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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Wed Dec 03, 2008 6:14 pm Post subject: No longer academic |
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Buckledown, shut down the spending and get ready for a terrible, terrible year.
http://www.financialpost.com/story.html?id=1027601
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U.S. job losses could have hit a staggering 400,000 to 500,000 in November some analysts fear as figures Wednesday showed the world's biggest economy sinking deeper into recession.
While many analysts believe the United States could now be entering a vicious cycle of retrenchment and rising unemployment, a few encouraging signs continue to bubble below the surface and one major investment bank boldly forecast Wednesday the S&P 500 would rebound 50% next year.
Figures Wednesday however, were grim and pointed to hefty interest rate cuts on both sides of the border next week. A key survey of purchasing managers showed the giant U.S. service sector contracting at the fastest pace on record in November while its employment subindex imploded.
A Federal Reserve survey also showed business activity weakening across the United States in recent weeks.
"The scary thing is we are likely to see the adverse feedback between job losses, the housing market slump and the credit crisis over the next few months which can only prolong the recession," said Sal Guatieri, senior economist at BMO Capital Markets. "I think it's clear the U.S. economy is heading for its longest recession in the post-war period."
The Institute of Supply Management said its index of service sector activity fell to 37.3, the lowest level since records began in 1997 and down from 44.4 in October. Its employment subindex, meanwhile, dropped to 31.3 from 41.5 as respondents to the survey made such comments as: "Staff adjustments due to fall off in sales"; "Hiring freeze in place. Almost impossible to fill open positions"; and "Restricting new hires unless service/productivity/demand warrants."
Paul Ashworth at Capital Economics and Ian Shepherdson at High Frequency Economics said the plunge in the employment index pointed to job losses as high as 500,000 when official payroll figures are released Friday, while Mr. Guatieri said his models now show a 400,000 drop which would mark the biggest monthly drop in percentage terms since 1983.
The U.S. economy is now in its deepest funk since the early 1980s and the recession could easily drag on well until the fall of 2009, Mr. Guatieri said. The last longest recession was a 16-month contraction in the early-1980s. The National Bureau of Economic Research said on Monday the U.S. economy entered recession last December.
"The deepening recession indicates that unscrambling the economic eggs is much more difficult than scrambling them," said Brian Bethune, chief U.S. financial economist at IHS Global Insight.
Economists say both the U.S. Federal Reserve and the Bank of Canada could cut interest rates 50 basis points at meetings next week, taking benchmark rates down to 0.5% and 1.75% respectively.
In a rare bullish note however, UBS forecast Wednesday the S&P 500 would hit 1,300 by the end of 2009, about a 50% gain from yesterday's 870.74 close and Canada's S&P/TSX would rise 50% to 12,500.
David Bianco, equity strategist at UBS said in a note the "panic of 2008" created a confidence vacuum that policymakers are rushing to fill.
"Filling the void is a challenge, but we take comfort [in the fact] that now every policy maker in the world is trying to jump-start confidence in the system," he said in a note. "Once this happens, powerful positive economic forces such as the worldwide proliferation of technology and globalization should make confidence shine again."
Central banks and governments from the U.K. to the United States are pumping global markets with liquidity and buying up toxic debt to try to clear clogged markets and get credit flowing to consumers and businesses again.
There has been some success with interbank lending rates dropping sharply and now mortgage rates. A plan by the U.S. government to buy up to $500-billion in mortgage-backed securities last week sent mortgage rates lower by half a percentage point over the past week to 5.5%, its lowest level in three years, and sparking a record 112.1% gain in applications for mortgages and refinancings.
Amid the gloom Wednesday, the United States still managed to eke out productivity growth of 1.3% in the third quarter. That is a sharp drop from 3.6% in the second quarter but is much better than many other countries, including Canada. |
If you have a strong stomach:
http://globaleconomicanalysis.blogspot.com/2008/12/prepare-for-depression-level.html
For most of us, this will be the very first serious downturn we've ever experienced. |
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Gopher

Joined: 04 Jun 2005
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Posted: Wed Dec 03, 2008 6:16 pm Post subject: |
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Why are you so emotionally or otherwise invested in these "this-is-the-end-of-everything!" arguments? |
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Kuros
Joined: 27 Apr 2004
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Posted: Wed Dec 03, 2008 6:19 pm Post subject: |
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Gopher wrote: |
Why are you so emotionally or otherwise invested in these "this-is-the-end-of-everything!" arguments? |
Because he has studied this shit?
Well, I'd much rather be informed by Mises on economics than have him rant about . . . other unnamed subjects . . . |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Wed Dec 03, 2008 6:23 pm Post subject: |
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Gopher wrote: |
Why are you so emotionally or otherwise invested in these "this-is-the-end-of-everything!" arguments? |
I don't think I said that... Maybe you're grumpy? |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Wed Dec 03, 2008 6:23 pm Post subject: |
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Kuros wrote: |
Gopher wrote: |
Why are you so emotionally or otherwise invested in these "this-is-the-end-of-everything!" arguments? |
Well, I'd much rather be informed by Mises on economics than have him rant about . . . other unnamed subjects . . . |
I agree. Except islam. Don't want to get into it.. |
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sojourner1

Joined: 17 Apr 2007 Location: Where meggi swim and 2 wheeled tractors go sput put chug alugg pug pug
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Posted: Wed Dec 03, 2008 7:33 pm Post subject: |
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Well, it is reality. This is no time to be changing career or looking for a job. It was normally easy to get a retail sales or other low paying job, but it would be super difficult to get almost any sort of job now in America.
This really blows it for those of us wanting to go home and hop back into a career or even retrain into a new field. I'm brainstorming so much on what I can do and can't come up with anything. If you have $20,000, surely there's a way to start a small business that takes advantage of the down economy or simply fills a need that people are willing to pay for. BBQ concession is an idea or something else in the food as people can't totally stop eating while they can stop shopping the expensive mall. |
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bucheon bum
Joined: 16 Jan 2003
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Posted: Wed Dec 03, 2008 7:37 pm Post subject: |
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sojourner1 wrote: |
Well, it is reality. This is no time to be changing career or looking for a job. It was normally easy to get a retail sales or other low paying job, but it would be super difficult to get almost any sort of job now in America.
This really blows it for those of us wanting to go home and hop back into a career or even retrain into a new field. I'm brainstorming so much on what I can do and can't come up with anything. If you have $20,000, surely there's a way to start a small business that takes advantage of the down economy or simply fills a need that people are willing to pay for. BBQ concession is an idea or something else in the food as people can't totally stop eating while they can stop shopping the expensive mall. |
last year I would have scoffed at the idea of applying to the Peace Corps. Now? I am one of at least a few in my grad program thinking of doing so. |
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Juregen
Joined: 30 May 2006
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Posted: Wed Dec 03, 2008 8:53 pm Post subject: Re: No longer academic |
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Shutting down on spending will make it worse. |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Wed Dec 03, 2008 9:13 pm Post subject: Re: No longer academic |
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Juregen wrote: |
Shutting down on spending will make it worse. |
On aggregate, yes. Individually, it is the smart thing to do.
This is the time to retrain, is that is what you want. |
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canuckistan Mod Team


Joined: 17 Jun 2003 Location: Training future GS competitors.....
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Posted: Wed Dec 03, 2008 9:20 pm Post subject: |
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Well I called it a shyte tsunami.
Longest lines ever at food banks.
It definitely "the end of their world" for a lot of families.
I really think that if you've got plenty to eat and all the trappings of a nice life it's going to be more important than ever to share this year. And it's patriotic.
Bring non-perishable items to food banks--especially before holidays--a lot of families with kids go hungry because they're not eating at school every day.
Just do it. |
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Kuros
Joined: 27 Apr 2004
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Posted: Wed Dec 03, 2008 9:38 pm Post subject: |
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canuckistan wrote: |
And it's patriotic. |
I call moratorium on calling things patriotic. |
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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Wed Dec 03, 2008 10:01 pm Post subject: |
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Kuros wrote: |
canuckistan wrote: |
And it's patriotic. |
I call moratorium on calling things patriotic. |
Agreed. But if one can afford it, this is the time to be giving. |
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canuckistan Mod Team


Joined: 17 Jun 2003 Location: Training future GS competitors.....
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Posted: Wed Dec 03, 2008 10:58 pm Post subject: |
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Kuros wrote: |
canuckistan wrote: |
And it's patriotic. |
I call moratorium on calling things patriotic. |
Why I'm simply employing mindless populism of course. Works for the mindless populist pols.
But I've also decided I'm personally going to shake down everyone on my street for a canned food donations and bring them to the Sally Ann.
Most of my neighbours would otherwise probably not get the opportunity to do so. |
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Gopher

Joined: 04 Jun 2005
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Posted: Wed Dec 03, 2008 11:07 pm Post subject: |
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No. You are talking like a smug leftist elitist. Like Harry Reid and his friends, the American people, the smelly masses... |
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samcheokguy

Joined: 02 Nov 2008 Location: Samcheok G-do
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Posted: Wed Dec 03, 2008 11:15 pm Post subject: |
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Most of us in our early 20's don't have any memories of the 80's downturn, which was the most serious economic bust since the great depression. We have been raised in a period of mostly strong economies. It is only logical that we should experience one. I don't see it being permament, or even a decade, but I do see it as being
1)over-due
2)inevitable if you'e a capitalist. |
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