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Topic:
The R-word: In it, will be in it, or will we escape it?
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KnightWriter
Title:
Administrator Emeritus
Registered:
Nov '01
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Date Posted:
1/24 8:47pm
Subject:
The R-word: In it, will be in it, or will we escape it?
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So, I think the word "recession" is in seemingly half the regular stories on politics and the economy these days. The Economist's R-Word formula, going off how many times the word is mentioned in print, predicted recessions in 1981, 1990/1, and 2001. If you use it here, it seems to be rather damning evidence in favor of there being a recession right now, rather than just up the road (not that that's much better).
So, if we're in a recession, how bad is it and how bad will it get? If we're not, is it avoidable?
I think we're in a recession right now, and we're in for some solidly tough times ahead.
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"The Obama Car will be fueled by FISA amendments and emit civil liberties for exhaust." A-B
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Ender_Sai
Title: Manager Emeritus
Registered:
Feb '01
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Date Posted:
1/24 8:53pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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The Economist agrees about recession now, as do Goldman Sachs. The Fed's response showed they were spooked and rather than alleviate fears, it aggitated them causing Tuesday to be a massive writedown globally.
Recession is likely to not be a minor, mild one like 1987 or 1989, but rather a sustained downturn period like in 1981. Billions will be lost, and thanks to insatiable greed, pursuit of the "American Dream" and intertwined global economics, it looks like you'll drag us down with you.
The necessity of a recession, however, shouldn't be unscored. Think of it as short term pain, long term gain. There's been too much boom, too little bust and as a result, fiscal discipline has been forgotten. The US has lead this but it would be wrong and ignorant (coughNorthernRockcough) to pretend it's confined to the US.
ES
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In this truth he knew himself to be.
From sinking sands he stepped into light's embrace.
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KnightWriter
Title:
Administrator Emeritus
Registered:
Nov '01
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Date Posted:
1/24 8:56pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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Is all this attempt at stimulating the economy really a good idea? Seems like letting things go their own way for a time might be the best solution long-term.
But, in the end, we're all dead anyway.
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"May you live all the days of your life"
"The Obama Car will be fueled by FISA amendments and emit civil liberties for exhaust." A-B
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Ender_Sai
Title: Manager Emeritus
Registered:
Feb '01
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Date Posted:
1/24 8:58pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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Well of course, because even if recession is 90% certain it's still 10% avoidable. Good, responsible public policy would dictate an attempt to avert crisis to protect people.
ES
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In this truth he knew himself to be.
From sinking sands he stepped into light's embrace.
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Jabbadabbado
Registered:
Mar '99
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Date Posted:
1/24 9:02pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
- Date Edited:
1/24 9:03pm (1 edits total)
Edited By:
Jabbadabbado
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It's important to underscore here how complicit Europe and Asia have been in the effort to make sure America continues its fiscal irresponsibility as long as possible. In the short term, everyone benefited from America's real estate bubble. The European banks bought heavily into the mortgage-backed securities that no one really understood. China adds a billion dollars a day to its currency reserves,etc., etc.
If there is a global recession, it is richly deserved by all.
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Lane_Winree
Registered:
Mar '06
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Date Posted:
1/24 9:02pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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Well, I can assure you the $300 to $600 check the US government is going to hand me isn't going to help stimulate the economy. I don't plan on spending it, I'm going to be throwing it into a Roth along with a good chunk of my savings (been planning on this for a while, the $600 is just a nice little bonus).
But, how many people are going to actually get their checks, turn around, and put it towards a nice, shiny 46 inch LCD TV?
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SuperWatto
Registered:
Sep '00
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Date Posted:
1/25 2:38am
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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I don't get it, folks.
The US government's solution to a crisis is to send people a check so they can buy more stuff? And what will happen next quarter, when the checks are through? Then the looming threat is gone? It's as short-sighted as when they said the war in Iraq had been won.
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Mr44
Registered:
May '02
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Date Posted:
1/25 4:31am
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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I don't get it, folks.
The US government's solution to a crisis is to send people a check so they can buy more stuff? And what will happen next quarter, when the checks are through? Then the looming threat is gone? It's as short-sighted as when they said the war in Iraq had been won.
Because you're not factoring in the cause and effect nature of a stimulus package.
Let's say 60% of those who are issued checks turn around and buy a couch. The couch makers hire more workers, who in turn then buy their own couches, and so on... If an initial 5% bump turns into a sustained 2.5% growth, then you just countered a recession. Even if that 5% bump exists in tandem with a recession, but settles into a .9% increase instead of falling into negative growth, you just blew away the same definition.
At the basic level, that's the nature of the economy. I forget the latest estimate, but I think for every dollar spent, it actually filters through and acts as 5 dollars. It might even be more now.
You're looking at it from a perspective that once the checks are spent there's no more impact, which isn't exactly accurate.
Sure, a rebate program isn't going to work wonders on its own. Like anything else, it works in tandem with other policies. But such a stimulus can also reduce the short term effects of an artificial negative.
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Peter Shoomaker
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Jabbadabbado
Registered:
Mar '99
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Date Posted:
1/25 7:52am
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
- Date Edited:
1/25 8:06am (5 edits total)
Edited By:
Jabbadabbado
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It's not really a tax rebate. It's more of an intertemporal loan. If I qualified for the payout, which unfortunately I don't, it would basically be the same thing as robbing my son's piggy bank with the intent of not paying it back within my lifetime.
I'm surprised no one is asking this very basic question: should we be asking the future *again* to bail out the present? Maybe we need a recession more than we need another debt-fueled cash infusion. A recession will solve our economic problems, if not in a nice way.
Goldman Sachs launched a preemptive strike against its own recessionary predictions today by announcing a 5% cut in the workforce. Other finance/banking institutions have already announced job cuts in the wake of big subprime market losses. GS may be doing this in part to bring its employment levels in line with the rest of the banking industry as it sheds jobs.
Goldman is the first institution to announce job cuts ahead of a potential downturn. It's a typical GS contrarian approach: they announce record profits for 07 and issue record bonuses, then promptly downsize.
Business school hiring will likely fall off this year, which will of course cause a wave front that affects law firm hiring and college recruitment in general. Wall Street bonuses, bad last year, will likely be worse this year, meaning that a dminishing pool of high end consumers will be spending less. if you believe in the trickle down effect, there is a virtual guarantee that less money will be trickling down in 2008 than was the case in 2007.
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DroidGeneral
Registered:
Jun '05
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Date Posted:
1/25 8:11am
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
- Date Edited:
1/25 8:11am (1 edits total)
Edited By:
DroidGeneral
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To quote star wars:
"It could be worse..."
ROOOOOOOOOOOOOOOOOOOOOOOOOOOOOAAAAAAAAAR (bear)
"It's worse."
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"The Force will be with you, always." "Star Wars isn't dead."-George Lucas  Ron Paul 2008
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Ender_Sai
Title: Manager Emeritus
Registered:
Feb '01
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Date Posted:
1/25 12:06pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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Watto: When they say "checks", I think they mean "cheques" but fail @ English. 
But yes, it's supposed to stimulate spending which recirculates capital (Droid General, you already knew this right?   )
And yes, it could be worse, you could be facing recession with Dr Ron  Paul destined to take office. That would outrank making child abuse legal and encouraged on the list of ways the US could be worse off right now, and on par with massive genocide.
ES
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In this truth he knew himself to be.
From sinking sands he stepped into light's embrace.
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SuperWatto
Registered:
Sep '00
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Date Posted:
1/25 5:03pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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Mr44 posted:
You're looking at it from a perspective that once the checks are spent there's no more impact, which isn't exactly accurate.
I was more looking at it from:
a. a consumer's perspective: if everybody's talking about a looming crisis, I'm not going to buy a couch.
b. a macro perspective: within two years, the US national debt will hit the ten trillion mark. 3/4 of the US citizens have a credit card debt. A shaky economy has been built that can only thrive on excessive spending, and I don't think spending is the key to toning that down.
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Jabbadabbado
Registered:
Mar '99
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Date Posted:
1/25 5:07pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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American austerity will crash the global economy. We owe it to ourselves, and to the world, to spend like drunken sailors on shore leave.
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Lowbacca_1977
Title: Senate Moderator
Registered:
Jun '06
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Date Posted:
1/25 5:14pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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Legalise prostitution?
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Jabbadabbado
Registered:
Mar '99
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Date Posted:
1/25 5:18pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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What could better express our nation's transition to a post-industrial service economy? Use your economic stimulus package to stimulate your package.
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darthdrago
Registered:
Dec '03
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Date Posted:
1/25 5:43pm
Subject:
RE: The R-word: In it, will be in it, or will we escape it?
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