So, the next U.S. recession starts this week?

Discussion in 'Politics, Religion, Social Issues' started by FoxyKaye, Jan 23, 2008.

  1. FoxyKaye macrumors 68000

    FoxyKaye

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    #1
    What do folks think? I'm not an economist, but like a lot of folks, I've got a 401k and other investments that are currently being pounded by the falling stock market.

    Is this a market correction, or are we now at the beginning of a new recession?

    I tend to think the latter, since a lot of Americans have been hit hard by the subprime market collapse, live paycheck to paycheck, and the entire country seems to be debt-financed. A lot of these chickens seem to be coming home to roost right now.
     
  2. Prof. macrumors 601

    Prof.

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    #2
    My dad is in the news business and all the "officials" are saying we are going to be in a recession for at least one year.:( DAMMIT, George!!!
     
  3. Blue Velvet Moderator emeritus

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    #3
    So, markets collapse and the FED slashes interest rates, probably encouraging inflation... who exactly is dictating monetary policy?

    Giulani is going to have change his campaign message; it's the economy, stupid.
     
  4. PlaceofDis macrumors Core

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    #4
    too early to tell if its a recession or correction, or a bit of both.

    personally i think its the last option, a bit of both. there really is no black and white way to look at it. there are so many factors in play here that its hard to tell just whats going on, but certainly i think its a bit of a correction and the beginning of a recession. although, people seemed panicked by the thought of a recession, and thus the panic is making things worse.
     
  5. Ugg macrumors 68000

    Ugg

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    #5
    I think it's a recession. The sub prime disaster is a classic pyramid scheme similar to what led to the crash of 1929.

    I think it'll be June before we really know how bad things are.
     
  6. FoxyKaye thread starter macrumors 68000

    FoxyKaye

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    #6
    I sure wish I knew - about the only good to come of this might be the opportunity to refinance my home loan at a ridiculously low interest rate. I'm also wondering if we might see 1970s style inflation again - in which case maybe I could pay off the home loan a lot quicker (it's a 30-year fixed). Wasn't there some country in Africa that just minted a $50 million dollar bill for general circulation?
     
  7. miloblithe macrumors 68020

    miloblithe

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    #7
    Judging by the indicator of Apple's shard price, it's not just a recession, it's a collapse!

    More seriously, yeah, we'll definitely see as we get more data. It's starting to feel recession-like though.
     
  8. Ugg macrumors 68000

    Ugg

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    #8
    Zimbabwe is not exactly the most stable country. With inflation running over 10,000% it's somewhat of an anomaly. Even bushco couldn't make that big of a mess of the US although they've certainly tried.
     
  9. Much Ado macrumors 68000

    Much Ado

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    #9
    Because investor confidence in AAPL = the strength of the US economy? :rolleyes:

    It's going to be close-run, but I think we'll narrowly avoid a full-blown recession.
     
  10. Eraserhead macrumors G4

    Eraserhead

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    #10
    The Vietnamese have 31000 vietnamese dong to the pound (16000 to the dollar) and they are certainly doing well at the moment.

    But if its Zimbabwe then it isn't a surprise that they have very large notes they have huge inflation.
     
  11. Blue Velvet Moderator emeritus

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    #11

    Let's see:

    • Servicemen — and women this time — returning from an unpopular war
    • Trouble with Iran
    • Fuel prices soaring
    • A lame-duck president
    • Rising inflation with growth collapsing: stagflation
    • Simultaneous fear and obsession with China
    • Stirrings in Russia

    That can surely mean only one thing...



    The return of flares. :D




    And some great cultural changes in the air as the centre cannot hold. Love it.
     
  12. miniConvert macrumors 68040

    miniConvert

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    #12
    I think folk all over the world are feeling a lot less rich at the moment. If that sentiment continues then surely a recession is inevitable. For the first time ever I felt like I was being ripped off in Starbucks the other day :D

    Still, I'm hopeful. I just hope the Bank of England doesn't pull any crazy stunts like the Fed has. Sterling vs Euro is buggered up enough right now.

    The only thing that's for certain is that if the US goes into recession then it has implications for us all.
     
  13. IJ Reilly macrumors P6

    IJ Reilly

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    #13
    By definition, you don't know the economy is in a recession until after it is already in one. The stock markets don't cause recessions, but they do act in anticipation of future conditions. The markets are betting on a recession, or at least slower growth. We'll know in a few months who was right.
     
  14. Eraserhead macrumors G4

    Eraserhead

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    #14
    That was the stupidest thing they could do IMO.
     
  15. skunk macrumors G4

    skunk

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    #15
    A contribution I have just received from George Soros:
     
  16. Eraserhead macrumors G4

    Eraserhead

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    #16
    ^^ Looks like I've timed finishing University wonderfully :rolleyes:.
     
  17. Ugg macrumors 68000

    Ugg

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    #17
    The Japanese shopping spree of the 1980s will be insignificant in comparison to the Sovereign Wealth Funds of the noughties.

    Norway's attempt to sink Iceland's economy is only a taste of the future. And the Norwegians even have a modicum of morality.

    What happens when the Chinese buy Boeing?
     
  18. FoxyKaye thread starter macrumors 68000

    FoxyKaye

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    #18
    Oh... my. So, if the entire United States economy was the Genesis project, we've just built everything on protomatter, haven't we?

    I wonder what will become of the dollar when the international markets dump it in favor of the Euro?
     
  19. IJ Reilly macrumors P6

    IJ Reilly

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    #19
    An old friend of yours? Could I receive a contribution from George Soros? Please? :)

    I think this is all a bit too buzzword compliant for my tastes. I don't see where he's made a case that this current credit crisis is fundamentally different than than the others we have experienced. So what if the world economy is becoming less US-dollar denominated? He makes it sound like this has drastic consequences, but it is unclear what those consequences are, precisely.

    As for his description of the sub-prime train wreck -- so what else is new? And the rise of the Chinese economy -- tell me something else I didn't know. If I've completely missed some original and deep insights from Mr. Soros, I beg enlightenment.
     
  20. FoxyKaye thread starter macrumors 68000

    FoxyKaye

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    #20
    I took it to mean that he's looking at changes in geo-political power structure (how's that for a couple buzzwords) that weren't necessarily factors in previous recessions - the Cold War kept a lot of things in check, for better or worse, and it also made the Dollar the international currency of choice in many circumstances. However, this time, there are emerging international economic alternatives that mean faith lost in the Dollar this time might not be regained in the future - and the U.S. might decide that there's a military intervention or two to be had to rectify the situation. Basically, we could see more Iraqs as the US Government makes military plays to keep the economy rolling was one implication I read. That, and what will happen when the bully in the international playground breaks its legs and realizes it has no friends to take it to the hospital.
     
  21. Eraserhead macrumors G4

    Eraserhead

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    #21
    @ IJ Reily I'm sure that Skunk can reply better than I can, but I would say that the Federal Reserve have screwed up badly with the .75% drop in interest rates, as it looks desperate and without confidence.

    Also that at some point assuming the amount of credit has been increasing since WW2 there has to be a crunch at some point.
     
  22. Dont Hurt Me macrumors 603

    Dont Hurt Me

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    #22
    refinance time!:) I want to see the fed go down another qtr of a point.:)
     
  23. skunk macrumors G4

    skunk

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    #23
    I believe the key part here is, as FoxyKaye has divined, that it has been only the status of the US dollar as international reserve currency of choice which has allowed the US to draw on almost inexhaustible supplies of credit to finance its deficits. Once this ceases to be so, the excrement is going to become virtually inseparable from the air-conditioning.

    GS isn't actually a personal friend. I just get his emails. :)
     
  24. Thomas Veil macrumors 68020

    Thomas Veil

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    #24
    I got a little bit into this in the Bernanke thread, but...

    Tons of foreclosures +
    Inflated housing market collapse +
    Job market flat +
    Below expected Christmas sales +
    Talk of other countries going to euros +
    Citibank and Morgan Stanley selling parts of themselves to foreign investors to raise cash +
    Fed dropping interest rates .75% =
    _______________________________
    I got a bad feeling about this.

    A really bad one. I'm old enough to have been in and out of several recessions, and I don't think I've seen one with this kind of confluence of events. When everything else was going bad, people said, "Well at least real estate is still holding its value." And now that's not true anymore. You put that together with what look like desperation moves like the Citibank/Morgan Stanley things and the Fed drop, and this looks worse than just your average recession.

    I just have the same uneasy feeling that I had when Bush tried to convince us we should go to war with Iraq: "Uh-oh. This could get really, really bad." I sure hope I'm wrong.
     
  25. Queso macrumors G4

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    #25
    Seriously, I expect a US recession coupled with a global slowdown for the next couple of years. Indicators suggest Europe will weather the storm best, so hopefully the recent correction in the pound/euro rate will boost UK exports to the eurozone and keep us from following the US down. We also have a lot of Russian money coming into the country which will help the service economy, and the high oil price should add to the UK coming in for a soft landing rather than a collapse.

    I don't see this as 1989 all over again. Not unless you live in the States anyway.
     

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