Nobody’s been saying much about this lately. Do you think the worst is behind us in: Housing Unemployment On a scale of 1-10, how confident are you about the resurrection of the American economy: In the short term In the long term
too much invevtory Job losses will continue but at a slower rate ST 3 LT 10
Housing? Well, in some places there seems to be some opportunistic buying, but there are a bunch of mortgage resets still coming down the pike and with unemployment shooting up, even normally creditworthy folks are likely to be entering foreclosure. I’m looking for reasons for optimism, but I don’t see very much yet. Long term… we’ll recover, but when we do, it won’t look like the 1990s or the 2000s. What exactly is the US economy producing these days that can employ people? ST - 3 LT - 7.5
ST - 1 LT - 10 house prices will not return to 2006/2007 levels until 20 years from now and with alot of help from inflation. there is no demand for all the supply and until the total population catches up, prices will remain depressed and consumers will remain deflated with their house prices. i don’t believe the signals given by many indicators recently, as the only crisis that this recent crisis reflects is the great depression. reason for this collapse, individuals were levered through the teeth by ways of monster mortgages. reason for the great depression, individuals were levered through the teeth by ways of 10:1 leverage in equities along with other sources of leverage. the only reason why we haven’t dropped at the same rate as 1929-1931 is that back then, the government wasn’t going to buy 20% of all equity in the market to stop the constant margin call selling… it also happened too fast for them to consider it. nowadays, you’ve got the government owning 20% of all houses in the country, directly and indirectly through paying 7% of mortgage payments directly as well as bank ownership in banks that are underwater in their loans as well as the spread between the actual market price and banks’ valuation due to reduced selling activity. i am convinced that without government intervention in the mortgage market, the system would’ve collapsed 6 months ago. that said, we will still experience “great depression II”, but over many many years as the government will spread the losses out over many years. ST: we’re F’d, but you won’t notice until we return to TRUE prosperity LT: everybody may be F’d but the U.S. relative to the rest of the world will be less F’d.
Who cares? - you’re asking the wrong question Here’s another way of looking at it: The main game is making money - personally I make money from equities, so that’s my focus. From where I sit the recession is irrelevant. Here’s why - history has shown for more than a century that stock markets lead GDP by around 2-4 quarters - no secret in that - so equity returns are a leading indicator of the economy. But that perspective was invented by economists who focus on GDP - and I have never met a wealthy economist. From my view-point, GDP is a LAGGING indicator of the main game, which is the MARKET. The GDP number is interesting but irrelevant - It follows behind the market - it’s gone, over, done, history, kapish. If GDP is a lagging indicator of the Market, the main game is understanding the Leading indicators of the Market - and that is forward looking, not backward looking, like looking at the GDP numbers. They’ll lag behind like they always do. It’s like Unemployment - sad for the poor buggers who are unemployed, but it lags even GDP - so it’s interesting but doubly irrelevant because it lags the laggers. Forget GDP because it’s looking backward from the perspective of the Market. Instead, look forward and focus on the future - this is the key to making money in the market.
^ could you have thought of a longer way to say “I don’t know” ST - 3 LT - 7
remind me again - what does america produce? apart from fine specimens like steven dale green (101st airborne)
We’re pretty good at higher education. Does anyone know if out-of-country students pay the same as out-of-state students? I heard someone ranting about how our federal tax dollars have financed the educations of the rest of the world. I can’t agree 100%, but public (and private) institutions do get a lot of federal money for research, which attracts quality professors who have to teach those pesky classes. In a way, we do export a lot of knowledge at a low cost to the economies that eventually benefit from foreign students. Yes I know that thousands of them stay in the US and contribute to our economy. I’m just saying that other economies extract more value from our education system than we extract from theirs.
and don’t forget abu ghraib - that was higher education
What does America produce? It’s not to America’s competitive advantage to “produce” anything other than ideas. So far, they’re doing ok with their ideas (transportation, communications, medical, energy, etc.) What has China produced that is original? They’re just making our stuff faster, cheaper and worse. Japan tried that strategy and it didn’t last long.
it’s not over until it’s over
KJH Wrote: ------------------------------------------------------- > What does America produce? It’s not to America’s > competitive advantage to “produce” anything other > than ideas. So far, they’re doing ok with their > ideas (transportation, communications, medical, > energy, etc.) What has China produced that is > original? They’re just making our stuff faster, > cheaper and worse. Japan tried that strategy and > it didn’t last long. if china is just copying ideas and making stuff cheaper and worse (and I whole-heartedly agree) - why are americans so keen to mortgage their futures to borrow money from the chinese to fill their over-sized, over-geared houses with the stuff. It’s killing them - literally. Fascinating to watch it all pan out…
Maybe Americans understand the value of some nice diggz versus the value (or lack thereof) of a dollar in the future?
KJH Wrote: ------------------------------------------------------- > What does America produce? It’s not to America’s > competitive advantage to “produce” anything other > than ideas. So far, they’re doing ok with their > ideas (transportation, communications, medical, > energy, etc.) What has China produced that is > original? They’re just making our stuff faster, > cheaper and worse. Japan tried that strategy and > it didn’t last long. Yes, but at least the world likes to buy China’s stuff, and that keeps the Chinese employed and growing (less so right now, but there’s no reason to feel that this story is over). The world is buying less these days, but when they do buy, the cheapest stuff around is most often the most attractive. As for ideas, it’s very hard to protect those long enough to justify sustainably high profit margins that can pay the labour force what it’s used to getting, and so it looks like we’re in for substantial downsizing.
well said, bchad: "The world is buying less these days, but when they do buy, the cheapest stuff around is most often the most attractive. " Look how they are raking up US equities! Really cheap stuff…
And no, I don’t think this recession is over. But that doesn’t matter, if some NBER fart says “now” it’s over. As someone who is interested buying stocks at a good level, I more concerned about the next step in terms of economic performance. I struggling hard to buy into this V-shaped recovery. One way or the other, a sh*tload of debt needs to be worked off, and I don’t see how spending will make a swift turn from here. That said, N&Nuller, I think you are making a big mistake in just shrugging off every indicator of note as lagging. All them indicators are lagging, same for corporate earnings.
Prisons/detention facilities CXWý - Corrections Corporation of America (NYSE)ý
I don’t think the receession is over, it looks like a bear rally (correct term?). The stress(less) tests and ongoing capital injections places a lot of false confidence in the markets. Right now, there is a slight plateau, and I am waiting for the credit bubble tied up in credit cards to blow. Approx 900bn in credit traditionally used by the most flakey of borrowers. I think it will be a bloodbath this Summer, with slight recovery to be seen start 2010. At least in America, accounting and regulatory and bankruptcy practices mean companies can shake off losses quicker than the EU.
Donno whether its over or not but we live in strange times. New housing starts slow down and thats called a bad indicator when there is like humungous inventory out there that nobody wants to touch with a 10 foot pole. Market rallies on no news and is all over the place on so-called bad news. Commerical financing and consumer debt is likely bringing more poop to the fan and the pundits say the worst is behind us. Germany’s GDP takes a double digit hit and LIBOR decreases. This is what happens when you bring a magnet close to a compass.