government has intervened. How is that any different than Soviet Russia? And then there are the actions of the Federal Reserve and the Treasury. Ben Bernanke and Paulson/Geithner have conducted themselves as befitting a conspiracy theorist’s wet dream. Who cares about the recession anymore? I’m more concerned that we have implimented structual barriers to a free and vibrant society and that the means of production will be increasingly controlled by the federal government.
May 27th, 2009 at 9:33 am
MEH – I have a theory about prosperous societies. The prosperity sows the seeds of decline by wringing out the mentality of hard work and generational investment, and replacing these with laziness, entitlement, and instant gratification.
I see a lot of behavior in society which leads me to believe the US culture has jumped the shark.
May 27th, 2009 at 9:35 am
Why are you always dissing on the forecasters?
Your calls aren’t perfect either
May 27th, 2009 at 9:35 am
cvienne Says:
May 27th, 2009 at 9:25 am
@dead hobo
You’d think at SOME POINT this year though (if the Treasury is acting as a cohort with the large brokerages flooring the market), they’d engineer a temporary SELLOFF so they could scare some people into selling and collect some capital gains revenues…
reply:
————
I would hope so. Philosophically speaking, “If a crooked game emulates an honest game, is it still a crooked game?” On one hand, if Uncle Stupid were running the show, as opposed to only financing it, what you write would certainly happen. Markets that move in a significant range are normal. It would make me think about jumping back in.
I don’t think Uncle Stupid is running the game, although he might think he is. The large brokerages are playing a street hustle. Gains chasers are the mark.
May 27th, 2009 at 9:37 am
@hopeImwrong 9:33
Reminds me of the Chinese quote that Mish talked about a few months back, “Wealth does not pass four generations.”
May 27th, 2009 at 9:41 am
@cursive 9:28 – more evidence we have jumped the shark. We are letting the government squeeze the life out of our society because the population doesn’t want to do the heavy lifting.
I thought maybe 9/11 would wake us up, but there was a huge wave of “lets get back to normal.” The changes were only marginal in the end.
I thought maybe the economic crisis would wake us up, but you can see it again. The huge wave of “lets get back to normal.” The changes (government sponsored) may not be marginal, but they will be detrimental.
The minor retrenchment in spending habits to correct the balance sheets is forced, and being implemented within the context of “getting back to normal – as much as possible.”
This is why the Chinese will dominate us in the end.
May 27th, 2009 at 9:41 am
NO WONDER the bondholders balked at the government’s offer. 100% of a bad company isn’t enough but 10% is pitiful.
May 27th, 2009 at 9:43 am
Mark,
Remember, I watch CNBC every single day in order to figure out what the wrong thing is to do or believe so in that respect it isn’t a complete waste of time. Last year, watching Kudlow early in the year was the greatest sell signal of all. When the Chair of the Council of Economic Advisors says that consumer confidence reports back up their optimism I know she’s nothing but a fat lying bitch.
As far as tuning in, well, that’s why I come here.
May 27th, 2009 at 9:43 am
hopeImwrong,
Cursive nailed it, above. Your theory sounds like a Macro- version the Micro- story: “Shirtsleeves to Shirtsleeves, in 3 Generations..”
I’m not disagreeing, though, Peep that can get 4 out of 2 2’s should be paying the utmost attention to what is *Really transpiring, the MSM “Gamed Shows” can wait..
May 27th, 2009 at 9:44 am
Cursive
Yep, it’s the war on terrorism all over again except it’s now the war on recession. Anything is justified and rationalized under the guise of saving our economy.
“It’s just too important to our economic security …. ”
“We can’t risk not doing…”
And the people are willing to give up their liberties and cede more power and control to the fed govt to fight the evil recession.
It’s all very spookily reminiscent and the parallels are scary.
May 27th, 2009 at 9:46 am
@dead hobo (9:35)
Your last sentence was perfectly stated…
And think…now that “moral hazard” issue has been trampled underfoot by the end of the old Administration, and continued by the new Administration, TBTF is now the mantra so anyone can play any game they want…
…moreover, Bear Stearns, Merrill Lynch, & Lehman are all split up (or gone), so it falls to just a few lucky players…
May 27th, 2009 at 9:48 am
@hopeImwrong
Free men can never be dominated. If we remain free, and I ultimately believe that we will, China, a country without protection of individual rights, will never dominate us.
May 27th, 2009 at 9:51 am
Yeah, and here is their forecast from 2007. How bad did they screw the pooch on this one? http://www.nabe.com/graphweek/2007/gw071125.html
May 27th, 2009 at 9:54 am
@Cursive
If we remain free, and I ultimately believe that we will, China, a country without protection of individual rights, will never dominate us.
—
Agreed…
If push came to shove we could seal out borders rather easily…
If it came to conventional warfare, it would be very hard to land a standing army on any beachhead (ask Cromwell about that notion)…
Sure I’m sounding “goofy” here, but one gets the point…
May 27th, 2009 at 9:59 am
Heh heh heh.
LB just caught franklin411’s assertion that the “american attitude is different than the japanese attitude” and the following takedown by cvienne that f411 “knows nothing about japan beyond the sushi restaurant down the street”. The Myth of American Exceptionalism lives on in the mind of franklin411…
So far we are following the Japanese blueprint ALMOST EXACTLY.
May 27th, 2009 at 9:59 am
@Onlooker 9:44
If the majority of Americans had any sense of history or of the writing of our founding fathers, most notably the Federalist Papers, we wouldn’t have made it to this juncture. MEH has been very good to post several of the greatest quotes/warnings from Thomas Jefferson.
May 27th, 2009 at 10:00 am
Does anybody know anything about the Iranian Navy (& more specifically, the “stealth” capacities of their submarines that could lob nukes)?
Just curious…
May 27th, 2009 at 10:04 am
@Super Trooper:
Incorrect about a 0% growth quarter signaling the end of the recession. In fact, it is very possible to have a positive growth quarter during a recession. Already happened in this one — see 2008.
May 27th, 2009 at 10:04 am
@cursive 9:48
I hope you are right.
But, I see us getting less free, and them getting more free. The two trends could end up crossing.
I see the US regulations and government control as “less free” factors. These are ever increasing.
Individual liberties are being eroded in the US. We are still basically free, but less so every year.
Unfortunately, for the plutocracy to stay in power, they have to chip away at freedom.
(hope I’m wrong)
May 27th, 2009 at 10:04 am
People were very assertive about trotting out Krugman when he was grumbling about the President’s handling of the economy.
Why aren’t these same people as assertive in hauling the old war horse out, now that he’s saying the recession is almost over?
Now, don’t get me wrong. GDP will stop contracting this summer, and unemployment will continue to increase for 6-8 months after that. The rest of the world is another 6-8 months behind us in this whole process as well.
World economy stabilizing: Krugman
Mon May 25, 2009 2:31pm EDT
ABU DHABI (Reuters) – The world economy has avoided “utter catastrophe” and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.
“I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now,” Krugman told a seminar.
“I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year.”
http://www.reuters.com/article/businessNews/idUSTRE54O20L20090525?feedType=RSS&feedName=businessNews&rpc=35
May 27th, 2009 at 10:05 am
What?! They couldnt find ANY way to positively spin the data???
May 27th, 2009 at 10:05 am
Bob Hoye’s address from March puts a historical perspective on the question …
http://www.cmre.org/hoye2009.htm (hat tip to OA)
May 27th, 2009 at 10:09 am
Globaleyes, The US is putting more money into GM so GM can repay the banks and then US owns 70% of a company entering BK, similar to their ownership of AIG. What a tangled web we wre weaving. Turbo Tim said it would be very complicated, he’s keeping his word on that!
May 27th, 2009 at 10:10 am
@Franklin411
Franklin – do your loins start getting all flush with blood as you type the words…
“The President”?
May 27th, 2009 at 10:11 am
> According to a survey of business economists….
Basically opinions ( not very informed ones ) based on yesterdays economic models
What’s relevant today is this and why saying recession will probably end in the third quarter is complete bullshit !
THE INCREASING FREQUENCY OF BLACK SWANS
http://bit.ly/36yDue
few business economists can even add perspective here because they’re living in the past.
May 27th, 2009 at 10:11 am
@cvienne: AYFKM?
http://www.globalsecurity.org/military/world/iran/ships.htm
Diesel = not stealthy
May 27th, 2009 at 10:13 am
Inventory up from 9.6 months to 10.2 months. This is the only housing number that really matters, as per many many posts from CR and BR. We all know there is a boatload of shadow inventory out there waiting to go on sale.
May 27th, 2009 at 10:13 am
leftback,
you just caught that, I thought that was funny yesterday.
If we just have a positive attitude we will believe our way right out of the recession.
My if I have a good attitude about my investments I will make a three fold gain each and every year. If I believe really hard maybe more!
May 27th, 2009 at 10:13 am
@hopeImwrong
Just be careful about thinking that the grass is greener on the other side. Jim Rogers may have moved to Asia with a bunch of bluster about future Asian dominance, but I’m old enough to remember when Japan, Inc. was supposedly close to global economic hegemony; now look at the poor bastards. I am troubled by much that has happened here over the last 9 months. We need some Churchillian resolve in the face of this latest threat. Don’t give up, don’t ever give up. And be sure to keep voting.
May 27th, 2009 at 10:15 am
&Franklin
When are you going to understand that the ISSUE of GDP (growing, stabilizing, or whatever) has nothing to do with the scenario that will play out in the future…
The ISSUE, is asset deflation…
In 2 economic quarters, we’ve lopped off $2 trillion dollars of GDP (that’s just US, not including the ROW)…
But we’re using that to try to support asset prices at FORMER levels…
There’s no value in that, which means that REAL GROWTH (as the world has perceived it for the past 30 years) will not exist for a VERY LONG TIME
May 27th, 2009 at 10:18 am
@Transor Z
Exactly…
Once they have reactors though, all their subs could be refitted to be nuclear powered, correct?
May 27th, 2009 at 10:21 am
@cursive
Thanks for the optimism.
I don’t really think the grass is greener. I’m not moving to China! I love the US. But, China has an opportunity here. If we don’t have our ducks in a row, we are England (not Japan).
I am worried about our economic future (standard of living), our culture, and our freedom.
I do vote, but it’s hard to do when both parties disappoint me so consistently. They seem like one party now. Sometimes I vote third party, but that’s a wasted vote.
May 27th, 2009 at 10:23 am
Franklin — so long as you’re in prediction mode this morning, when will mortgage foreclosures peak, and how much further will housing prices fall? At what level (and when) will continuing unemployment claims peak? And how will this have no impact at all on the banking industry? (I actually have an answer to that last question — they will lie about their balance sheets and income statements, via the magic of accounting alchemy)
I suggest that you take a moment to read the Bob Hoye talk about the historical experience of past depressions, and how well this one is following the long-established patterns.
Also note that while Paul Krugman says “I would not be surprised to see…”, this falls considerably short of his saying “I fully expect to see …”. All in all, Mr Krugman’s statements seem less than a stirring endorsement of an upward trending future, than an acknowledgment that at some point we will see and upward trend — however slight — to the global economy. It seems to me that he might have instead said something like “in a few months we should see the impact of the monetary stimulus that has been delivered to date”.
And you seem to have missed the rest of Mr Krugman’s remarks in the piece you linked to …
“In some sense we may be past the worst but there is a big difference between stabilizing and actually making up the lost ground,” he said.
“We have averted utter catastrophe, but how do we get real recovery?
“We can’t all export our way to recovery. There’s no other planet to trade with. So the road Japan took is not available to us all,” Krugman said.
May 27th, 2009 at 10:25 am
@cvienne: franklin is sooo right. As long as we STAY POSITIVE, enjoy LIFE, drive a HUMMER, live in a McMANSION and keep on eating American burgers with American cheese, we will be fine.
Avoid any kind of ANGST, stay away from eating fish and seaweed, and SAVING, and there is NO WAY that we will EVER experience ASSET deflation of the Japanese variety !!
Keep up the takedowns, my friend, and I’ll just watch. Got popcorn?
May 27th, 2009 at 10:26 am
@constantnormal
yeah…I LOVE IT that Franklin411 has finally gotten into the “prediction” game…
I look forward to seeing more of these predictions & “market calls” going forward…
May 27th, 2009 at 10:28 am
cvienne, a correction to your assertion about GDP contraction from up above….
GDP is reported on an annualized basis – so Q4 2008’s -6% number was really a drop of 1.5% during that three month period.
May 27th, 2009 at 10:30 am
The comments on this board, particularly Cursive, MEH, cvienne, B22, LB, DH, et al., are all the green shoots I need. You guys get it. There is evil, profound evil, afoot in this power grab going back to the Bear Stearns bailout, but really before that, as Barry points out in his book, all the way to the initiation of the Greenspan Put in 1987, and even before.
Evil is doing things that are inimical to survival. Virtually everything we have allowed our leaders to do over the last two decades have imperiled our ability to survive, both individually and collectively. We wanted to believe in illusions of security and wealth, and so were provided plenty of illusions to believe. We willingly forswore freedom and responsibility for delusions of security. We traded our accumulated wealth and mortgaged our future to save an unsustainably corrupt and fraudulent economic system built upon the premise that every American generation can live better today than did its predecessor, but without the sacrifices that before had made such a historically implausible idea possible.
Evil never triumphs because by its definition as doing things inimical to survival, it does not survive. The question for us now is whether this evil dies because we destroy it, or it dies because it destroys us.
Timshol…Evil is always crouching at the door. “Thou mayest” overcome it. It is our choice.
May 27th, 2009 at 10:35 am
not sure i buy that we will be getting out of the recession this fall (or this year) but thats more because the mess we are in is to big to get out of that quick. and while i understand (sort of) the need to get more positive about the economy (otherwise the depression will happen as it did in the great depression) i think its too soon. and i am not sure how to value those who now seem to be claiming that rights have been trampled now. when that has been going on for at least 8 years, and i don’t recall a lot of complaints before now
May 27th, 2009 at 10:36 am
@cvienne
> Once they have reactors though, all their subs could be refitted to be nuclear powered, correct?
I’d guess not. Our ‘Nautulis’, the first nuke sub was based on an older non-nuke platform (‘Skipjack’, I think), but was built from the ground up to hold the reactor. It’s larger in diameter than the old diesel boats, large enough to make it impractical to refit, I would say. Of course, that’d also depend on building a sea-going reactor, which is tricker than building a land-based one. If Iran wanted to pull a ‘Red October’ on us, they’d find other options cheaper and more likely to be successful. Again, just my opinion.
May 27th, 2009 at 10:38 am
Curmudgeon,
I think it’s simpler than that. It’s only thieves stealing whatever they can. Uncle Stupid is helping them by being stupid, under the belief he is being helpful. The thieves are smart enough to profit in any economic environment. Right now it’s a golden age for them.
May 27th, 2009 at 10:42 am
If Uncle Stupid really wanted to throw a monkey wrench in the works, he would see that a few or a lot of people are fired. Preferably a lot of people in high places. This would throw them off balance for a while until they could figure out an angle that creates job security and a blank check.
May 27th, 2009 at 10:46 am
This’ll either merge the ideas of dead hobo and Curmudgeon, or start a fight: thieves stealing whatever they can is a form of evil. Garden variety, every day evil but evil nonetheless.
@Curmodgeon: “Thou mayest” overcome it… early experiences with that were not positive, which takes nothing away from its truth.
Wasn’t the US founded partly in reaction to a government that had grown too large and controlling?
What have the successes been in cutting something like that down to size, short of crisis, revolution and collapse? MEH?
On the other hand, maybe it’s time to find Krugman’s other planet to trade with. Terraform Venus, anyone?
May 27th, 2009 at 10:50 am
@cvienne:
No, put the whole Iranian naval nuclear strike on mainland US out of your mind. It’s absurd.
HOWEVER, the torpedo tubes of Kilo class SSNs can be fitted with nuclear-tipped cruise missiles to launch against warships/Persian Gulf coastal targets.
May 27th, 2009 at 10:52 am
For me, I find Krugman’s arguments to be a little more political than the type of advice I prefer to follow.
and, as someone said above, franklin, nice try putting in the happy quotes from the article. spinster.
May 27th, 2009 at 11:04 am
cvienne @ 8:35
“the 6% “contraction in Q4 ‘08 … lops 800 billion off our potential…We’re down to 13.15 trillion … Next quarter, the same…we’re down to a $12.35 trillion dollar economy”
I think there’s an error here. The reported declines for the respective quarters are on an ANNUALIZED basis; but the decline has not occurred for a full year. So I don’t think we’re near to a $12.4 T economy at this point.
May 27th, 2009 at 11:43 am
Agreed ben22, re: Krugman. He’s mostly a political animal, as much or more than an economist. That’s the only reason it was notable that he was skeptical about the economy and critical of the O admin. If an avid Democrat was being critical of their plans/actions, that’s notable. Now it seems that either he’s on board with the “don’t be so negative, it’s bad for the economy” meme, or he’s just chicken of swimming against the increasing current of those who are talking recovery in the face of the rising “all-knowing” markets.
May 27th, 2009 at 11:46 am
Transor Z: Diesel subs are extremely stealthy. The diesel motor simply runs a generator that charges batterys and feeds electric motors. When they shut the motor off and run off battery, they are very hard to find/follow.
May 27th, 2009 at 12:20 pm
Transor Z
> The diesel motor simply runs a generator that charges batterys and feeds electric motors.
… which makes these essentially surface ships that can duck under occasionally, for as long as the battery power lasts. Nuclear power brings endurance underwater, probably necessary for stealth attacks anywhere near the US coasts.
Maybe the recession will be over when we declare war on the rest of the axis of evil? The Navy does want to build more subs.
May 27th, 2009 at 12:24 pm
Well this takes away some potential fun, Turbo Timmy must be pissed!
Bair Says Banks Can’t Buy Own Assets in PPIP Auction (Update1)
By Alison Vekshin
May 27 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said banks involved in the U.S. Public- Private Investment Program won’t be permitted to buy their own impaired assets as a way to cleanse their balance sheets.
“There should be no confusion: Banks will not be able to bid on their own assets,” Bair said today at a Washington news briefing to discuss first-quarter U.S. bank earnings. There is “no structure” for such purchases, she said.
May 27th, 2009 at 12:46 pm
[...] there a turnaround? Jump to Comments Maybe sometime in 2010: When Will the Recession End? Let’s look at the Conference Board’s Leading Economic Indicators, the ECRI LEIs, and the Ratio [...]
May 27th, 2009 at 1:21 pm
http://www.youtube.com/watch?v=akVL7QY0S8A
The Coming Collapse of the Middle Class
Interesting…not your usual nut jobs…rather long though…if interested, save it for tonight…
May 27th, 2009 at 1:40 pm
[...] course, these are the same folks who said there would not be a recession,” FusionIQ CEO Barry Ritholtz writes on his blog. “Given their track record and ill informed opinions, we can safely ignore the noise that [...]
May 27th, 2009 at 1:58 pm
@pmorrisonfl (10:36)
I appreciate that post…
I have a lot of NAVY in my ancestry…(Admr. Boorda – fmr. Sec of Navy) was the brother of my aunt “in-law”…
Nevertheless, I’m not well schooled on modern day “technicalities”…
My reason to post the point was indeed to draw some comments from someone who could supply some perspective for an audience like this (which you did – thanks!)…
In any case, TBP is that the MSM (and average citizens) never bother to play a chess game more than one move ahead…
Take for example the Iranian situation and how it relates to other things…You’ve got a N. Korean regime that’s blowing 20 kiloton nukes and launching rockets that can carry a payload 130 km…
Of course, this is all a TEST to see what kind of man BHO is 9and what the response will be…Ahmadinejad looks at that, basically sees no strength and says ‘Perfect! we’ve got elections coming up…so let’s “stall” any talks about out nuclear program until AFTER the election…
Iran will play this “stall” game for 8 years (meanwhile build their reactors under everyones nose)…
Meanwhile, Americans stay COZY all along because they think that even if Iran DOES produce a NUKE, the payload doesn’t have intercontinental capabilities…It can’t strike NY or Washington…
But Iran has a Navy…They can build submarines…In 8 years, they could have “stealth” submarines that could go just about anywhere (I’d imagine)…
I know this is MANY MOVES AHEAD in the chess game…But Americans (who have the thinking capacity of “gnats”) ought to play out scenarios such as this in their head to understand the spectrum of things that might affect them in the future…
May 27th, 2009 at 2:12 pm
@cvienne… you self-describe as a ‘hack’, but I think you look more moves ahead in all kinds of chess than I do.
My favorite book for perspective on all things nuclear is ‘The Making of the Atomic Bomb’ by Richard Rhodes, a comprehensive history of how ‘The Bomb’ came to be, starting with turn of the centruy physics. Fascinating read, and I became a big fan of Enrico Fermi and Robert Oppenheimer who, roughly, were behind the first reactor and the first bomb(s). Short story is that they are both *big* projects, the bomb probably being technically more difficult.
From what I’ve read, not everone in Iran is looking to bomb NY. On the other hand, certainly, strategically, the US has taught the world that owning nuclear weapons is a big bargaining chip (and that not having them makes you prone to invasion).
As far as future scenarios, personally, as I’ve mentioned, I’m more worried about NY becoming Sao Paulo (no disrespect to Brazillians!, I speak only of the wealth disparity) than I am about it becoming a flat plate of glass.
May 27th, 2009 at 2:25 pm
cvienne,
do you know how many Satellites the DoD has? do you have any idea what they can ’see’?
do you have an idea of the “SigInt” capabilities of the NRO?
the whole idea of “Stealth” is marketing/fear mongering tactic. It is, literally, reduced, not eliminated, signature/footprint.
you should wonder why, and how, the USN has been killing Whales in the Pacific, and what that program can reconnoiter..
http://www.thefreedictionary.com/reconnoiter
for all of your dissing of the MSM, you sound like you get Ops Updates from Katie Couric, her ownself..
have a blast with this s**** from ‘98
http://ieeexplore.ieee.org/xpl/tocresultprintf.jsp?isnumber=14773&ResultStart=25
~~
pm,
to your point, above, obviously Leviathan is upon/among Us. Is it optimal? hardly. Can it be tamed? that’s the ‘morrow’s for. The answer’s EZ, the Solution difficult, but, as others have seen, before Us, the Paths we face are similiar, and there are, still, but Two.
May 27th, 2009 at 3:19 pm
@MEH (2:25)
I “prefaced” the entire thread with the disclaimer that I knew very little about present day intelligence and tactical capabilities…
I published the thread simply to draw dialogue (which apparently succeeded – as it drew some interesting comments that were very new to me)…
I appreciate YOUR contribution as well…
All I do here, MEH, is to try and think about things OUTSIDE THE BOX…I try to think of things that either nobody else has thought of, or that nobody has expressed…
That’s why, all along, I refer to myself as a QUACK…I’m sure some of my posts sound like the comments of from the “tinfoil hat” section…
Meanwhile, I plod along in my real estate that is owned outright (unless the USG comes along and decides it has the right to “annex” my property)…I grow my own food, and harvest my own clean energy sources for any “mechanized” things I need to subsist…
I’m not trying to irritate anybody…I’m just trying to see how my human “brothers” and “sisters” see things…
Ironic how
May 27th, 2009 at 3:32 pm
@MEH
I’m not trying to “prod” you brother, but I always like to think of “what if’s”…
You mentioned in the (2:25) thread that the DoD has “x” number of satellites that are even capable of seeing down your (wife’s/girlfriends) panties…
Well, you didn’t put it that way, but I just tossed it in there for “comedic” effect…no offense
…
Anyway…what would it take to disable satellite transmissions? I frankly don’t know…
- Solar flarees?
- EMP impulses?
- Gamma rays?
- Gravitational bends (from comet or meteor showers)?
Don’t answer that…because I know all the “scenarios” I refer to are either “far fetched” or have low “mathematical probability” coefficients…
Again, I just like to think OUTSIDE THE BOX (which, in an ironic sense, generally leads to conservative decisions that result in LIVING WITHIN OUR MEANS scenarios)…
Unfortunately, it doesn’t seem like our GOVERNMENT operates that way…Therefore, we are faced on a DAILY basis with ECONOMIC CATASTROPHE because our government is deluded to such a degree with it’s own perception of power that it doesn’t realize that a PISS ANT is capable of toppling the whole system at any random moment…
May 27th, 2009 at 3:43 pm
@MEH
Lastly,
I mean…in the grand scheme of things…(& whether you want to credit either the Visigoths or the Vandals for the “sack of Rome”)…
Don’t the “Visigoths” OR the “Vandals” qualify as PISS ANTS when viewed in the larger scope of what the empirical Roman dynasty accomplished?
May 27th, 2009 at 4:18 pm
@cvienne
> Anyway…what would it take to disable satellite transmissions?
Could be as simple as a handful of pebbles in the ‘wrong’ orbit, relative to the satellites.
Enjoy GPS… but don’t forget how to go old school, just in case.
There are more things in the world than are dreamed of in any man’s philosophy. It’s certainly worth thinking about them.
May 27th, 2009 at 6:05 pm
“Could be as simple as a handful of pebbles in the ‘wrong’ orbit, relative to the satellites.
Enjoy GPS… but don’t forget how to go old school, just in case.”
pm makes a good a point. it’s the flip-side to the over-reliance on sigint for intel. though, it’s also why I was mentioning the USN, and the Ocean(s)..
cvienne,
Iran, as a threat, is waay overblown, and, if you want to shut-down N. Korea, tell the Chinese. The PROC has been keeping them on the hoof, for decades..
May 27th, 2009 at 6:27 pm
@MEH
Then THANK GOD…
We can all sleep soundly night after night…
all the while knowing that our SUPERIOR technology will far outstrip anything that anyone could ever think of for milennia on end…
That’s good to know…:-)
May 27th, 2009 at 7:13 pm
cvienne,
our Problems are Political, not Technological, much like the Roman-era that you were referring to..
May 27th, 2009 at 7:57 pm
For the no-deflation crowd, here is Apple cutting prices Macbooks in a back to school promotion. Of course they aren’t saying they are cutting prices, but you get a free iPod Touch which list for a bit over $200. I’m still looking at puts, but the stock keeps rising, so I’m waitin.
On the Nautilus, I believe it was an older hull design and the Skipjack was one of the newer, faster round hull jobs. Showing my age, but I had a model of the Skipjack in grammar school.
May 27th, 2009 at 7:58 pm
Forgot the link:
http://store.apple.com/us/browse/campaigns/back_to_school
May 27th, 2009 at 8:22 pm
Mike,
with the stock in a uptrend that you don’t believe, look to be Selling Calls, and raking the premium..
http://finance.yahoo.com/q/op?s=AAPL
the June 135 Calls @ 4.15, for instance, are nice..
the June 140 Calls @ 2.29 are even more stupid..
note the Pricing mis-step between the 130s and the 135s, There be Idiots about, Sell to Them..
May 28th, 2009 at 6:35 am
[...] of the comments in a post yesterday (When Will the Recession End?) asked why I am “always dissing on other [...]
May 28th, 2009 at 8:00 am
@Mike in Nola
> On the Nautilus, I believe it was an older hull design and the Skipjack was one of the newer, faster round hull jobs.
You are correct; Mea Culpa on the facts, though the principle still holds.
I never built a Skipjack; I built Polaris sub models (showing my age!)
July 6th, 2009 at 7:25 am
[...] case in point is the absurdly foolish Green Shoots compost. As we have detailed since this nonsense first started spreading earlier this year, the data simply did not [...]