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Gatsby
Joined: 09 Feb 2007
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 Posted: Sun Sep 09, 2007 5:15 am Post subject: |
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There is a certain amount of truth to mack4289's remarks about Ben Stein, in a backwards sort of way.
The subprime mortgage sector is largely irrelevant. That, alone, could not cause a major downturn in the U.S. economy, any more than the S&L scandal could.
You know what many economists think triggered the stock market crash of 1929? Some believe it was the Smoot-Hawley Tariff legislation pending in Congress. Did this legislation cause the Great Depression? Of course not, though it may have made things worse.
Is the subprime crisis capable of causing a recession or depression? Not by itself. But it could trigger a decline, and make conditions worse.
Forget the subprime crisis. Heck, Wall Street is already starting to forget it.
It is the larger economic picture that counts. And that is why the market is continuing to decline.
While you're at it, forget the New York Stock Exchange. Forget NASDAQ. The stock market is no longer an accurate gauge of the U.S. economy. A rising stock market does not mean a thriving economy, and a falling stock market does not mean an ailing economy.
Heck, even many gauges of the economy, such as GDP, are rather irrelevant, unless you are a multi-millionaire or billionaire.
What counts for the average person is whether there are good jobs, full time jobs with benefits and potential for advancement, that you can raise a family on and buy a house with. Part-time jobs with no benefits beyond one free Big Mac per day, paying less than $10 an hour do not count.
Every time there is a downturn in the economy, big business uses it as an excuse to eliminate full time jobs, and when economic conditions improve they are never entirely reinstated. They are replaced with part-time workers, contract workers, or outsourced.
For those of you who sneer, be my guest. Go back to the United States this month. Go find a job. See how long it lasts.
I dare you. |
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atomic42
Joined: 06 Jul 2007
Location: Gimhae
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| Posted: Sun Sep 09, 2007 5:16 am Post subject: |
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| And I double dog dare. |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Tue Sep 25, 2007 7:21 pm Post subject: |
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I's beginning to look a lot like 1929.
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| New legislation is likely that would impose trade sanctions on China unless it makes a major adjustment in its currency. |
Shall we try Smoot-Hawley, again?
Sadly, with a little common sense and basic economics, much of this equation has been forseeable for years. How long can you run a nation's economy on people buying cheap Chinese imports? (One thing not mentioned here is that the price of Chinese goods is bound to increase, regardless of tariffs or currency adjustments.) The U.S. economy has become anchored to consumer spending, rather than manufacturing:
| Quote: |
| Consumption expenditures currently account for a record 72 percent of the gross domestic product � a number unmatched in the annals of modern history for any nation. |
And when consumer spending falls, jobs, home prices, the general economy are liable to be dragged down with it.
Well, at least I have finally found a local source of cheddar cheese, even if it is Australian. Maybe with the fall of the dollar, I will be able to buy American cheddar in Korea, along with reasonably priced American beef.
Note that the author of this piece is in Hong Kong. I wonder why?
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September 25, 2007
Op-Ed Contributor
Save the Day
By STEPHEN S. ROACH
Hong Kong
CURRENCIES are first and foremost relative prices � in essence, they are measures of the intrinsic value of one economy versus another. On that basis, the world has had no compunction in writing down the value of the United States over the past several years. The dollar, relative to the currencies of most of America�s trading partners, is off about 20 percent from its early 2002 peak. Recently it has hit new lows against the euro and a high-flying Canadian currency, likely a harbinger of more weakness to come.
Sadly, none of this is surprising. Because Americans haven�t been saving in sufficient amounts, the United States must import surplus savings from abroad in order to grow. And it has to run record balance of payments and trade deficits in order to attract that foreign capital. The United States current account deficit � the broadest gauge of America�s imbalance in relation to the rest of the world � hit a record 6.2 percent of gross domestic product in 2006 before receding slightly this year. America must still attract some $3 billion of foreign capital each business day in order to keep its economy growing.
Economic science is very clear on the implications of such huge imbalances: foreign lenders need to be compensated for sending scarce capital to any country with a deficit. The bigger the deficit, the greater the compensation. The currency of the deficit nation usually bears the brunt of that compensation. As long as the United States fails to address its saving problem, its large balance of payments deficit will persist and the dollar will keep dropping.
The only silver lining so far has been that these adjustments to the currency have been orderly � declines in the broad dollar index averaging a little less than 4 percent per year since early 2002. Now, however, the possibility of a disorderly correction is rising � with potentially grave consequences for the American and global economy.
A key reason is the mounting risk of a recession in America. The bursting of the sub-prime mortgage bubble � strikingly reminiscent of the dot-com excesses of the 1990s � could well be a tipping point. In both cases, financial markets and policy makers were steeped in denial over the risks. But the lessons of post-bubble adjustments are clear. Just ask economically stagnant Japan. And of course, the United States lapsed into its own post-bubble recession in 2000 and �01.
Sadly, the endgame could be considerably more treacherous for the United States than it was seven years ago. In large part, that�s because the American consumer is now at risk. Consumption expenditures currently account for a record 72 percent of the gross domestic product � a number unmatched in the annals of modern history for any nation.
This buying binge has been increasingly supported by housing and lending bubbles. Yet home prices are now headed lower � probably for years � and the fallout from the subprime crisis has seriously crimped home mortgage refinancing. With weaker employment growth also putting pressure on income, the days of open-ended American consumption are likely to finally come to an end. That will make it hard to avoid a recession.
Fearful of that possibility, foreign investors are becoming increasingly skittish over buying dollar-based assets. The spillover effects of the subprime crisis into other asset markets � especially mortgage-backed securities and asset-backed commercial paper � underscore these concerns. Foreign appetite for United States financial instruments is likely to be sharply reduced for years to come. That would choke off an important avenue of capital inflows, putting more downward pressure on the dollar.
The political winds are also blowing against the dollar. In Washington, China-bashing is the bipartisan sport du jour. New legislation is likely that would impose trade sanctions on China unless it makes a major adjustment in its currency. Not only would this be an egregious policy blunder � attempting to fix a multilateral deficit with more than 40 nations by forcing an exchange rate adjustment with one country � but it would also amount to Washington taxing one of America�s major foreign lenders.
That would undoubtedly reduce China�s desire for United States assets, and unless another foreign buyer stepped up, the dollar would come under even more pressure. Moreover, the more the Fed under Ben Bernanke follows the easy-money Alan Greenspan script, the greater the risk to the dollar.
Why worry about a weaker dollar? The United States imported $2.2 trillion of goods and services in 2006. A sharp drop in the dollar makes those items considerably more expensive � the functional equivalent of a tax hike on consumers. It could also stoke fears of inflation � driving up long-term interest rates and putting more pressure on financial markets and the economy, exacerbating recession risks. Optimists may draw comfort from the vision of an export-led renewal arising from a more competitive dollar. Yet history is clear: no nation has ever devalued its way into prosperity.
So far, the dollar�s weakness has not been a big deal. That may now be about to change. Relative to the rest of the world, the United States looks painfully subprime. So does its currency.
Stephen S. Roach is the chairman of Morgan Stanley Asia. |
http://www.nytimes.com/2007/09/25/opinion/25roach.html |
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igotthisguitar
Joined: 08 Apr 2003
Location: South Korea (Permanent Vacation)
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| Posted: Tue Sep 25, 2007 8:10 pm Post subject: |
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UN Web Site Glitch Offers Peek At Bush Cheat Sheet
Speak 'Bush' in one easy lesson
Tue Sep 25, 6:03 PM
UNITED NATIONS (AFP) - US President George W. Bush says "nuke-you-lar" not "nuclear," but on Tuesday visitors to the United Nations Internet site could get a handy, abbreviated presidential pronunciation guide for other challenging words.
A quickly remedied "glitch" momentarily gave visitors to the UN website a version of Bush's UN General Assembly speech that included phonetic spellings for world leaders, a former Soviet satellite, and at least one capital.
French President Nicolas Sarkozy is "sar-KO-zee." Mauritania should be said "moor-EH-tain-ee-a." Kyrgyzstan sounds like "KEYR-geez-stan." And the capital of Zimbabwe President Robert "moo-GAH-bee" Mugabe is Harare "hah-RAR-ray."
White House spokeswoman Dana Perino said such phonetic guidance is common but curtly rebuffed a questioner who wanted to know whether Bush has a hard time with certain names: "I think that's a offensive question. I'm going to just decline to comment on it." 
"I don't know how the draft of the speech -- it was not final -- was posted, but it was, and it was taken down. There's really nothing more to say about it," she told reporters.
Ironically, one of the hardest names to pronounce, that of Myanmar democracy icon Aung San Suu Kyi, was not written out in phonetic form, and Bush only briefly stumbled over it before getting it right.
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Gatsby
Joined: 09 Feb 2007
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| Posted: Sat Jan 12, 2008 7:23 pm Post subject: |
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This from the New York Times.
The U.S. economy is in a downward spiral, the Fed is in a panic, and the federal government is running out of options for economic stimulus, in part because it is out of money.
http://www.nytimes.com/2008/01/13/business/13econ.html?hp=&pagewanted=all
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January 13, 2008
News Analysis
Some Fear Economic Stimulus Is Already Too Late
By PETER S. GOODMAN and FLOYD NORRIS
As leaders in Washington turn their attention to efforts to avert a looming downturn, many economists suggest that it may already be too late to change the course of the economy over the first half of the year, if not longer.
With a wave of negative signs gathering force, economists, policy makers and investors are debating just how much the economy could be damaged in 2008. Huge and complex, the American economy has in recent years been aided by a global web of finance so elaborate that no one seems capable of fully comprehending it. That makes it all but impossible to predict how much the economy can be expected to fall before it stabilizes.
The answer could be a defining factor in the outcome of the fiercely contested presidential election. Not long ago, the race centered on the war in Iraq.
But now, as candidates fan out across the country, visiting places as varied as the factory towns of Michigan and streets lined with unsold condominiums in Las Vegas, voters are increasingly demanding that they focus on the best way to keep the economy from slipping off the tracks.
The measures now being debated in Washington and on the campaign trail � tax rebates, added help for the unemployed and those facing sharply higher heating bills and, most immediately, a move by the Federal Reserve to further cut interest rates � could certainly moderate the severity of a downturn. Democrats and the Bush administration are considering a package of such measures that could reach $100 billion.
But the forces menacing the economy, like the unraveling of the real estate market and high oil prices, are too entrenched to be swiftly dispatched by government largess or cheaper credit, some economists say.
�The question is not whether we will have a recession, but how deep and prolonged it will be,� said David Rosenberg, the chief North American economist at Merrill Lynch. �Even if the Fed�s moves are going to work, it will not show up until the later part of 2008 or 2009.�
In the view of many analysts, the economy is now in a downward spiral, with each piece of negative news setting off the next. Falling housing prices have eroded the ability of homeowners to borrow against their property, threatening their ability to spend freely. Concerns about tightening consumer spending have prompted businesses to slow hiring, limiting wage increases and in turn applying the brakes anew to consumer spending.
Not everyone is convinced that the American economy is headed for a recession, defined as six months of economic contraction. The economy often serves up indications of distress that later turn out to be false warnings.
But some economists think a recession may have begun in December. In the last two weeks, there have been signs that a substantial downturn may already be unfolding. The Labor Department reported a sharp slowdown in job creation in December. Retailers said that sales last month were extremely disappointing, capping the worst gain for a holiday season in five years. A widely watched index showed manufacturing slowing, despite a weak American dollar that has encouraged growth in exports.
The construction of new homes has already fallen by some 40 percent since the peak in 2006. The sales of new homes have fallen even faster, suggesting that a large oversupply of places to live will continue to drag down prices.
Home prices have dropped by about 7 percent since the peak in 2006, but some experts suggest they could fall by another 15 to 20 percent before hitting bottom.
�There is still a long way to go,� said Nouriel Roubini, an economist at the Stern School of Business at New York University and chairman of the research firm RGE Monitor.
Mr. Roubini has long predicted the real estate downturn would cause a severe recession. He envisions foreclosures accelerating this year, and banks counting fresh losses. That could make them less able to lend and further slow economic activity, not just in the United States but around the world.
�We�re facing the risk of a systemic financial crisis,� Mr. Roubini said. �It�s not just subprime mortgages. The same kind of reckless lending has been occurring throughout the financial system. And it�s not only mortgages: Now it�s credit cards and auto loans, where we see problems increasing. The toxic junk is popping up everywhere.�
Banks, including commercial banks and investment banks, have so far acknowledged losses of some $100 billion, yet anxiety persists that more large write-offs are coming.
�Firms will go to great lengths to hide or delay reporting losses,� said Paul Ashworth of Capital Economics. �What we know now therefore might only be the tip of the iceberg.�
In a speech on Thursday, the Federal Reserve chairman, Ben S. Bernanke, zeroed in on the nervousness of bankers as a prime factor slowing the economy, even as the Fed tries to stimulate it with cheaper credit.
�Developments have prompted banks to become protective of their liquidity and balance sheet capacity and thus to become less willing to provide funding to other market participants,� he said. His comments were widely construed as an assurance that the Fed would soon cut rates again. The Fed already dropped rates three times during the last four months of 2007.
Wall Street has clamored for the Fed to keep lowering rates, cognizant that cheaper credit is generally good not just for encouraging borrowing and spending but also for corporate profits.
But some economists fear that lower rates will simply provide a short-lived boost at the expense of the economy�s longer-term health: Cheap money encourages foolish investments, they say, which is precisely how Americans came to experience the evaporation of wealth in the Internet era, followed by housing prices rising beyond any reasonable connection to incomes.
�This appears to be a panic on the part of the Fed,� said Michael T. Darda, chief economist at MKM Partners, a research and trading firm. �The housing bubble was a reaction from the effort to protect us from the collapse of the tech bubble. What�s the next bubble going to be as a consequence of trying to protect us against this?�
Mr. Darda asserts that the economy would be fine if left to its own devices, maintaining that the job market is healthier than most economists think. He contends that the December jobs report is likely to be revised to show that far more jobs were created than the 18,000 reported by the Labor Department.
�That could be important in terms of reversing the direction,� Mr. Darda said. �We need to see evidence that the labor market isn�t falling apart. That�s critical.�
But most economists seem convinced that the economy has slowed significantly, and say it is the severity of a downturn that is in doubt, not the existence of one.
�If we have a recession with a modest consumer retrenchment, and the rest of the world holds up, this could be three quarters of disappointment,� said Robert Barbera, the chief economist of ITG. �The risk is a more dramatic decline for the consumer.�
There is little doubt that the Fed will lower its benchmark rate later this month, making it cheaper for banks to lend money to one another. But there is more doubt whether Washington can quickly agree on fiscal policy moves � that is, raising spending or cutting taxes � in an election year in which the White House and Congress are controlled by different parties.
A recession could pack enormous political consequences. Over the last century, the economy has been in a recession four times in the early part of a presidential election year, according to the National Bureau of Economic Research. In each of those years � 1920, 1932, 1960 and 1980 � the party of the incumbent president lost the election.
Much discussed now in Washington and on the campaign trail is a potential rebate for taxpayers, similar to one that seemed to lubricate spending during the last recession six years ago. But worries remain over whether such a move could exacerbate inflation, and some doubt that the benefits would be felt rapidly enough to justify the risks.
While tax rebates can encourage spending and generate jobs, Mr. Roubini said, the government cannot afford to unleash the significant amounts � $300 billion or $400 billion � that he believes would be required to ensure a substantial rebound in economic growth.
�Whatever they�re going to do,� he said, �it�s going to be cosmetic.�
And most economists concur that even meaningful policies will probably take several months to filter through such an enormous economy. By the time they take effect, the country could already be in a recession.
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igotthisguitar
Joined: 08 Apr 2003
Location: South Korea (Permanent Vacation)
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| Posted: Sat Jan 12, 2008 7:38 pm Post subject: |
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| Gopher wrote: |
| By the way, how do you conspiracy-freaks account for this...? |
http://www.blackboxvoting.org/
Alex Jones Interviews Bev Harris On New Hempshire Vote Fraud Scandal
On January 9th and 10th Alex Jones welcomed Bev Harris of Black Box Voting on his radio program to discuss voting "irregularities" and instances of fraud in the New Hampshire primary 
http://www.liveleak.com/view?i=170_1200019114
1-12-08: Red Flags Over New Hempshire
New Hampshire's 2008 primary election may prove to be the most fascinating presidential preference race in history.
- Both Democrat and Republican candidates have requested recounts
- More than half of New Hampshire's elections administrators hand count paper ballots in public at the polling place, with a public chain of custody. The rest of New Hampshire's towns and cities use Diebold voting machines to count votes in secret, with a secret chain of custody.
- Hand count and machine count locations, when calculated statewide, show an eerie statistic:
Clinton Optical scan 91,717 52.95%
Obama Optical scan 81,495 47.05%
Clinton Hand-counted 20,889 47.05%
Obama Hand-counted 23,509 52.95%
- Two hand count towns reported "zero" votes for candidate Ron Paul to the media, even though they did have votes for him. The town of Sutton reported zero, but had 31 votes; the town of Greenville reported zero, but had 25 votes. The two towns had misreported results affecting exactly the same candidate in exactly the same way.
- Results in many locations arrived up to four hours late on Election Night, surprisingly, from machine-counted locations -- not hand count locations;
- A single private entity had control over coding for every memory card in New Hampshire. According to the contract for LHS Associates, this firm requires a right of access to any voting machine at any time, services the machines, maintains the machines and handles repairs, replacements and troubleshooting on Election Day.
- Ken Hajjar, a key employee of this sole source private entity, LHS Associates, has a criminal record for narcotics trafficking. The state of New Hampshire knew of this conviction but approved the contractor anyway. According to a complaint filed with the New Hampshire Attorney General, Hajjar had called the Dan Pierce radio show in 1999 and threatened to rig an election.
- A high number of "other" votes appeared in Manchester, where over 570 people apparently decided to go to the polls and choose none of the first tier OR second tier candidates.
- The voting system in New Hampshire was updated, but to a version that had been proven to be vulnerable in studies in Florida and California. Instead of upgrading to newer versions which at least claim to address known security vulnerabilities, New Hampshire chose to implement none of the beefed up procedures or upgraded versions that other states are using.
Last edited by igotthisguitar on Mon Jan 14, 2008 3:46 am; edited 1 time in total |
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cbclark4
Joined: 20 Aug 2006
Location: Masan
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| Posted: Sat Jan 12, 2008 7:48 pm Post subject: |
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It was worse in 1995 housing dropped 40% as much a 60% in the condo market.
We haven't reached the buy point yet for real estate.
As in buy low sell high.
Even the HUD auctions are still holding 80% of assessment value. |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Sun Jan 13, 2008 10:07 pm Post subject: |
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More storm signals reported by the N.Y. Times.
If consumer spending drops, it seems everything else in the U.S. economy is going to spiral downwards.
What is curious is how slowly it is all unfolding. It's not the panic seen in classic historical recessions or depressions. But that it is unfolding so slowly suggests a certain inevitability to it all, as though there is nothing much people or government can do about it.
Yet plenty of people have predicted just this scenario in the U.S. for years. This is going to get a lot worse before it gets better, especially if the dollar falls sharply. Then you might see inflation combined with a recession, a very dangerous combination. Yet with the Fed lowering interest rates in the U.S., with higher rates available elsewhere with tighter monetary policies, how can the dollar not fall?
The main uncertainty is how much the economic downturn in the U.S. will affect other countries, particularly Korea.
http://www.nytimes.com/2008/01/14/business/14spend.html?hp=&pagewanted=all
| Quote: |
January 14, 2008
Americans Cut Back Sharply on Spending
By MICHAEL BARBARO and LOUIS UCHITELLE
Strong evidence is emerging that consumer spending, a bulwark against recession over the last year even as energy prices surged and the housing market sputtered, has begun to slow sharply at every level of the American economy, from the working class to the wealthy.
The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth. Such a decline would be the first since 1991, and it would almost certainly push the entire economy into a recession in the middle of an election year.
There are mounting anecdotal signs that beginning in December Americans cut back significantly on personal consumption, which accounts for 70 percent of the economy.
A raft of consumer companies � high-end stores like Nordstrom and Tiffany, and middle-of-the-road ones like Target and J. C. Penney � reported a pronounced slowdown in growth last month, and in several cases an outright drop in business.
American Express said that starting in early December the growth in the rate of spending by its 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent, the first slowdown since the 2001 recession.
And consumer confidence, an important barometer of economic health, has plunged. Andrew Kohut, president of the Pew Research Center, says consumer satisfaction with the economy has reached a 15-year low, according to the firm�s polling.
Even wealthier consumers, who were seen as invulnerable to rising gasoline prices and falling home values, are feeling the squeeze.
�People are clearly concerned that we are headed into a recession,� said Stephen I. Sadove, the chief executive of Saks Fifth Avenue, the upscale department store whose runaway growth throughout much of the year slowed markedly in December.
Gia Trumpler, 37, a travel consultant who lives in Manhattan, shops at luxury chains like Saks. But she is trimming costs where she can by bringing lunch to work from home, rather than eating out. �Everything just feels more expensive to me now,� she said, including the cost of heating her apartment this winter.
There are plenty of recession naysayers. Average hourly wages and salaries have not fallen, and some economists argue that unless � or until � that happens, consumer spending will hold up despite widespread economic unease. According to these economists, what happened in December was a temporary blip.
�Incomes have managed to hold up,� said Chris Varvares, president of Macroeconomic Advisers, an economic forecasting firm, who added that the data to date did not support the view that a recession was inevitable.
Even in tough economic times Americans rarely reduce their consumption, preferring instead to slow the growth in their spending. Since 1980, they have cut spending in only five quarters � a total of 15 months � most of them in the depths of a recession. The 2001 recession passed without a cutback in consumer spending.
Only once before, in 1980, did consumer spending fall during a presidential election year, helping Ronald Reagan in his campaign against Jimmy Carter, the Democratic incumbent.
Official statistics do not yet show that consumer spending has dropped, but they do suggest that in late 2007, it slowed in areas like automobiles, furniture, building materials and health care, said Mark M. Zandi, chief economist at Moody�s Economy.com.
Fresh evidence of a pullback is pouring in from many quarters as Americans confront the triple threats of higher energy costs, falling home prices and a volatile stock market.
Perhaps the strongest barometer over the last 30 days is the performance of the country�s big chain stores. December turned out to be a blood bath for retailers at every rung on the economic ladder, with sales for the month growing at the slowest rate in seven years.
Sales at stores open at least a year, a crucial yardstick in retailing, plunged by 11 percent at Kohl�s and 7.9 percent at Macy�s, compared with last year.
Chains that cater to the middle and upper classes, which have benefited from years of trading up � when customers splurge on select expensive products � struggled as well. Coach, the leather goods maker, said sales of its popular handbags had become sluggish, prompting the company to issue rare coupons to drum up business.
�This is the real deal � consumers are slowing down across the spectrum,� said David Schick, a retail analyst at Stifel Nicolaus.
But it is the trouble at the highest reaches of retailing that has economists most worried about a recession. Over the last year, even as low-wage and middle-income consumers have cut back, the wealthy have spent freely, keeping high-end chains insulated from the economic turbulence.
That started to change in December, as shoppers held off on buying $300 designer shoes and $500 dresses. For example, store sales fell 4 percent at Nordstrom, the high-end department store.
And Tiffany, the upscale jeweler, said the number of purchases at its stores dropped last month. In an interview, its chief executive, Michael J. Kowalski, said that even if the wealthy remain so at least on paper, their economic anxiety is taking a toll.
�It�s a reaction to the general economic uncertainty everyone is feeling,� he said. �There are housing price declines and financial market instability. There is a lot of caution out there, and it�s reflected in jewelry sales.�
At the same time, the number of overdue payments on American Express cards is surging, the company said � and this among well-heeled cardholders who charge up to $12,000 a year, on average, on each card. American Express has called some cardholders in the last few weeks to ask if they will have trouble paying their bills.
�We are seeing a correlation with housing prices,� said Michael O�Neill, a spokesman for American Express. �The falloff in spending is everywhere in the country, but it is greatest in those areas like south Florida and California, where home prices have fallen the most.�
The big exception is gasoline. American Express and the Consumer Federation of America say that consumers are buying just as many gallons as ever, but paying more for them, and that has forced cutbacks in other purchases. Gasoline prices usually drop after the summer driving season, but this year they shot up, from $2.85 a gallon on average in September to $3.07 in December and $3.15 in the first week of January.
A similar trend is evident in the cost of natural gas, electricity and home heating oil. �We built these big houses in the suburbs, which need a lot of energy to stay warm and a car to go shopping,� said Stephen Brobeck, executive director of the Consumer Federation. �And we can�t change that quickly.�
The impact of rising gasoline prices �is just profound on middle- and lower-income families,� said Mr. Kohut of the Pew center. �Our surveys are showing one of the lowest levels of satisfaction with national conditions in any recent presidential election year. You have to go back to 1992 to get a lower number of people saying the national economy is excellent or good.�
The nation was recovering from recession that year. Consumer spending had contracted in two separate quarters in 1991, and while economic growth was gradually accelerating as Bill Clinton and George H. W. Bush sought the presidency, the Clinton camp famously posted a sign in its campaign war room proclaiming, �It�s the economy, stupid.�
There are some bright spots now in consumer spending. Sales of sports gear and electronic gadgets � particularly G.P.S. navigation devices and flat-panel television sets � have risen over the last three months. To Stephen Baker, vice president for industry analysis at the research firm NPD Group, that suggests there is still enough purchasing power for people to buy what they really want.
�We probably would not have seen strong sales for electronics products that people really want if the overriding issue was economic,� Mr. Baker said.
But not everyone is splurging. Jinal Shah, 22, a college senior in New York, said she wanted to buy the popular Nintendo Wii video game system as a gift for herself this holiday season, but had second thoughts because of the $250 price tag. She ended up not purchasing it.
�You have to make choices,� she said. �I get the Wii, or I go out more. I am just much more aware of the tradeoff now.� |
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igotthisguitar
Joined: 08 Apr 2003
Location: South Korea (Permanent Vacation)
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stillnotking
Joined: 18 Dec 2007
Location: Oregon, USA
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| Posted: Mon Jan 14, 2008 1:19 pm Post subject: |
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| Just remember that economists have predicted nine of the last three recessions. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Mon Jan 14, 2008 2:05 pm Post subject: |
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They must have been some of Harry Truman's two-handed economists. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Mon Jan 14, 2008 2:31 pm Post subject: |
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| Gatsby wrote: |
I's beginning to look a lot like 1929.
| Quote: |
| New legislation is likely that would impose trade sanctions on China unless it makes a major adjustment in its currency. |
Shall we try Smoot-Hawley, again?
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I believe in free trade as much as the next free-market booster. But Hawley-Smoot was passed in June, 1930. |
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Gatsby
Joined: 09 Feb 2007
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| Posted: Tue Jan 15, 2008 3:46 pm Post subject: |
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http://www.nytimes.com/2008/01/15/business/15cnd-stox.html?hp
From today's New York Times:
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Stocks Plunge on Economic News and Bank Woes
By VIKAS BAJAJ
Stocks fell sharply on Tuesday after Citigroup announced a $9.8 billion quarterly loss and an economic report showed retail sales fell in December.
The Standard & Poor�s 500 stock index closed down 2.5 percent, or 35.30 points, at 1,380.95. The Dow Jones industrial average was off 277.04 points, or 2.2 percent, at 12,501.11. The Nasdaq composite was down about 2.5 percent.
The day started with an announcement from Citigroup, the world�s largest bank, that it was writing down the value of its mortgage-related securities by $22.2 billion, slashing its dividend by 41 percent and raising $12.5 billion in new capital from several foreign and domestic sources. Shares of Citigroup fell $2.12, or 7.3 percent, to $26.94.
Merrill Lynch & Company, another financial firm that has been rattled by losses tied to mortgages, said it was raising $6.6 billion from two sovereign wealth funds and a Japanese bank. Merrill stock was down $2.47, or 4.4 percent, to $53.50.
Later in the morning, investors were taken aback by a 0.4-percent drop in retail sales in December, with sales of building materials, gasoline, clothing, electronics and sporting goods dropping markedly. The Commerce Department, which reports the data, also revised lower sales increases in October and November.
�The momentum is down,� said James O�Sullivan, an economist with UBS. �Based on the limited information we have, January looks even weaker.�
The drop in sales, coupled with a statement by the oil minister of Saudi Arabia that the kingdom would consider producing more oil, drove down energy prices. Crude oil prices fell 2.23 percent, or $2.10, to $92.10 a barrel. Natural gas, heating oil and gasoline prices also fell as investors considered the potential ramifications of slower consumer spending.
Another economic report showed that wholesale prices fell slightly in December, suggesting softer demand was helping to tamp down prices of some raw materials. The producer price index fell 0.1 percent, though it was up 0.2 percent excluding volatile food and energy prices, according to the Labor Department.
The sell off in the stock market was fairly broad based, with a majority of the nearly 2,000 stocks in the New York Stock Exchange Composite index down. The financial sector, however, suffered the biggest losses, down 3.7 percent, followed by energy companies, which were collectively down 3.5 percent.
Stocks also fell sharply in Europe and Latin America. Stocks in emerging markets, which had in recent weeks bucked the bearish sentiment in the American stock market, declined more than 4 percent, perhaps an indication that investors are starting to worry about what slackening retail sales in the United States might mean for markets that are heavily reliant on exports to the developed world.
Emerging markets �are playing a little bit of catch up because they have been insulated over the last week or two,� said Paul K. Lieberman, director of United States equities and derivatives strategy at BNP Paribas, the French banking group.
Economists caution that retail sales numbers are volatile from month to month, so investors should not read too much into the drop in December. Sales may have been softer last month in part because some consumers started and finished holiday shopping sooner because the Thanksgiving holiday fell earlier than usual. Retail sales were up 1 percent in November, said Mr. O�Sullivan.
Still, economists conclude that the broader trends do not look promising at least for the next few months. Mr. O�Sullivan noted that a Conference Board survey released Tuesday shows that chief executives were less confident at the end of last year than at any since 2000, when the economy was on the eve of a recession.
Policy makers have picked up on that theme as well, and last week the chairman of the Federal Reserve, Ben S. Bernanke, said central bankers �stand ready to take substantive additional actions as needed to support growth.�
Investors in the futures market are now betting that the Fed will almost certainly cut overnight bank lending rates by at least a half point, from 4.25 percent. Some are even expecting a cut of 0.75 percentage points.
Prices for Treasuries edged up Tuesday, and the yield on the 10-year note, which moves in the opposite direction as its price, fell to 3.69 percent, from 3.77 percent on Monday evening. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Tue Jan 15, 2008 3:50 pm Post subject: |
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| As already discussed, every bit of bad economic news is good news for Senator Hillary Clinton and the Democrats in general. |
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mistermasan
Joined: 20 Sep 2007
Location: 10+ yrs on Dave's ESL cafe
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| Posted: Tue Jan 15, 2008 4:12 pm Post subject: |
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yes, who wouldn't want to be the next jimmy carter? basket case economy at home and sandbagged by the warhawks abroad.
4 years of such is enough to send the nation running back to the repubs- again. |
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