Cut in Household Spending Points to Recession

Roubini: U.S. in Throes of Economic Contraction

'Most advanced economies are lapsing back into recession while the U.S. is already in the throes of an economic contraction, according to Nouriel Roubini, co- founder and chairman of Roubini Global Economics LLC.
“The way I see the global economy, I think we’re entering into a recession again in most advanced economies,” Roubini said in a panel discussion today at the Bloomberg Dealmakers Summit in New York. “I think we’re already into one in the U.S. based on the hard and soft data -- same with most of the euro zone, same with the United Kingdom.”
The Conference Board today said that confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades.'...

http://www.bloomberg.com/news/2011-...-of-bullets-in-what-may-become-recession.html

 

roubini is checking the same date that alot of us investors look at.....rising bond prices and falling commodity prices especially copper and oil. Mind you there is no yield inversion as that is a guaranteed sign of recesion, but then again interest rates are manipulated so I guess we cant use that as a guideline!

 

Recession, for some reason, is a technical thing relating to quarters without growth. If you look at the bigger picture, we have been in a declining economy since the Fall of 1997. There have been some rises and falls during that time but basically, things continue to worsen and I see no end in sight. We still have high unemployment, a battered real estate market and weak banks. Our government continues to be obsessed with "fixing the economy," something it cannot do. Nothing has really changed except for an uptick last year. We aren't going into a recession. We are continuing the one that we've been in for years. And we will continue in it until we stop sending our manufacturing, jobs and wealth to other countries.

 

about the time greenspan started his dissasterous stimulus spending and cheap money!

 

There is no doubt that cheap money was a major contributor to the next bubble - real estate. The Fed doesn't and didn't do any "stimulus spending."

 

no, but the fed provided the tools ( cheap money) and then the government provided the rest!

 

This let's the risk management failure of the private sector off the hook. Cheap money or not, it is unethical for a financial institution to provide a loan to someone who lacks the ability to pay it back.

The majority of our economy is based under the assumption that private interests will take the action that leads to the best outcome. History however proves that this is not necessarly the case (only sometimes).

 

If too much money was being injected into the money supply in the early 2000s, there would have been high inflation. There was not.

 

What a shocker from "Dr. Doom" eh?

 

A few month ago you said commodity prices would continue to increase because of the Fed's money policies.

 

not necessarily.....too much money only becomes hyper-inflation if people lose confidence in the dollar...so far even now that has not happened...but remember that in 2007 oil prices reached 150 dollars a barrel and copper also hit new highs along with rice and wheat.....so there was definate monetization going on...only not as bad as QE has been!

 

yes....long term they should and will...but I also said many times it can go either way,,,,,,if at anytime QE stops the whole house of cards comes crashing down....then everything collapses.....commodities, housing, stocks everything.......and many banks would fail along with many insurance companies.

So although its not impossible, the deflationary route is highly unlikely!

think of it as a tire with a slow leak...you need to keep pumping air into it ( QE 1 ansd 2) or it will go flat...ideally you should just fix it ( purge the system)

 

Too much money in the system increases inflation. See 1970s.

We didn't have too much money in the 1990s. Inflation was right in the target range.

 

Pumping it up until you make it to the service station for repairs (the economy reduces debt) seems like a sound idea to me.

 

A) the monetization actually started in the 60's so as you can see it takes time for it to work its way through the system!

B) the 90's did create the tech bubble and as I have said in other threads cheap money and monetization doen't always create inflation ( at least not initially) it can also create destructive boom and bust cycles!

 

exactly, but the fed is not fixing anything, they are just putting more and more air into the leaky tire so either they dont put enough air and you get a flat ( collapse and deflation) or they put too much air and the tire explodes ( hyper-inflation) you need to put just enough air.....a very hard thing to do.......now if they would only fix the tire ( purge the system and raise interest rates ) then the tire would be sealed and all would be fine!