Merrill Lynch: "We're In A Recession"

[Back Beach]

I follow the general concept that economic expansions last 5 years on average, while downturns, recessions, et al. last approximately two years. We're in the early stages of a downturn right now, which is perfectly healthy in the big picture(long term). Things got way out of control with housing, which was not unlike the late 90's "irrational exuberance" with the stock market. You'll hear horror stories, and perhaps experience some pain of your own. When all the excesses get wrung out, we'll expand again. When people capitulate and throw the towel in you can bet we're near a bottom, which isn't the case right now.
I think the credit crunch is far from over. Consider the millions of ARM resets pending and you have another catalyst for further systemic deterioration in the credit and housing markets. It ain't over yet, in fact its just beginning, IMO.

Your best hedge of course is to buy wooden fishing plugs. As the economy slows and unemployment rises, participation in leisure activities such as fishing will increase, thus increasing demand for complemantary items such as wooden fishing lures. Better yet, buy some Alaskan yellow cedar futures...

[fishpoopoo]

Originally Posted by BBJ

When all the excesses get wrung out, we'll expand again.

I hope that's the case. However, with so much imbalance in our economy (monetary, budget deficit, balance of trade), I wonder if we're not headed towards the $hitter on a permanent basis. Like some other third world bannana republic.

Moody’s says spending threatens US rating
By Francesco Guerrera, Aline van Duyn and Daniel Pimlott in New York

Published: January 10 2008 18:36 | Last updated: January 10 2008 18:36

The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday.

The warning over the future of the triple-A rating – granted to US government debt since it was first assessed in 1917 – reflects growing concerns over the country’s ability to retain its financial and economic supremacy.

It could also put further pressure on candidates from both the Republican and Democratic parties to sharpen their focus on healthcare and pensions in the run-up to November’s presidential elections.

Most analysts expect future governments to deal with the costs of healthcare and social security and there is no reflection of any long-term concern about the US financial health in the value of its debt.

But Moody’s warning comes at a time when US confidence in its economic prowess has been challenged by the rising threat of a recession, a weak dollar and the credit crunch.

In its annual report on the US, Moody’s signalled increased concern that rapid rises in Medicare and Medicaid – the government-funded healthcare programmes for the old and the poor – would “cause major fiscal pressures” in years to come.

Unlike Moody’s previous assessment of US government debt in 2005, Thursday’s report specifically links rises in healthcare and social security spending to the credit rating.

“The combination of the medical programmes and social security is the most important threat to the triple-A rating over the long term,” it said.

Steven Hess, Moody’s lead analyst for the US, told the Financial Times that in order to protect the country’s top rating, future administrations would have to rein in healthcare and social security costs.

“If no policy changes are made, in 10 years from now we would have to look very seriously at whether the US is still a triple-A credit,” he said.

Mr Hess said any downgrade in the US rating would have serious consequences on the global economy. “The US rating is the anchor of the world’s financial system. If you have a downgrade, you have a problem,” he said.

Moody’s did once threaten to cut the rating of some of the US Treasury’s debt when Congress refused to pass the president’s budget in the mid-1990s.

[fishpoopoo]

priceless. i love this guy. i recommend you go out and get this weekend's edition of Barrons and read the 2008 roundtable article.

The U.S. already would be in a recession if government statistics were correct.

Marc Faber, "Barrons 2008 Roundtable: After the Deluge," Barrons, 1/14/08

[wheresmy50]

http://money.cnn.com/2007/11/01/pf/2...ion=2007111416

I guess I'm not the only one.

[fishpoopoo]

check your stock trader's almanac.

* every time the S&P 500 posted a loss for the full month of January, a flat market - or a new, extended BEAR market always followed.

* a loss for January is followed by a market decline for the year that averages 13%.

[pmueller]

My daughters boyfriend is a student at NYU's finance school. He's saying were heading there if not already.
You gotta figure with all the higher expenses centralized around the price of oil, we have the opposite of the situation in the nineties.

[wheresmy50]

The pieces of the puzzle are coming together. A little justification for investing in questionable lending practices?

http://money.cnn.com/2008/01/17/news...ex.htm?cnn=yes

[fishpoopoo]

the futures market went UP when the merill news came out this morning and jobless claims were reported - people were expecting bigger sub-prime writeoffs by merill and higher jobless claims.

then the philadelphia manufacturing index came out at a six year low and ben bernanke started flapping his gums on the telly.

has anyone been paying attention to the stock market carnage over the past couple of weeks?

a recession is being baked in by the markets.

[Back Beach]

If its being baked in, I would anticipate a bounce off the March lows for the major indexes and then some sideways action for several months while the subprime stuff works its way out. We're only about three percent above the lows now, which I think we'll hit prior to fed meeting. If that level doesn't hold, its gonna be....
Just a pure laymen's guess though, but hey, even the pros are right only 50 percent of the time at best.

[striperman36]

Originally Posted by fishpoopoo

the futures market went UP when the merill news came out this morning and jobless claims were reported - people were expecting bigger sub-prime writeoffs by merill and higher jobless claims.

then the philadelphia manufacturing index came out at a six year low and ben bernanke started flapping his gums on the telly.

has anyone been paying attention to the stock market carnage over the past couple of weeks?

a recession is being baked in by the markets.

Carnage, what ever you want to call it it's really bad and global.

[fishpoopoo]

Originally Posted by Back Beach

If its being baked in, I would anticipate a bounce off the March lows ...

i think at some point you could get a short term relief rally, but the trend would continue downwards after a few months. we're not there yet, methinks.

i'm a little confused as to why certain economists are looking to the second half of the year for the economy to rebound, given that housing woes (delinquencies and defaults) are really just starting to take off, and credit card and other installment loans (car loans, etc) are also showing signs of weakness.



oh well, at least if the economy tanks, gas might get a little cheaper.

my profound question for you all:

will custom wood continue to sell for $50/pop?

[Back Beach]

Look out below tomorrow. Overseas markets got crushed today, many experiencing 5-7% one day declines.

50 handle on wood is baked in....

[fishpoopoo]

i suspect beachmasters will go on sale in a few months.

[fishpoopoo]

holy crap bbj, you weren't kidding.

cash market is closed today, but ...

dow futures are down 500 (FIVE FRICKIN HUNDRED POINTS)!

s&p futures are down 60 (SIXTY FREAKING POINTS)!

gonna get UGLEEEEEEE tomorrow at 9:30 a.m. EST.

[striperman36]

Big FishPOOPOO in the market tomorrow.

[Jenn]

well I dont understand all that stock market stuff but I sure am glad my 401K did so well last year

[fishpoopoo]

jenn, hopefully our 401k's don't become 201k's.

[Swimmer]

Cash is king at least for the moment..........

[Nebe]

Originally Posted by Swimmer

Cash is king at least for the moment..........

your cash is worth a lot less than it was a few years ago..

[striperman36]

Originally Posted by fishpoopoo

jenn, hopefully our 401k's don't become 201k's.

Looking not bad today. Felt like it was going to 201K last week

[Raven]

a guy i used to work for

who's one of the best quality carpenters in the state of MASS

has to go to work as an employee instead of a contractor

and hasn't had his phone ring for months...

I also know an electrician whose phone hasn't rung for 4 months


it becomes an issue of public perception not stock market analysis

because the public is always very apprehensive during an election year



until homeowners start hiring skilled laborers again to upgrade their homes
the economy is gonna be lousey

so pray for an early spring