Everyone Agrees: Worst. Economy. Ever.
By Andrew Jeffery Nov 12, 2008 1:30 pm
Consumers retrench, economy contracts, gloom and doom spread.
According to economists surveyed by Bloomberg, “The drought in consumer spending may be the worst ever.”
Meanwhile, Best Buy (BBY) CEO Brad Anderson, after reporting disappointing earnings and offering a dour forecast for profits going forward, said “Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen.”
Not to be outdone, Jeffrey Frankel, of the National Bureau of Economic Research told Bloomberg Monday, “We’re in for a pretty serious recession - there’s a chance it’ll be the worst postwar recession.”
As data from last month begins to trickle out, it’s becoming clear the global economy basically shut off at the end of September, and went on outright hiatus during October. Despite massive, coordinated efforts by the world’s central bankers and lawmakers, fears of a worldwide economic slowdown are becoming a reality.
Circuit City (CC) filed for bankruptcy protection Monday, retail-sales data is bleak, and regulators shut down 2 more American banks over the weekend. Las Vegas Sands (LVS) is fighting for its survival and facing a cash crunch; most agree General Motors (GM), Ford (F) and Chrysler won’t survive without a federal bailout.
Commodity prices are tumbling and miners, steelmakers and industrialists are scrambling to adapt to the rapidly shifting economic landscape.
What many once believed would be contained to the small, esoteric world of subprime mortgage-backed securities has spread like wildfire, as years of lax lending and easy credit is being unwound in a manner of months. Firms are slashing jobs at an astounding rate, policymakers still can’t seem to get a handle on the housing mess and the effects of the financial crisis are rippling through the global economy.
Estimates for economic growth over the next 6 months are abysmal at best, as American consumers lead the trend towards thrift - both voluntary and involuntary. Most economists agree the holiday shopping season will be the worst in years, and the US economy could contract by as much as 3%.
Gloom and doom are ubiquitous.
What's notably missing -- and this should be considered marginally positive -- is hope. Hindsight often tells us that when the news is at its worst, expectations at their lowest, and when fear trumps rationality at every turn, the worst may be over.
Unfortunately, we've heard that story before. It has yet to come true.
This May, in an ominous prediction, Ellen Hughes-Cromwick, chief economist at Ford and president of the National Association of Business Economists, offered that the entire US economy will "slowly return to health" this year.
Ms. Hughes-Cromwick may have been just a bit premature in her rosy outlook.
No positions in stocks mentioned.
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Reply
2008-11-12 13:44:30
Lies and more lies
What did the Fed say last year...
oh, the sub-prime problem was 'well contained'
a comment for the history books as one of the most untrue two words uttered by them!
oh, the sub-prime problem was 'well contained'
a comment for the history books as one of the most untrue two words uttered by them!
2008-11-12 18:51:55
I predict...
a VERY bright future for Ms Hughes-Cromwick. At the bank I work for, she'd be running the place right now.
I bet she even knows what "level-setting the table-steaks while leveraging our strategic synergy in a going forward space" means.
I bet she even knows what "level-setting the table-steaks while leveraging our strategic synergy in a going forward space" means.
2008-11-12 21:36:25
Hell in a Handbasket
Why can't they just say it and let's get over with the blood letting already?
"Ellen Hughes-Cromwick, chief economist at Ford..."
That's all you need to know. Of course she is trying to be optimistic:
"Things are looking up...the guillotine blade is rusted, the executioner is blind, and the pardon is on it's way." yeeaahhh....rriighhtt.
So...the bailout is not the bailout but a confiscatory shell game...and this is going to restore confidence in the markets and banks?
What are they smoking?
"Ellen Hughes-Cromwick, chief economist at Ford..."
That's all you need to know. Of course she is trying to be optimistic:
"Things are looking up...the guillotine blade is rusted, the executioner is blind, and the pardon is on it's way." yeeaahhh....rriighhtt.
So...the bailout is not the bailout but a confiscatory shell game...and this is going to restore confidence in the markets and banks?
What are they smoking?
2008-11-12 23:11:26
Main Street Bailout
I'm a retailer. And have never seen such a decline in sales. Something like 40% I don't know where the news is getting its retail numbers. But it is not good.
Bail me out first!
I never made a piggish SUV. And I never bought one either.
G
Bail me out first!
I never made a piggish SUV. And I never bought one either.
G
2008-11-13 01:17:16
Main Street Free Fall
Visted a Best Buy today and there were 20 sales people and 6 customers. I think I was the only one purchasing. Six check out register lines and only one open register. I was the only customer purchasing and I felt guilty. It was spooky!!
2008-11-13 09:06:51
Housing crisis, credit crisis, liquidity crisis and economic crisis and trust crisis
Housing crisis, credit crisis, liquidity crisis and economic crisis and trust crisis
What Paulson should consider is working out a three way split. Banks take on 30 % responsibility, the feds take 30% and the home owner that can survive takes 30%. That would mean for the home owner he would accept being under water for the 15% of a 45% loss of the value of his home. The banks would take a write down of 15% of the 45% loan loss and the Feds Puts the last 15% loan loss on its books using the 750 billion. This package should only be made available to homes sold in the last 8 years and to homes of max sales price in the last 8 years of $400.000. Anyone who bought a home valued at over 400.000.00 can take his own lumps. Any bail out becomes a non recource loan.
Homes prior to the last 8 years should be well on their way to being paid down and they were for the most part bought prior to the huge run up in price. If home owners borrowed out their equity to live large then it is not the governments or the banks that should be bailing them out.
I use these numbers as examples. The exact details can be adjusted by regions and affordability. Not all areas of the United States need to take a 45% hair cut. Home flippers and investors will have to negotiate between the banks and owners. It's not the feds problem.
We need to get beyond the idea that home values need to be shored up. They need to go back to historical values and affordability.
I would suggest that we all pool up some funds and send Paulson and Bernanke down to Mexico for a few weeks in the sun for fun and relaxation. They have had their nuts in a vice for over a year and are not thinking clear. Two weeks with no pressure and when they come back to work things will be much simpler to reason out. While were at it lets send Bush back to Saudi Arabia to do the sword dance again.
As for the big three on autos. There is nothing wrong with body styles on most of their cars. It is fuel efficiency that is the issue. We need smaller motors that are fuel efficient with transmissions that are geared to top out at 80 mph not 160 mph. we do not need all the do dahs. GPS, DVD's, Pearl paints 0 to 60 in 4.5 sec's were suppose to be in a recession. Detroit should act like it. That does not mean we have to rebuild all the factories from the ground up. This is not the time.
Just my inflated 8 cents worth of thought. Ah but for the good old days of a Penney for your thoughts.
JPM
What Paulson should consider is working out a three way split. Banks take on 30 % responsibility, the feds take 30% and the home owner that can survive takes 30%. That would mean for the home owner he would accept being under water for the 15% of a 45% loss of the value of his home. The banks would take a write down of 15% of the 45% loan loss and the Feds Puts the last 15% loan loss on its books using the 750 billion. This package should only be made available to homes sold in the last 8 years and to homes of max sales price in the last 8 years of $400.000. Anyone who bought a home valued at over 400.000.00 can take his own lumps. Any bail out becomes a non recource loan.
Homes prior to the last 8 years should be well on their way to being paid down and they were for the most part bought prior to the huge run up in price. If home owners borrowed out their equity to live large then it is not the governments or the banks that should be bailing them out.
I use these numbers as examples. The exact details can be adjusted by regions and affordability. Not all areas of the United States need to take a 45% hair cut. Home flippers and investors will have to negotiate between the banks and owners. It's not the feds problem.
We need to get beyond the idea that home values need to be shored up. They need to go back to historical values and affordability.
I would suggest that we all pool up some funds and send Paulson and Bernanke down to Mexico for a few weeks in the sun for fun and relaxation. They have had their nuts in a vice for over a year and are not thinking clear. Two weeks with no pressure and when they come back to work things will be much simpler to reason out. While were at it lets send Bush back to Saudi Arabia to do the sword dance again.
As for the big three on autos. There is nothing wrong with body styles on most of their cars. It is fuel efficiency that is the issue. We need smaller motors that are fuel efficient with transmissions that are geared to top out at 80 mph not 160 mph. we do not need all the do dahs. GPS, DVD's, Pearl paints 0 to 60 in 4.5 sec's were suppose to be in a recession. Detroit should act like it. That does not mean we have to rebuild all the factories from the ground up. This is not the time.
Just my inflated 8 cents worth of thought. Ah but for the good old days of a Penney for your thoughts.
JPM
2008-11-13 09:15:49
Why invest in the markets?
Why invest in the markets?
Or better yet why gamble. With short sellers lurking ready to pounce on anything that may have over appreciated and with all the complicated debt instruments and a total lack of transparency as to where they are it has become a fools game for anyone to be a part of. Day traders bounce in and out of markets clipping any liquidity the markets try to build. Then we have the endless parade of new issues coming to market with the sales pitch selling the latest and greatest with no intentions of trying to make it a going concern. Their only intent is to lead investors in and then fleece them. Wall Street has been packing the investors cash out the back door for years in huge salaries, stock options, bonus plans, retirement plans and golden parachutes. I use to term it as nothing more then a casino but now I look at it as the biggest form of thievery known to mankind.
Our government is trying to save the markets with huge sum of capital being pumped into in hopes of turning it around. They are also trying to shore up home values at a point that is no where near being affordable to most folks. Not affordable in price or tax appraisal values.
JPM
Or better yet why gamble. With short sellers lurking ready to pounce on anything that may have over appreciated and with all the complicated debt instruments and a total lack of transparency as to where they are it has become a fools game for anyone to be a part of. Day traders bounce in and out of markets clipping any liquidity the markets try to build. Then we have the endless parade of new issues coming to market with the sales pitch selling the latest and greatest with no intentions of trying to make it a going concern. Their only intent is to lead investors in and then fleece them. Wall Street has been packing the investors cash out the back door for years in huge salaries, stock options, bonus plans, retirement plans and golden parachutes. I use to term it as nothing more then a casino but now I look at it as the biggest form of thievery known to mankind.
Our government is trying to save the markets with huge sum of capital being pumped into in hopes of turning it around. They are also trying to shore up home values at a point that is no where near being affordable to most folks. Not affordable in price or tax appraisal values.
JPM
2009-11-23 01:56:53
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