• If you are having problems logging in please use the Contact Us in the lower right hand corner of the forum page for assistance.

Recession--Depression??

Do You think the US Economy is Heading into a Recession--or a Depression?

  • No-the Economy is doing Fine

    Votes: 0 0.0%
  • Yes- a mild short Recession

    Votes: 0 0.0%
  • Yes- a prolonged Recession/Depression

    Votes: 0 0.0%
  • Economic Collapse

    Votes: 0 0.0%

  • Total voters
    0
A

Anonymous

Guest
Breaking News from MoneyNews.com

Gross: $250 Billion in Credit Losses Will Slam Economy

Bond guru Bill Gross says credit-default swaps, a derivative used to insure against the risk companies won't pay debts, could cause losses of $250 billion this year, helping send the U.S. economy into a recession.

The Pimco chairman also sees economic growth as low as 0.75 percent for 2008 and a housing price slide of up to another 10 percent.

Assuming default rates on corporate bonds reach historical averages of about 1.25 percent, $500 billion of credit-default swap contracts will be triggered, causing losses of $250 billion to sellers of the derivatives after accounting for the recovery value of the securities, Gross told investors in his monthly note.

Goldman Sachs estimates that mortgage related losses of $200-$400 billion alone might lead to a pullback of $2 trillion of aggregate lending, Gross wrote.

"Add to that my $250 billion loss estimate from CDS, as well as prospective losses in commercial real estate and credit cards in 2008 and you have a recipe for a contraction in credit leading to a recession,” he wrote.

There will be winners that emerge from the losses, Gross acknowledged.

"Goldman Sachs wins? Fine, but the losers in many cases will not be back for a return match.” Overall, the losers outnumber winners in Gross’ forecast, as he sees the U.S. economy growing by 0.75 percent to 1.25 percent next year while housing prices fall 5 percent to 10 percent.


According to the Bank for International Settlements, such obligations totaled $43 trillion at the end of 2007, in a global banking system with an asset base of an estimated $85 trillion to 90 trillion. Altogether, the national value of derivatives amounts to over $500 trillion, an amount that’s more than 6 times the total capital of the system.

"Pyramid schemes and chain letters collapse because there is no more credit to feed them,” Gross warned. If Gross is correct and a pyramid-type credit party is coming to an end on Wall Street, the consequences of such a collapse would be dire.

"Credit-default swaps are perhaps the most egregious offenders,” Gross wrote. "Our modern shadow banking system craftily dodges the reserve requirements of traditional institutions and promotes a chain letter, pyramid scheme of leverage, based in many cases on no reserve cushion whatsoever.”
 
A

Anonymous

Guest
Citigroup May Face $24 Bil Writedown, Cut 24,000 Jobs

MoneyNews
Monday, Jan. 14, 2008


NEW YORK -- Citigroup Inc, the largest U.S. bank, may eliminate 17,000 to 24,000 jobs and write off as much as $24 billion for subprime and other credit losses, as part of a plan to cut costs and add capital, CNBC television said on Monday.

The write-down and job cuts may be announced on Tuesday, CNBC said, when Citigroup is widely expected to report the largest quarterly loss in its history.

Analysts on average expect the loss to be about $5 billion, according to Reuters Estimates.

Citigroup may also reduce its 54 cents per share quarterly dividend, which equates to a 7.6 percent dividend yield. It may also raise billions of dollars of new capital from various entities, including from its largest individual shareholder, Saudi Prince Alwaleed bin Talal, published reports said. The bank sold a $7.5 billion stake to Abu Dhabi's government in November.

http://moneynews.newsmax.com/money/archives/articles/2008/1/14/142638.cfm?s=mnh


Foreign Cash Pours Into USA

MoneyNews
Monday, Jan. 14, 2008


Foreign companies burned by the Dubai ports deal have discovered a new way to influence American companies -- buying stakes in U.S. companies via so-called "sovereign wealth funds," or SWFs.

Record amounts of foreign government money have flooded into U.S. markets this year in the form of SWFs -- pools of foreign-government money controlled by foreign governments.

Major U.S. companies including Citigroup and Merrill Lynch, desperate for cash following the subprime mortgage crash, have turned to Asian and Arab financiers for a bailout.

SWFs from those nations have used their billions of dollar reserves to rescue troubled U.S. firms.

Sources tell Newsmax the foreign SWFs have bought beleaguered companies at bargain-basement prices as the credit-market crisis unfolded. The SWFs have carefully avoided taking substantial voting stakes in those companies, however, sources tell Newsmax.


Such funds are growing fastest in the Mideast -- thanks to the overflowing oil revenues pouring into government coffers there. Another hot region: China and East Asia, flush with cash due to the region's soaring trade surpluses.

http://moneynews.newsmax.com/money/archives/articles/2008/1/14/105751.cfm?s=mnh
 

Tex

Well-known member
So what is the goal of our govt.? To mismanage our regulatory agencies so bad that we have to sell the U.S. out to foreigners?
 

backhoeboogie

Well-known member
Look at where we are right now and where we were in the 60's. Heck, look back 100 years.

The economy is booming locally. Based on what you read in this forum, you'd think the rest of the U.S. was going down the tubes. So one wants to check it out. Look at the papers in way off places. It all seems to be doing great.

There haven't been any new nuke plants built for well over a generation. They are now planning new plants all over the U.S. Companies are needing people and there is a whole new generation to be trained. Technology has really advanced. Those coming out of the navy nukes should be set for life if they choose to be reactor operators. Six figure incomes in no time. There is going to be a huge need for construction workers and materials. Piping, pumps, instrumentation - all of it. Shreveport and Portland should be expanding in no time to supply pumps.

Petroleum Companies are struggling to produce petro to the new regulations. Plants are being planned.

Engineering firms are paying a huge "signing bonus" to get all of these things on paper before building starts.

There are enrichment facilities being built.

Coal fired power plants are putting in polution control modifications. Workers are is shot supply. There is a huge shortage of welders in the U.S.

My savings accounts are guratanteed by the FDIC. I keep reading "the sky is falling" in this thread. :shock: In my mind, we are all about to hit a boom. There is the chance that everyone and every business will shut off their electricity and start riding bycicles.

If the housing mortgage companies made some bad loans, it won't be a total loss. They own the deed to the property. Even if they had to dump the house for 70% of its value, it is only a 30% loss.

Land values have gone through the roof. Try to buy 100 acres. It will cost you much more than it would have cost 10 years ago.

Look at the papers. Check the employment ads.

Ex-cons can get jobs tying rebar for a very decent salary. All they really need to do is learn to weld and stay off of drugs - AND WELFARE.
 
A

Anonymous

Guest
Faster horses said:
Great post, bhb...I enjoyed some POSITIVE NEWS.

Thank you for a nice start to the day.

That's a rant, not news.

Mortgage companies didn't make "some" bad loans. They made a lot of bad loans. Then they sold them to other banks. The property value is much less than the loan. Somebody is going to eat that. Apparently it will either be the taxpayers of this country or some of our major financial institutions will be sold to foreign companies. The FEC is opening thousands of investigations into mortgage fraud. Now they're investigating. While the money was rolling in to the high rollers, they paid no attention. Now that the bottom has fallen out, now that big business are struggling, the FEC is "investigating." :roll:

The Bush Administration EPA is trying to cut back EPA regulations on coal companies. Does anyone on here remember Buffalo Creek?

Holding Fast. After the other deputy's call, Mutters drove to the slag heap and checked with a mining official, who assured him that the dam was holding fast. Unconvinced, Mutters set out in his car to spread the alarm. But there was too little time, and the people of Buffalo Creek had been threatened too often before with false alarms about the dam. Some time after 8 a.m., the wall of slag burst open "like a bomb had hit it," according to one witness, and a huge mountain of water and sludge descended on the hollow, trapping many people still asleep.

http://www.time.com/time/magazine/article/0,9171,903335,00.html

You don't have to look back 100 years to see good times. You only have to look back eight years, before George W. Bush was elected President.
 
A

Anonymous

Guest
A person can look at it thru rose colored glasses and say everythings just hunky dory-- or a person can look at whats actually happening...20% inflation is not out of sight for 08- 30% would put us in a third world countries class- where GW wants us for his NAU...

2007 Wholesale Inflation Up Most in 26 Years

MoneyNews
Tuesday, Jan. 15, 2008


WASHINGTON -- Wholesale inflation shot up in 2007 by the largest amount in 26 years even though falling gasoline costs allowed price pressures to moderate in December.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

http://moneynews.newsmax.com/money/archives/articles/2008/1/15/084653.cfm?s=mnh
 

backhoeboogie

Well-known member
So which way do you want it? Inflation is the opposite of recession/depression.

When products can't be sold, prices drop and you get a deflated economy. It is great for folks on fixed income.

When products cannot be produced fast enough, you get inflation. It is great for young adults looking at 40 year mortgages or for those hocked up to their eyeballs.

The republicans are being blamed in this thread for inflated economy and they are being blamed for a deflated economy.

The poll results (as of right now) are weighted for deflation and depression/recession.

What if things stay about where they are? What if all these new nukes being planned get built and all these jobs are created?

It makes no sense for someone to argue deflation and inflation in the same breath. Point fingers are republicans if you like but you need to make your mind up which way you want to argue it.

Money just doesn't disappear. It goes somewhere. Someone's loss is another's gain.

Those gaining overseas is a concerned indeed. Those gaining here in the U.S. is not a concern. If someone gets a house for 70% of its value because someone else defaulted on the loan, it is hard for me to shed a tear for the one who defaulted. They could have taken a second job just like I did for most of my young adult life.
 

backhoeboogie

Well-known member
ff said:
Faster horses said:
Great post, bhb...I enjoyed some POSITIVE NEWS.

Thank you for a nice start to the day.

That's a rant, not news.

Does the truth hurt all that bad ff? Just google "new nuclear plants" or anything similar. Check the employment ads for the Houston Chronicle or any other large paper.

Invest wisely in the stock market and study where technology is taking us. If you have enough invested, you'll pay close attention to who is going to be making nickels and who is going to be losing them.

The government you hate so bad is now offering combined Construction and Operating License Agreements for the nuke industry. It is a streamlined money saving initiative. "COLA" is the term they coined. Check it out or sit here in this forum and call it rhetoric or a rant.
 

cutterone

Well-known member
There is no question after reading all the posts here and in other areas that this whole thing is regionalized and even different in the same areas depending on the circumstances. Those who have been fortunate are not complaining much. Those who have been suffering from drought or floods have much more to loose. Even in some areas off farm employment has taken a nose dive and if you wanted a 2nd job they aren't there. In some areas the mexicans have taken a lot of the secondary employment and construction jobs. If your raising cattle in the southern states(other than the drought stricken areas) you can graze them and not feed grain but that's not so simple in the northern teirs.
I was in the Ag construction business for several years and for a while it was a boom. Then land prices took a small hit and hog prices went to hell in a hand basket. Farmers who invested hundreds of thousands in modern facilities (instead of their house) saw markets drop until they were selling finished hogs for $15/head. Because the value of their facilites dropped like a rock they were setting on more debt that value, their product was worthless, and the banks moved in and shut them down and sold their dreams to the farmers down the road who only raised corn and invested big dollars in their house and machinery. Since good housing was in strong demand their values did not drop. Which guy do you think saw the economy so rosey??
This whole thing hinges on your situation - "One man's junk is another man's treasure." "It's a recession if your neighbor looses his job - it's a depression if you loose your's."
Things overall are not good - just better for some than others. We have simply let government and Big corporations get too big of pants and they have put us in a fix that will take quite some time to mend. And it will effect each and every one of us - to what extent is "film at eleven"!
 
A

Anonymous

Guest
Money just doesn't disappear. It goes somewhere.

Dow just dropped another 280 points-- over 2%...NASDAQ down 60 points- 2 1/2 %...
Where did that money go?
 

Tex

Well-known member
It must be noted that the stock market has not done well at all under GW. Probably in part because of such lousy fiscal policy. The stock market should go up at least the inflation rate, which would mean that it really stayed the same, adjusted for inflation.

We need a president who is interested in an economy for the whole nation, not one just for their cronies.

The republican party is no longer the part of fiscal conservatism, balanced budgets, smaller government, or the business community as a whole.

I wonder what they are really for and how long they can keep up the perception that they are more conservative than democrats.

I think they just turned into politicians.
 

backhoeboogie

Well-known member
Oldtimer said:
Money just doesn't disappear. It goes somewhere.

Dow just dropped another 280 points-- over 2%...NASDAQ down 60 points- 2 1/2 %...
Where did that money go?

It simply means someone bought stock for less than what it sold for at yesterday's close. Someone was willing to sell for a lower price and someone was willing to buy at a lower price. Not much different than a cattle auction when prices are down. If you buy when prices are up and sell when they are low, you lose money.

For me personally it means my small cap growth equity is down 9% for the year. My large cap growth equity is down 7.3%. Both are way higher than what they were back when I bought in. Hence, I didn't make as much profit based on the current close as I did based on Dec closes. (good thing I pulled a bunch when I did). Stocks are way ahead of my savings interest, CDs, and other things in my portfolio.

Now if it really bottoms out, I will pull all my savings and sink them in the stock market and buy at low prices. Kind of like buying F-1s with ear from the sale barn at really low prices.
 

passin thru

Well-known member
The republican party is no longer the part of fiscal conservatism, balanced budgets, smaller government, or the business community as a whole.

So Tex I have a question, so it seems you are looking for a fiscaal conservative to vote for is that right?


A little hint as you are right about many in the rep party not being fiscal conservatives..................you darn sure won't find it in the dem party.
 
A

Anonymous

Guest
backhoeboogie said:
Oldtimer said:
Money just doesn't disappear. It goes somewhere.

Dow just dropped another 280 points-- over 2%...NASDAQ down 60 points- 2 1/2 %...
Where did that money go?

It simply means someone bought stock for less than what it sold for at yesterday's close. Someone was willing to sell for a lower price and someone was willing to buy at a lower price. Not much different than a cattle auction when prices are down. If you buy when prices are up and sell when they are low, you lose money.

For me personally it means my small cap growth equity is down 9% for the year. My large cap growth equity is down 7.3%. Both are way higher than what they were back when I bought in. Hence, I didn't make as much profit based on the current close as I did based on Dec closes. (good thing I pulled a bunch when I did). Stocks are way ahead of my savings interest, CDs, and other things in my portfolio.

Now if it really bottoms out, I will pull all my savings and sink them in the stock market and buy at low prices. Kind of like buying F-1s with ear from the sale barn at really low prices.

But that 2%-- amounts to Billions (Trillions ?) of $--Where did it go?

Don't worry if you can't answer it-- I've seen it asked of many economists that can't answer it.....Nobody gains any $ value out of it--But they have to agree that the value of the total stocks is lower- and the value of the stockholders portfolio is lower- and the wealth of the nation is lower- because it can't be converted to the cash value it was....
 

backhoeboogie

Well-known member
Oldtimer said:
Don't worry if you can't answer it-- I've seen it asked of many economists that can't answer it.....Nobody gains any $ value out of it--But they have to agree that the value of the total stocks is lower- and the value of the stockholders portfolio is lower- and the wealth of the nation is lower- because it can't be converted to the cash value it was....

How can something like that be answered?

Perhaps I don't look at it the way you do. If you buy a cow for $900 and you sell it to me for $950. It closed "up $50". I hold the cow a year and sell a calf (dividend). Get her bred again and sell her for $925. Wallstreet can say she closed at $25 less than the last time she sold.

That is how I look at stocks. You made money on the cow you bought. I made money on the calf but lost $25 on the cow. Now someone else might offer $1100 if they want her bad enough (I should have held her). She's still the same cow you bought for $900. Money didn't disappear.
 
A

Anonymous

Guest
backhoeboogie said:
Oldtimer said:
Don't worry if you can't answer it-- I've seen it asked of many economists that can't answer it.....Nobody gains any $ value out of it--But they have to agree that the value of the total stocks is lower- and the value of the stockholders portfolio is lower- and the wealth of the nation is lower- because it can't be converted to the cash value it was....

How can something like that be answered?

Perhaps I don't look at it the way you do. If you buy a cow for $900 and you sell it to me for $950. It closed "up $50". I hold the cow a year and sell a calf (dividend). Get her bred again and sell her for $925. Wallstreet can say she closed at $25 less than the last time she sold.

That is how I look at stocks. You made money on the cow you bought. I made money on the calf but lost $25 on the cow. Now someone else might offer $1100 if they want her bad enough (I should have held her). She's still the same cow you bought for $900. Money didn't disappear.

And when the value of all your herd of $1200 cows drops down to $900- your net worth has just dropped a whole lot...And thats whats happening to many folks portfolios--the value of the whole market- and the net worth of the entire US.....

Whatever you want to call it your losing value/net worth-- which could have been converted to dollars.....
 

Red Robin

Well-known member
Oldtimer you can't deny that some funds and portfolios and those on their toes have made fortunes this last week. The market doesn't have to go up to make money.
 
A

Anonymous

Guest
Red Robin said:
Oldtimer you can't deny that some funds and portfolios and those on their toes have made fortunes this last week. The market doesn't have to go up to make money.

Oh--I'll admit some are making fortunes-- on the misery of others-- they always do...Thats what got us into the sad economic state we're in right now...But I'll bet the majority of the normal everyday retirement accounts- 401k's- are taking it in the shorts bigtime...Some states are now afraid their state run retirement systems and school funding surplus funds are bankrupt....

And ole GW wanted everyone to put their retirement funds into the stock market in a "privatized" social security... :shock: Be a cold day in Hates before they'll be able to ever get that to pass now....

Interesting note-- In the history of the US- there have been 5 recession/depressions that came about during election years...In every one of those years the Party controlling the White House lost the election big time....
 

Latest posts

Top