United States Heading towards a Depression?

lorien can you stop attacking guerilla please so this thread stays on topic?

 

As I said. Stop making my job so easy!

 

Who is attacking Guerilla? He made a dumb ass, unsupportable, assertion, and I'm refuting it. He isn't bothering to defend himself, so it just makes it more fun.

 

Is persistent childish behavior abusive?

 

How to stop whining in 4 easy steps!

 

Take at least first step. Thanks.

 

To try and move back on topic.....one citation that I have seen quoted more than once but hasn't provided an original source stated that the current size of the sub prime mortgages is about $1.3 trillion. That is an astronomical total. Its worthwhile to put it into perspective. A financial industry association publishes total debt listings per year. In 2006 and 2007 top quality new corporate debt just exceeded $1 trillion/year each year, growing over ever accelerating totals of the hundreds of billions for preceeding years. I noted that total municipal bonds were in the range of $400 billion in 2007.

$1.3 trillion is an enormous debt load even as more than this is unloaded to investors on a yearly basis. While in current terms some of these bonds are valueless...if the evolution of foreclosures is slowed and a structural bottom is placed under this bad debt....and in consideration that I believe its been reported that about 16% of the existing subprime mortgages have faced foreclosure.....on a grand scale these are numbers that can be dealt with by the big financial world and ultimately after the fallout those bonds currently valueless will regain value....though far less than the basis on which they were sold.

But it will cause intense financial agony as there will be an enormous loss of asset value on which the sub prime mortgages were written. That asset loss will convey into a far slower lousier economy for some time into the future.

Meanwhile the enormous asset losses in home values will have brutal effects on communities and populations wherein the foreclosure problems are worse.

Its gonna be a long ugly haul.

 

Whistler's mutter

 

The trouble is, when you refute that of the defenseless, or those that for whatever reason, lack the mental capacity to respond, you appear as though you are attacking them.

It's a vicious circle here at DP... Perhaps we should just stop engaging those making the "dumb ass" comments.

 

Greenspan is predicting an additional 15% drop in housing prices. But I think it will be worse. The S&P/Case-Shiller Home Price Indices has only rolled back to May 2005 levels. There's still a lot of air in the bubble.

Something like 15% of all mortgages are already in negative equity. Basically there is no value in the homes when it's cheaper to rent than to buy. In some bubble markets the cost to buy is almost double the monthly rent payment.

 

It was the other way around last year. that's how I knew the market was in for a correction. Housing prices went too high too fast. It was bound to come down again.

Anyways, they revised quarterly growth upward in the first quarter to 0.9%. Not great; but certainly not doom and gloom.

 

There's still money to be made. The Bush rebate is stimulating the economy and it will be feel good through the election and the Christmas holiday.

I think that there is a 50-50 chance of a 1982 style recession. But there is still a lot of air in the bubble and it's going to take some time to unwind.

The inflation is really getting out of control. Last year wheat prices rose nearly 100%, and rice prices 45%.

Inflation in India is running 10% and China is in the 10% range. It wouldn't be long before the prices in Walmart and outsourcing start to get out of control as well.

http://timesofindia.indiatimes.com/..._revised_to_10_Report/articleshow/3074255.cms

 

GDP growth is nonsense. It's a BS measure.

For example, do you know if you're talking about real or nominal GDP?

If it's real, do you know if they used Core or Headline CPI for the adjustment?

And lastly, what is the lag time for massive credit injections from rate cuts? 3 months? 6 months? How fast does velocity adjust CPI to accurately reflect changes in TMS or MzM?

The people who get excited, like they have on the market today, based on the growth news, are generally moronic lemmings, and will be the first people to go broke when things get bad.

 

GDP growth is always used as the measure. Every year, whether Bush is in office or not, whether people suffering from BDS are whining about things or not. Whether you feel its relevant doesn't concern me so much. A recession is normally defined as 2 consecutive months of negative GDP growth. If memory serves, we haven't had one. Also, I believe 6 of the 10 leading indicators were up last time around as well. I also believe unemployment was down last time around as well.

 

And that means what? It's still a BS measure. This has nothing to do with BDS, so save the anti-intellectualist comebacks meant to distract from your lack of knowledge on the subject matter.

If you'd been following this thread, you would have seen the quote from the NBER, who declares whether it is a recession or not. And the 2 consecutive quarters is not an absolute standard. But it has been reinforced into the minds of casual economists like yourself.

When you make anti-intellectual arguments like "whether you feel it is relevant..." highlights my point. You are willing to talk about the growth number, but you don't even understand how it is constructed.

Which is fine, if you trust government statistics. And you probably do.

"Leading" macro indicators are nonsense. Keynesian economics is nonsense. The unemployment numbers are meaningless, when you understand how they are constructed.

If you want to actually learn something, increase your knowledge base, go to Shadow Stats and read the articles. You'll be a much wiser man for it.

http://www.shadowstats.com/section/primers



~

 

You can sit around and moan about people in black helicopters wanting to take you to a work camp or whatever; but it's pretty simple, really.

Economic growth revised upwards; probably will be even higher in quarter 2. Unemployment numbers down. Leading indicators generally up.

No one claims the thing is perfect; but the economy, as usual, is pretty resilient. But given that the Iraq War is off the front page; the fear mongers need something else to frighten everyone. Glad you can stop counting those 7 million dead starving people long enough to join in

From the vendors I talk to every week or so in my business; they say the people complaining about a bad economy are the ones who always complain about it (good or bad economy).

They don't declare anything. they are looked at as some sort of semi-official source; but the typically, your measure is 2 quarters of negative growth and we haven't had one yet. If it weren't an election year, no one would be saying "recession" or "growth recession" - it's just politics.

I'm sure it fits your narrative, so continue to be frightened about work camps and economic collapse. It's fun!

 

This is exactly what I am talking about. More Conservative anti-intellectualism. You're creating strawmen, instead of responding to the fact that you are hyped about statistics you don't understand. If they showed -0.9 growth, you wouldn't question that either.

It's not about black helicopters. It's about how you (and the many like you) who cannot be dragged to learn something, or look at facts.

Indicators you don't understand. Again, someone who promotes statistics he doesn't understand....

This thread has been going on for sometime. Guys like Peter Schiff, who have predicted the last two years very accurately, don't believe we're anywhere near bottom yet. Casual observers like yourself, are dancing in the streets on "not chaos" GDP numbers, that have been (sic) revised (read: massaged).

You didn't read the post previous about the NBER. That's something else you would do well to learn about. Instead of trying to perpetuate misinformation.

Again, you're late to this thread, and well below the plumbline of economic knowledge that circulates this forum daily. Please get up to speed, you're running the risk of writing more silly and ridiculous things.

 

And by definition, certainly anything but a recession, much less a depression.

 

Facts in your world are BS...