Jump to content
House Price Crash Forum
Injin

When Will The Recovery Begin? Never.

Recommended Posts

http://robertreich.blogspot.com/2009/07/wh...egin-never.html

The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape.

Unfortunately, V-shapers are looking back at the wrong recessions. Focus on those that started with the bursting of a giant speculative bubble and you see slow recoveries. The reason is asset values at bottom are so low that investor confidence returns only gradually.

That's where the more sober U-shapers come in. They predict a more gradual recovery, as investors slowly tiptoe back into the market.

Personally, I don't buy into either camp. In a recession this deep, recovery doesn't depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.

Problem is, consumers won't start spending until they have money in their pockets and feel reasonably secure. But they don't have the money, and it's hard to see where it will come from. They can't borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water -- owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can't are hunkering down, as they must.

Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can't be built on replacements. Don't expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don't rely on exports. The global economy is contracting.

My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.

There is no going back to the fantasy land of 1971 - 2007.

Share this post


Link to post
Share on other sites
Guest DissipatedYouthIsValuable

Nettle soup and a donkey it is then.

Share this post


Link to post
Share on other sites
Eventually consumers will replace cars and appliances and other stuff that wears out

Perhaps. I'm not convinced it's a given though.

All those boomers suddenly finding out they've got no money. Why would they buy a shiny new car and stuff? They'll make do and mend, then die. GDP is a weird measure at the best of times.

Share this post


Link to post
Share on other sites
Perhaps. I'm not convinced it's a given though.

All those boomers suddenly finding out they've got no money. Why would they buy a shiny new car and stuff? They'll make do and mend, then die. GDP is a weird measure at the best of times.

How about coffins?

Shiny new coffins!

Share this post


Link to post
Share on other sites
Guest DissipatedYouthIsValuable
How about coffins?

Shiny new coffins!

And mausoleums with huge plaques denoting how rich of property they once were.

'Here lies ........................., she and her husband were property millionaires, you know?'

Share this post


Link to post
Share on other sites

but boys that is the USA with their silly non-recourse home loans which are killing sales of new kitchens & carpets I hear.

House prices are holding up in the UK & nowt else matters much now does it.

"Britain is better placed ....... " remember?

Yes I know it's not even close to Hamish's 'standards' but I feel one of must try

Share this post


Link to post
Share on other sites
but boys that is the USA with their silly non-recourse home loans which are killing sales of new kitchens & carpets I hear.

House prices are holding up in the UK & nowt else matters much now does it.

"Britain is better placed ....... " remember?

Yes I know it's not even close to Hamish's 'standards' but I feel one of must try

Troll. :P

Share this post


Link to post
Share on other sites
Guest DissipatedYouthIsValuable
but boys that is the USA with their silly non-recourse home loans which are killing sales of new kitchens & carpets I hear.

House prices are holding up in the UK & nowt else matters much now does it.

"Britain is better placed ....... " remember?

Yes I know it's not even close to Hamish's 'standards' but I feel one of must try

That's the bulling spirit.

Share this post


Link to post
Share on other sites
Poverty will be the new bling as everyone races to the bottom.

Remember, "The Meek Shall Inherit the Earth". :blink:

A nice used up earth. They're welcome to it.

Share this post


Link to post
Share on other sites
How much of 1971-2007 was an illusion i wonder.

When Gordo brags about his XXX continuous quarters of economic growth, i just translate that to meaning XXX continuous quarters of increasing debt.

come on, there MUST be huge wealth in the UK,otherwise the bankers would not have lent in the first place.

Share this post


Link to post
Share on other sites
http://robertreich.blogspot.com/2009/07/wh...egin-never.html

There is no going back to the fantasy land of 1971 - 2007.

There was a great drought where Wilhelm lived; for months there had not been a drop of rain and the situation became catastrophic. The Catholics made processions, the Protestants made prayers, and the Chinese burned joss-sticks and shot off guns to frighten away the demons of the drought, but with no result.

Finally the Chinese said, 'We will fetch the rain-maker.' And from another province a dried up old man appeared. The only thing he asked for was a quiet little house somewhere, and there he locked himself in for three days.

On the fourth day the clouds gathered and there was a great snow-storm at the time of the year when no snow was expected, an unusual amount, and the town was so full of rumours about the wonderful rain-maker that Wilhelm went to ask the man how he did it.

In true European fashion he said: 'They call you the rain-maker; will you tell me how you made the snow?'

And the little Chinese said: 'I did not make the snow; I am not responsible.'

'But what have you done these three days?'

'Oh, I can explain that. I come from another country where things are in order. Here they are out of order; they are not as they should be by the ordinance of heaven. Therefore the whole country is not in Tao, and I also am not in the natural order of things because I am in a disordered country. So I had to wait three days until I was back in Tao and then naturally the rain came.'â€

Share this post


Link to post
Share on other sites
come on, there MUST be huge wealth in the UK,otherwise the bankers would not have lent in the first place.

That's it!! - Brilliant BL. -

Now why didn't you tell us this 18,015 posts ago? :angry:

'There is no problem except the problem itself' :blink:

Share this post


Link to post
Share on other sites
Poverty will be the new bling as everyone races to the bottom.

Remember, "The Meek Shall Inherit the Earth". :blink:

"The meek shall inherit the earth but not the mineral rights"-John Paul Getty I think.

Share this post


Link to post
Share on other sites
Guest DissipatedYouthIsValuable
A nice used up earth. They're welcome to it.

Do you think flu epidemic mass graves with plentiful use of lime would make a good compost for potatoes, or should I try tomato plants?

Share this post


Link to post
Share on other sites
Do you think flu epidemic mass graves with plentiful use of lime would make a good compost for potatoes, or should I try tomato plants?

July 10 (Bloomberg) -- An unexpected characteristic has emerged among many swine flu victims who become severely ill: They are fat.

Doctors tracking the pandemic say they see a pattern in hospital reports from Glasgow to Melbourne and from Santiago to New York. People infected with the bug who have a body mass index greater than 40, deemed morbidly obese, suffer respiratory complications that are harder to treat and can be fatal.

http://bloomberg.com/apps/news?pid=2060120...id=aM.7Dg3Z_msI

It seems you'll have plenty of opportunity for evaluation.

Share this post


Link to post
Share on other sites
Do you think flu epidemic mass graves with plentiful use of lime would make a good compost for potatoes, or should I try tomato plants?

:lol: Using lime, I'd probably plant some good vines, what with global warming and all they'll grow well. Make a few good bottles of wine to enjoy.

Share this post


Link to post
Share on other sites
"The meek shall inherit the earth but not the mineral rights"-John Paul Getty I think.

The last meek person I spoke to about his future inheritance said he didn't effing want it and who was going to pay the IHT anyway. Then he punched me on the nose. I think that the meek are adapting to changed circumstances.

p-o-p

Share this post


Link to post
Share on other sites
The last meek person I spoke to about his future inheritance said he didn't effing want it and who was going to pay the IHT anyway. Then he punched me on the nose. I think that the meek are adapting to changed circumstances.

p-o-p

There will be a recovery. But not until a painful process is complete, our economy has been revolutionized and we start producing rather than consuming. We will, I beleive never feel as 'wealthy' as we did back in 2007, this I agree, but the 'wealth' was never real.

There will always be opportunity for those smart enough to see it and brave enough to benefit from it.

I reckon we will see stable growth from areound 2013 onwards, it will be slow and anemic, but we will return to growth. I think the idea that this planet can see ever increasing growth is a lie that will be exposed in th next decade or so. And why is that a bad thing?

Share this post


Link to post
Share on other sites
There will be a recovery. But not until a painful process is complete, our economy has been revolutionized and we start producing rather than consuming. We will, I beleive never feel as 'wealthy' as we did back in 2007, this I agree, but the 'wealth' was never real.

There will always be opportunity for those smart enough to see it and brave enough to benefit from it.

I reckon we will see stable growth from areound 2013 onwards, it will be slow and anemic, but we will return to growth. I think the idea that this planet can see ever increasing growth is a lie that will be exposed in th next decade or so. And why is that a bad thing?

I can really see local economies coming back. Trafford Centre type malls will become outdated and a relic of past excess. No bad thing in the long run.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   289 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.