Greenspan uses the R-word

[J]

WSJ link

Greenspan Sees U.S. as Likely
In Recession, or Soon to Be
By GREG IP
January 15, 2008; Page A2

The U.S. is probably in or about to enter a recession, former Federal Reserve Chairman Alan Greenspan said.

The odds are "not overwhelming but they are marginally in that direction" of recession, Mr. Greenspan said in an interview with The Wall Street Journal.

"The symptoms are clearly there. Recessions don't happen smoothly. They are usually signaled by a discontinuity in the market place, and the data of recent weeks could very well be characterized in that manner," he said.

Specifically, he cited a drop in the Institute for Supply Management's purchasing managers index to 47.7 in December after several months just above 50, the dividing line between expanding and contracting manufacturing activity. While "by no means conclusive, ... [that] is the type of thing, if we were going into recession, we'd observe."

Another sign, he said, was the jump in the unemployment rate to 5% in December from 4.7% in November.

Mr. Greenspan first publicly raised the possibility of recession in February of last year, and put the odds at about 33%. He said in mid-December the odds had risen to about 50%.

Yesterday, he said the odds were still close to 50% but "more likely higher than lower."

Mr. Greenspan saw a glimmer of hope in the housing market, saying new-home sales may have bottomed because the number of purchases financed by subprime and Alt-A mortgages -- a category between subprime and prime -- has fallen to zero. But bloated inventories mean housing construction and prices are still bound to fall, he said.

Oh dear, the Great Lord Greenspan has spoken, and he has uttered the dreaded R-word.
In the words of C3P0, "that isn't very reassuring" and also, "we're doomed!"

[Illuminatus Primus]

Comin' from Easy Al', that's not good.

[Admiral Valdemar]

I see all red across the stocks board. And it had to be the day I got my pension plan seminar at work.

What about Citi losing nearly $10bn... in three months? Ouch.

[Alyrium Denryle]

You know when a certifieable(yes I use the word intentionally) randroid (didnt he actually sleep with her?)nutbar says that, we are in trouble....

[Einhander Sn0m4n]

Thanks a lot, Mr. Bubbles. You helped cause this shit with your 'LOL AYN RAND RAR!' and Reaganomics trickle-down shit. Sorry, but you and Bobo the Wonder Chimp failed to note the simple fact that rich people are tight-fisted assholes even when you flood the bastards with literally more money than they know what to do with.

It's just like some dumb redneck winning a hundred-million-dollar Powerball ticket: Their brains break trying to comprehend exactly _how_ much money they have, and the result is it just sits in a bank account to fester instead of being put to work in the community like a good philanthropist would do.

Or it could simple be just blind 'Fuck you stinking poor people I got mine!' greed.

[Adrian Laguna]

Things probably got bad enough that having experts say "recession" isn't going to make things worse. That's why most forecasts are optimistic in the financial world, the bad ones often become self-fulfilling prophesies.

[Admiral Valdemar]

It gets worse

[Adrian Laguna]

It gets worse

So much for the Russian oligarchs introducing draconian anti-car measures and investing heavily in nuclear power like in Marina's PO fic.

[Dartzap]

Uh oh, even the Beeb and C4N have said the R word now. You know its bad when they bother with such things.

[Admiral Valdemar]

It gets worse

So much for the Russian oligarchs introducing draconian anti-car measures and investing heavily in nuclear power like in Marina's PO fic.

Capitalism, comrade. It's what's for dinner.

[J]

Capitalism, comrade. It's what's for dinner.

So the free market will save us?
Rejoice everyone, the free market is here! Yay!!

[aerius]

Uh oh, even the Beeb and C4N have said the R word now. You know its bad when they bother with such things.

I wonder what it'll mean if they ever use the D-word?

[Admiral Valdemar]

Uh oh, even the Beeb and C4N have said the R word now. You know its bad when they bother with such things.

I wonder what it'll mean if they ever use the D-word?

Or if they ever actually agree the definition. How's that old saying go about economists and defining something?

Some would say we're approaching a depression now and have been slugging through a recession for ages, given increased costs of living and the falling dollar.

[Admiral Valdemar]

The SWFs appear to be rapidly leaving the premises. Without their constant stream of cash, the $800 billion per year current account deficit will bankrupt the US monetary/financial system. In short, the FED now has no way of injecting money into the private sector. All money will have to come through the federal government’s issuance of T-bills, which will drive government debt and inflation into the stratosphere. This will further retard foreign investment inflows and pound the green back.

Central banks can only support the US for a very short period. To continue to do so will seriously imperil their own economies. With the bond market now broken, we are in for a long strange ride; collapsing asset evaluations and skyrocketing commodity prices. This will be accompanied by falling wages and employment.

With the consumer now on the ropes, 70% of the US financial backbone is severed. The asset based economy and its debt based fiat currency are failing rapidly!

This sort of sums up the "big picture".

[Illuminatus Primus]

Thank Reagan! It was sooo worth it to toss the regulatory state we built up after the Great Depression and World War II for good fucking reasons down the toilet.

[Starglider]

Damn. Hate to say it, but I'm glad we're making a 'this will automate away all your outsourced IT expenses, and maybe some of your onshore IT staff too' product. Particularly with subscription licensing, companies looking to slash costs doesn't complicate our sales problem the way it does for many companies (that want other companies to actually /invest/ or rely on consumer largesse). Fingers crossed, but it may even make it easier to sell.

[Adrian Laguna]

Thank Reagan! It was sooo worth it to toss the regulatory state we built up after the Great Depression and World War II for good fucking reasons down the toilet.

The graph posted by Valdemar basically starts skyrocketing during the Reagan administration. There's a sharp climb, compared to everything since the late 50s in the early couple of years of his first term. That may not actually be his fault, as it seems to have started before he entered office. But that's nothing compared to the cliff the curve turns into as soon as Reagan enters his second term. It's possible that Reagan's tossing of the regulatory state not only opened the floodgates for massive public debt, but also opened them during high tide. But that's just speculation based on a single graph.

[MKSheppard]

debt based fiat currency

Hmm. So I see. It's that kind of site.

Does it sell Gold as an alternative to "Fiat Currency", amongst other amusing things?

*thinks back to the days of 1998, when he was reading survivalist websites*

[Admiral Valdemar]

Hmm. So I see. It's that kind of site.

Does it sell Gold as an alternative to "Fiat Currency", amongst other amusing things?

What's amusing is the people who are holding gold and making a lot of money from it. A lot more than the increasingly worthless greenbacks. The dollar, as with any modern currency, is fiat based. Has been since '72 thanks to Tricky Dicky.

[White Haven]

Speaking as a member of the US IT industry Starglider, bite me.

[Gerald Tarrant]

Central banks can only support the US for a very short period. To continue to do so will seriously imperil their own economies. With the bond market now broken, we are in for a long strange ride; collapsing asset evaluations and skyrocketing commodity prices. This will be accompanied by falling wages and employment.

The strange thing is I'd blame central banks for this in the first place. No one is really sure when it started, but a lot of foreign banks decided to try to manipulate currency rates for economic reasons. A strong dollar let most of Europe go with "Export led growth" and for whatever reason quite a few central banks followed suit with this. That's partly responsible for the current precipitous and deep dollar drop. Normal trade theory, and most economic history, suggests that the dollar should have dropped much sooner probably in the 90's. The 30 or so years of trade deficits are unusual in that the dollar remained strong for so long. The dollar purchases were currency manipulations to keep exports competitive.

Central banks can only support the US for a very short period. To continue to do so will seriously imperil their own economies.

The resources to keep the dollar afloat are kind of beyond central bank's reach, and if it's still going to drop those purchased dollars are going to drop in value, decreasing the value of their reserves.

Letting the dollar drop is also going to hurt their economies. Countries with a large trade surplus with the US are going to see slow downs in their export sectors, which is itself worrisome. Some of the major "export countries" are on shaky ground. Japan has been in the doldrums for the past decade or so, and Germany is experiencing limited growth. If Merkel can effect sufficient reform they might avoid recession. But the dollar drop isn't pleasant news for quite a few of the US's trade partners.

[Admiral Valdemar]

BP do something hilarious: apparently it's YOUR fault for not demanding enough oil, not ours for running out of said oil.

[J]

BP do something hilarious: apparently it's YOUR fault for not demanding enough oil, not ours for running out of said oil.

You know, if you change a few words it would apply perfectly to "economists" these days...

[Starglider]

Speaking as a member of the US IT industry Starglider, bite me.

If you're competent, and do genuinely valuable stuff, you have nothing to fear (at least, not this decade). Indeed with rising margins you might even benefit.

If you just grind out nasty boring VB.NET code for cookie-cutter business apps, or equally nasty PHP for bog standard web apps, then we're coming for you. Given decent automation, the IT industry won't need people like that more than the garment industry needs people weaving fabric by hand. Good riddance, I say.

[Einhander Sn0m4n]

BP do something hilarious: apparently it's YOUR fault for not demanding enough oil, not ours for running out of said oil.

Well if the dumb fuckers wouldn't pull shit like this [nearly $40 BILLION pure profit in 2k6 dor people who don't want to RTFA] or the $3-a-gallon gas which is apparently a tipping point where people say 'Fuck this! I'm carpooling/riding a bike/etc!', then we wouldn't have this "demand-driven production peak" BP is whining about. And yes, it really does come across as whining.

Cry me a river you fucking disgusting pigopolist rich people. It's time for you to taste the oppression you've meted out to the rest of us; more than time.