WHOA! CNBC Guest tells the truth... Economy is a ticking time bomb...recession ahead

[Blackhatjack]

He just said that a recession is going to happen and the Fed is afraid to tell the truth.

He says the Fed can't cut the rate without it devaluing the dollar.

We are definitely in a box economically.

[ayeshahaqqiqa]

1. I think recession is too mild a word to describe what will happen

Depression would be a more accurate term to use.

[Warpy]

9. We'll be lucky if it's only a recession

You can't concentrate wealth at the top and drown the bottom in debt and expect a healthy consumer economy over the long term. It is an impossibility.

At some point, the movers and shakers are going to have to make some very tough decisions because the only way you can keep money moving in a healthy economy is to scrape it off the very top and recirculate it at the bottom.

If they are inadequate to the job, bring on the tumbrils, my knitting awaits.

[indepat]

19. Obviously those relative few who own most of the wealth had much rather have a much bigger slice

of a much smaller pie because that's really the only thing Reaganomics and Bush I and II tax and fiscal policies can produce in the longer haul.

[leeroysphitz]

47. Maybe the movers and shakers don't care about keeping money moving...

Maybe they feel that all the wealth that is concentrated at the top is doing just fine where it is.

It wouldn't be the first time.

[ProfessorGAC]

12. Won't Happen

The indicators for a massive global drop are not there. By a more analytical perspective, we're already in recession. Not based upon the conventional, and wholly inappropriate, definition. But, these past 5 years are ALL in the bottom quintile of the last 50 with respect to 6 critical macroeconomic parameters.

So, we're already there, but there is no cliff right in front of us. Absolutely no analytical or statistical basis for that concern.
The Professor

[Virginia Dare]

14. Even if the American consumer outright boycotts Chinese goods?

I'm not saying that will definitely happen, but how would that effect things overall?

[ProfessorGAC]

20. That Will, Indeed, Put Upward Pressure On. . .

. . .on prices. But, remember one thing;

The doom and gloomers who worry about the Chinese holding our debt are looking at this unidirectionally. The Chinese cannot afford to alienate their biggest market. Even if consumers boycott these goods, there are lots of component sales from China to U.S. manufacturers. They're not going to boycott. So, the business relationship still stays significant.

Given that, they are more dependent on our buying their stuff, then we are dependent upon purchasing it. And, the cash flow they get from those sales exceeds what they hold as callable paper. So, this whole China/U.S. concern is far more subtle and glacially paced than most understand.

As i said in a earlier post; by my less conventional measures and modeling, we are in a a recession already. The past 5 years are ALL in the bottom quintile of the last 50 with respect to 6 critical macroeconomic parameters.

Really, the whole Wall Street bloodbath this week has been a natural correction cycle because the market was overinflated. The aggregated micro- and macroeconomic state has not justified such rises in stock value. Eventually, even the hack economists at the big brokerages will figure that out and make sure the profit taking occurs before the market trends down. This causes a more sudden correction, like we just saw.

The correlation between market behavior and overall economic condition is tenuous at best, except in one case. The market always does grow when the economy is showing sustained health. Other than that, it's a crap shoot.
The Professor

[Virginia Dare]

26. I'm just thinking in terms of..

that the average American consumer suddenly realizes that Wal-Mart has been peddling toxins and deathtraps to them for 20-odd years now, gets really really pissed and stops buying their crap.

It seems like Wall Street nervously, you could almost say obsessively watches Wal-Mart's profit numbers. Even if they had a really bad, say apocalyptic quarter, wouldn't that cause some sort of financial melt down, which could in turn touch off a domino effect? I'm just thinking worst case hypotheticals here.

[CrispyQ]

40. Oh crap, I didn't bookmark it, but yesterday there was a post

with an article about many Chinese factories having two production lines -- one for European goods & one for goods going to America & other less developed countries. Gee, I don't know why I haven't heard that story on CNN. :eyes:

I'll see if I can find it & post back if I do.

[ProfessorGAC]

44. Down Turn Yes. Melt-Down, No

The cash flow position of those companies is too strong. They can easily sustain two quarters of hard times.
The Professor

[Virginia Dare]

49. Fair enough, but I have another question for you Prof..

how do we distinguish between a downturn and a melt-down? When should we start jumping out of windows?

[TNDemo]

27. About the China market.

I saw an article in Newsweek (I think) with a tidbit that caught my attention. They said that the whole world was buying from China now and China was the world's producer of almost everything. They said they no longer really need the US consumer to sell to because everyone else is buying. We are totally beholden to them so I don't know how accurate it was but it certainly caught my attention.

[Virginia Dare]

32. I don't think anybody really knows what the fall out of all of this will be..

we can theorize, but it's really like a runaway train.

[ProfessorGAC]

45. Well, They're Wrong

China is the world's #1 manufacturer of goods, (not services). But, the U.S., is nearly 40% of the export volume. A newly developing economy cannot sustain the loss of 40% of volume.

Whoever said what you read is an idiot.
The Professor

[EstimatedProphet]

50. Nope, no cliff - more like a swamp

[niceypoo]

2. I am sure that if it hits with a dem in charge the repukes will blame us

thus starting the same old cycle of dysfunction and blame that is our system of government

[rurallib]

15. I believe they have been using smoke and mirrors to delay the

depression until someone else, probably Democrat, was in charge.

[swag]

3. Who was it? Nouriel Roubini?

[Blackhatjack]

6. Sorry I never heard his name and did not see it displayed on screen...

[leftchick]

13. His name was Peter

I missed the last name.

[lpbk2713]

4. I believe it.

Simply because you can't rely on anyone from the BushCo Regime to tell the truth. They're all smoke and mirrors. All they want to do is make it throught the next seventeen months without being arrested and then the next administration will have to clean up their monumental mess.

[Blackhatjack]

5. Dems typically have to 'clean up' after Repubs make a shamble of the economy...

This time the Repubs were in power too long to blame the Dems.

Going to be an interesting election campaign season.

[Virginia Dare]

16. True, and one silver lining could be..

that we can shitcan once and for all the idea of privitizing social security.

[Maggie_May]

7. We are already in a recession

cost of living is high and wages down people losing there homes and its getting harder and harder to make ends meet. People are struggling now. Its just going to get worse. I know for my family we haven't been able to buy anything but what we need (food gas pay bills) thats it here in my home. We don't even go out to eat anymore can't afford it.

[HereSince1628]

17. Two consecutive quarters of decline . . .

. . . in real GDP is commonly taken to be a recession. The National Bureau of Economic Research, a private organization, effectively decides when recessions occur, however, and the actual dating process is determined by judgment rather than a formal rule.


Wasn't the second quarter reported larger GDP than Q1? Just asking.

[ProfessorGAC]

22. We're Debating Them On That

Every year, someone from the analytic school, goes to the open meetings and presents a new way to define it. I was there in 2002. Somebody else goes every year. That definition is neither scientifically nor statistically valid.
The Professor

[Pirate Smile]

29. Thank you for your comments and informed perspective, Professor.

:hi:

People aren't going to be able to refinance their homes and take out a bunch of $$$ to pay off their debts (credit cards) anymore, are they?

[ProfessorGAC]

43. Doubtful

That buxiness model has collapsed. I don't see any major lenders taking that approach anymore. It still could happen if the current business cycle turns around, but i don't see that happening unless the deficits drop.

I published an academic paper in 1997 that, imo, proves (statistically) that gov't deficits are an economic drag effect. That needs to be controlled for a mathematically significant turnaround to occur.
The Professor

[HereSince1628]

46. It doesn't matter much if the definition is questionable if

it is the one that the decision makers use. And I think that is the important question. What freaking twist on the definition are Berneke and Buddies using at the Fed?

[knitter4democracy]

31. Depression-level numbers here in Michigan.

Look at our real unemployment, our foreclosures, and job losses, and we're in a Depression, not a recession. I'd bet other parts of the country are the same.

[DemReadingDU]

48. It's not good in Ohio either

Unemployment and foreclosures at their highest rates in years.

But heck, the restaurants are packed full almost every night. People still must have credit cards.

[leftchick]

8. "the end of america's phony economy"

:wow:

[Blackhatjack]

10. The truth is when the DOW hit 14000 a lot of people got out at the top...

... and all the happy talk was designed to suck as much consumer money into the market as possible.

THere was no reason for the DOW to run up to 14000 and there was every reason for it to fall precipitously.

[leftchick]

11. "Peter's Apocalypse"

man all of those people are in denial. Like my husband. :(

[Blackhatjack]

18. When WalMart announced sales expected to be off, that was a clue....

especially when analysts were whispering that Walmart officials believed that consumers have run out of money to spend at Walmart.

And from personal observation, I can say shoppers are way down in all retail establishments. WE get dollars off coupons every day in the mail. Go in the store and they have cut the merchandise even more than advertised.

Keep an eye on clothing. If there is not an uptick with back to school purchases, there are going to be some tremendous discounts on left over inventory. That will tell you that people have pulled back on consumer spending to just necessaries.

[Virginia Dare]

28. Couple that with the epiphany about all of the toxic Chinese crap..

they've been selling us, there could be serious backlash against Wal-Mart in the coming months. I'm just thinking this could lead to a serious melt down.

[Blackhatjack]

21. Cheney did not move his investments out of the country for no reason at all....

... and Halliburton move their headquarters to Dubai.

Aside from hiding evidence of wrongdoing, Halliburton is most likely making a currency play against the American dollar.

Cheney knows this as well.

[TNDemo]

23. I have a dumb banking question.

Do we have any need to worry about not being able to get our cash from the bank? I have some savings in on-line banks and a CD at my regular bank and it is all FDIC insured but that is only as good as the government that backs it (though I think FDIC isn't really the government). Anyway, I digress. Do I need to do anything differently?

[rucky]

39. You'll be okay. n/t

[ChairmanAgnostic]

24. after this morning's sign and profiteering,

the numbers have realized the underlying weakness, and are crawling down again.

[Blackhatjack]

25. Just remember with every major downturn in the Economy there is redistribution of wealth

usually from the consumers to the wealthy. Just like Mr. Potter in "It's a Wonderful Life", those with cash on hand swoop in and scoop up the goodies for pennies on the dollar.

Wealth is never lost in an economy, it is just redistributed.

[Virginia Dare]

30. Absolutely correct, and terrifying to contemplate...n/t

[DU GrovelBot]

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[Virginia Dare]

35. Grovelbot, don't you know the sky is falling?...n/t

[Javaman]

34. Here comes inflation. Weeee....nt

[Virginia Dare]

37. I invested my 401(k) leavily in inflation protected bonds..

when I heard that's where Bill Gates and Dick Cheney were putting their money about 18 months ago.

[shireen]

53. is there such a thing?! nt

[MadHound]

36. Economy has been a ticking time bomb for years now

Ever since Greenspan converted the tech bubble into the housing bubble, our economy has been just waiting for the bubble to burst. Sadly, rather than taking our lumps then, Greenspan allowed the madness to continue, and now that the bill is coming in, it is much higher than it would have been seven or eight years ago.

[swag]

38. This is funny. Nobody even knows the guy's name, and here we are on the Greatest page

[rucky]

41. if it's the truth...

does it matter who's telling it?

this isn't anything that hasn't been said repeatedly on - well - pretty much every financial blog out there.

[Turbineguy]

42. Wait 10 minutes

they'll have a somebody on who says everything's just peachy.

In the end, the only thing that counts is whether the talking head confirms your views, not whether anybody in particular is correct. And now we'll break for a commercial. Finantertainment.

[swag]

51. Oh, must be Peter Schiff

http://www.cnbc.com/id/15840232?video=473206589&play=1

[On the Road]

52. Fed Actions Often Come too Late

and take awhile to develop.

I support the action by the Fed. It may prevent a complete breakdown in the market and in housing, but it may be too late to prevent a recession.