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Mikhail Liebenstein

At A Weird Kind Of Cross Roads, Slow Recovery Or More Bust?

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So far with the Crash and Depression things have followed a pretty clear path, even though individual events such as particular banks going under have been harder to predict, the general course has been clear and has followed many past charts.

We've been discussing the inflation versus deflation thing for a while and I don't want to head down that specific route on this thread, but more I wanted to ask what people thought would be coming next as now it seems less obvious?

At one level there does seem to be some repair of company balance sheets going on. Whilst unemployment may be painful for the individual and the overall consumer economy, it is what happens in recessions and helps keep firms afloat. So is a necessary part of the healing process for a sick economy. So on this basis, it may be possible that we are seeing some early signs of economic improvement, but that it may be slow and drawn out. Also in my book companies and hence jobs need to recover before house prices, so I'll completely ignore the property bulls.

The second issue is that right now it is clear in the business sections and the economic reports that a lot of excuses are being made, including GDP could fall 7.5% due to swine flu (ok its the E&Y Item club). So I also get the feeling we are being lined up for a bigger crash - effectively more of what we have had already, so in essence and double dip.

Your thoughts please?

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Your thoughts please?

A long slow recovery is what I see from here.

First the economy to has to stabilise a bit more, the stability of the banks are helping with that and QE is also helping.

When industries start to consolidate on jobs (moving back to full time workers rather than part-time) that will be another good sign.

Getting through the election will also help, as many sectors need to know how the next government might affect them.

All-in-all I see no need to panic.

My forecast house prices to continue sliding for 2-3 years and the first green shoots to appear......oh around 2014

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sorry guys, but we are having good news now, as it IS silly season and the information gatherers and managers are on their holidays, so while partial teams are in place, announcements and decisions are left till September.

It was ever thus, the reporting and decision making is on auto deny at this time.

Come mid September, as last year and the year before that, the bad news will out. Mark to model will have a consequence.

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sorry guys, but we are having good news now, as it IS silly season and the information gatherers and managers are on their holidays, so while partial teams are in place, announcements and decisions are left till September.

It was ever thus, the reporting and decision making is on auto deny at this time.

Come mid September, as last year and the year before that, the bad news will out. Mark to model will have a consequence.

yep, sept / oct will see a return to doom and gloom with a few Hurricanes chucked in for good measure.

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A long slow recovery is what I see from here.

First the economy to has to stabilise a bit more, the stability of the banks are helping with that and QE is also helping. {SNIP}

All-in-all I see no need to panic.

My forecast house prices to continue sliding for 2-3 years and the first green shoots to appear......oh around 2014

I am inclined to agree. Just read the economist finance section ??> more pain for property.

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Have to say I disagree with the doom and gloom mongers. Double dip recessions are relatively rare. I don´t see any reason why one should happen this time round.

This recession started in the US, if it is ending it is there to which we must look. The fundamentals there appear to have bottomed. Yes there is still pain to come. Unemployment will continue to rise for a year or so. Any recovery will be long and patchy but recovery there will be.

Asia, with the exception of Japan, seems to have been hit relatively lightly. It now seems to be well on the way to recovery. Europe looks set to be struggling for another while yet. As with previous global recessions it will lag behind the US both in and out of the recession.

Only time will tell but I do genuinely believe things are turning.

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Guest KingCharles1st

Well, lets think. Without QE, things are going to go over a cliff (like we sort of hoped they might) and with or without it, there is precious little else to sustain the UK economy. I mean there can only be so many Teachers, Coppers, Firemen and photocopier salesmen.

Labour are going to be out on their sorry behinds by next June, Whoever takes over may not continue with QE?

So what does that leave us with...?

The way I see it, we can either give ourselves an economy like Ireland's used to be until recently, where everyone makes houses for everyone else, or the UK can flatline.......

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Anyone who wants to seriously analyse this question should buy (and read...) a copy of "Solutions to a Liquidity Trap, Japan's Bear Market and what it means for the West", by Graham Turner.

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Have to say I disagree with the doom and gloom mongers. Double dip recessions are relatively rare. I don´t see any reason why one should happen this time round.

This recession started in the US, if it is ending it is there to which we must look. The fundamentals there appear to have bottomed. Yes there is still pain to come. Unemployment will continue to rise for a year or so. Any recovery will be long and patchy but recovery there will be.

Asia, with the exception of Japan, seems to have been hit relatively lightly. It now seems to be well on the way to recovery. Europe looks set to be struggling for another while yet. As with previous global recessions it will lag behind the US both in and out of the recession.

Only time will tell but I do genuinely believe things are turning.

technically, a double dip recession is rare BECAUSE OF THE WAY THEY DEFINE IT!.

3 months negative growth. yet, just one month 0% and its over.

I wonder why its done like that?

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technically, a double dip recession is rare BECAUSE OF THE WAY THEY DEFINE IT!.

3 months negative growth. yet, just one month 0% and its over.

I wonder why its done like that?

I think your just too cynical for your own young man.

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A long slow recovery is what I see from here.

First the economy to has to stabilise a bit more, the stability of the banks are helping with that and QE is also helping.

When industries start to consolidate on jobs (moving back to full time workers rather than part-time) that will be another good sign.

Getting through the election will also help, as many sectors need to know how the next government might affect them.

All-in-all I see no need to panic.

My forecast house prices to continue sliding for 2-3 years and the first green shoots to appear......oh around 2014

slow recovery isnt the word

Total_U.S._Debt_to_GDP.gif

debtcontributions.jpg

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post-2696-1248161304_thumb.jpg

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There's a scene in the Simpsons where Homer tries to jump a canyon on a skateboard. He almost makes it, against all laws of physics, before plummeting down the cliff. He falls, hits some rocks, says "Doh!", falls, hit some rocks, says "Doh!" and so on.

We're at the first "

"

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The Construction industry normally goes quiet October/November and picks up again February and is normally in full swing come the summer.

Given things are getting worse and have never really picked up, I hate to think how quiet its going to get this October/November ;)

Just think when peoples saving have run out? More pressure on the benefits system.

Was told the other day, the Government have cut a grant for an university in (Essex) to give the money to the Olympics?

Also told by a high up council official not to vote Tory, because they will cut deep at 20% and that will affect my work? I said don't give a fook, as long as they cut your pensions, and get rid of all the councils freeloaders, then I went on, why should 25% of my council Tax go towards Public Sector Pensions? End of Conversation :rolleyes:

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I believe recessions are measured in quarters. i.e. Two successive quarters of negative growth = recession. There would therefore have to be a quarter with positive growth before it could be called ´over´.

To my mind a double dipper would be recession - called over - recession again pretty well straight away.

Personally I don´t see that happening but then perhaps I´m a tad to optimistic for those on this site. :lol:

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I believe recessions are measured in quarters. i.e. Two successive quarters of negative growth = recession. There would therefore have to be a quarter with positive growth before it could be called ´over´.

To my mind a double dipper would be recession - called over - recession again pretty well straight away.

Personally I don´t see that happening but then perhaps I´m a tad to optimistic for those on this site. :lol:

Has the word recession been outlawed yet

http://mises.org/tradcycl/econdepr.asp

Economic Depressions:

Their Cause and Cure

Murray N. Rothbard

We live in a world of euphemism. Undertakers have become "morticians," press agents are now "public relations counsellors" and janitors have all been transformed into "superintendents." In every walk of life, plain facts have been wrapped in cloudy camouflage.

No less has this been true of economics. In the old days, we used to suffer nearly periodic economic crises, the sudden onset of which was called a "panic," and the lingering trough period after the panic was called "depression."

The most famous depression in modern times, of course, was the one that began in a typical financial panic in 1929 and lasted until the advent of World War II. After the disaster of 1929, economists and politicians resolved that this must never happen again. The easiest way of succeeding at this resolve was, simply to define "depressions" out of existence. From that point on, America was to suffer no further depressions. For when the next sharp depression came along, in 1937-38, the economists simply refused to use the dread name, and came up with a new, much softer-sounding word: "recession." From that point on, we have been through quite a few recessions, but not a single depression.

But pretty soon the word "recession" also became too harsh for the delicate sensibilities of the American public. It now seems that we had our last recession in 1957-58. For since then, we have only had "downturns," or, even better, "slowdowns," or "sidewise movements." So be of good cheer; from now on, depressions and even recessions have been outlawed by the semantic fiat of economists; from now on, the worst that can possibly happen to us are "slowdowns." Such are the wonders of the "New Economics."

For 30 years, our nation's economists have adopted the view of the business cycle held by the late British economist, John Maynard Keynes, who created the Keynesian, or the "New," Economics in his book, The General Theory of Employment, Interest, and Money, published in 1936. Beneath their diagrams, mathematics, and inchoate jargon, the attitude of Keynesians toward booms and bust is simplicity, even naivete, itself. If there is inflation, then the cause is supposed to be "excessive spending" on the part of the public; the alleged cure is for the government, the self-appointed stabilizer and regulator of the nation's economy, to step in and force people to spend less, "sopping up their excess purchasing power" through increased taxation. If there is a recession, on the other hand, this has been caused by insufficient private spending, and the cure now is for the government to increase its own spending, preferably through deficits, thereby adding to the nation's aggregate spending stream.

The idea that increased government spending or easy money is "good for business" and that budget cuts or harder money is "bad" permeates even the most conservative newspapers and magazines. These journals will also take for granted that it is the sacred task of the federal government to steer the economic system on the narrow road between the abysses of depression on the one hand and inflation on the other, for the free-market economy is supposed to be ever liable to succumb to one of these evils.

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Also told by a high up council official not to vote Tory, because they will cut deep at 20% and that will affect my work? I said don't give a fook, as long as they cut your pensions, and get rid of all the councils freeloaders, then I went on, why should 25% of my council Tax go towards Public Sector Pensions? End of Conversation :rolleyes:

:lol:

did you take a picture of his reaction

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:lol:

did you take a picture of his reaction

This IS a problem.

Those that need to be cut back are those that make the cutback decisions....its always going to be someone else.

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Only just started. The second dip will be worse. Its the phoney war. Govt trying to avoid the big cuts before an election. Public services are going to get stomach banded. My local NHS Trust is predicting a £58M (10%) deficit this year because the commissioners are reducing the number of treatments they'll pay for. A massive media outcry awaits once waiting lists sky rocket and compulsory redundancies occur. A top UK University is rumoured to be cutting 20% of senior clinical research staff - again govt policy for 10/11 beginning to bite early.

Internationally all you need to know is that the US Alt-A housing crisis kicks off from 2010 and goes through to 2012. It started in US housing and the second plunge globally will follow the same pattern. But this time there is little scope for bail-outs and less appetite for them from the general population.

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At one level there does seem to be some repair of company balance sheets going on. Whilst unemployment may be painful for the individual and the overall consumer economy, it is what happens in recessions and helps keep firms afloat. So is a necessary part of the healing process for a sick economy. So on this basis, it may be possible that we are seeing some early signs of economic improvement, but that it may be slow and drawn out. Also in my book companies and hence jobs need to recover before house prices, so I'll completely ignore the property bulls.

The second issue is that right now it is clear in the business sections and the economic reports that a lot of excuses are being made, including GDP could fall 7.5% due to swine flu (ok its the E&Y Item club). So I also get the feeling we are being lined up for a bigger crash - effectively more of what we have had already, so in essence and double dip.

Your thoughts please?

Nothing inconsistent in that. There's still a lot of money sloshing about, and it tends to gravitate to where people see profits. In "normal" times that's dictated by fundamentals (basically good) and tax breaks (potentially very bad - especially when combined with leverage as we've seen with property). In bubble times it's dictated by sentiment and leverage, which may lose sight of their origins in fundamentals and tax-breaks.

Now it's dictated by adjusted perceptions, incorporating fear (c.f. daddy bear), hope, and greed, but crucially also by newly-printed money. The latter is going into anything where fear is not too strong, and property remains a sponge to soak up liquidity and starve the productive economy.

So yes, we can see recovery and further big falls coexisting. But there's unlikely to be the kind of deleveraging-crash we saw last autumn, 'cos governments are now primed to cushion that with more printing.

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Only just started. The second dip will be worse. Its the phoney war. Govt trying to avoid the big cuts before an election. Public services are going to get stomach banded. My local NHS Trust is predicting a £58M (10%) deficit this year because the commissioners are reducing the number of treatments they'll pay for. A massive media outcry awaits once waiting lists sky rocket and compulsory redundancies occur. A top UK University is rumoured to be cutting 20% of senior clinical research staff - again govt policy for 10/11 beginning to bite early.

Internationally all you need to know is that the US Alt-A housing crisis kicks off from 2010 and goes through to 2012. It started in US housing and the second plunge globally will follow the same pattern. But this time there is little scope for bail-outs and less appetite for them from the general population.

typical...cut the treatments...cutting the top 2/3rds of managers, closing their office blocks and giving their car parks to the public would be just too much to ask.

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Have to say I disagree with the doom and gloom mongers. Double dip recessions are relatively rare. I don´t see any reason why one should happen this time round.

No reason?

The reason is easy: government has tackled our augean stables by sweeping it under the carpet. That's different from every Tory recession, where the economy was allowed to adjust to reality so it could make a recovery for real.

If they'd behaved like this last time, we'd have done whatever it takes to remain in the ERM and beat off Soros. And that would almost certainly have been a good deal cheaper and less damaging to the future than today's failure.

In the historical context, this is a generational recession, and needs a generational solution: an Attlee or Thatcher for our times[1]. We haven't yet reached a 1979-equivalent, because our leadership is digging the hole ever deeper.

[1] Yes, that's two very different leaders, with very different agendas. Their virtues are that each did what was needed in their respective times. Admiring past leaders doesn't have to mean their solutions are right for our times.

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