Will this be a depression?
Anthony Mirhaydari
Oct 07, 2008
http://blogs.moneycentral.msn.com/topstocks/archive/
2008/10/07/are-we-facing-a-depression.aspx
Americans sure are in a gloomy mood. A recent poll finds that 60% of us believe that a full-blown depression is somewhat or very likely.
http://money.cnn.com/2008/10/06/news/economy/depression_poll/
Since a depression has no official qualities (besides being worse than recession), the pollsters cited a few economic measures from the 1930s during their survey: A 25% unemployment rate, widespread bank failures, and millions of people homeless and unable to afford basic necessities. Other measures of consumer sentiment corroborate these findings.
Before you blow all this off as the irrational rumblings of an unhappy electorate, know that Wall Street's economists are starting to see a similarly dour picture. David Rosenberg of Merrill Lynch penned the following comment in a note to clients on Monday:
"It truly is a modern-day depression, in our view -- what else do you call it when an entire industry vanishes (investment banks) in less than a year; the ranks of the unemployed soared more than 30%; and nearly one in ten homeowners with a mortgage are either in arrears or foreclosure?"
While a repeat of the Great Depression isn't likely -- automatic stabilizers like welfare and unemployment insurance are in place, the government and the Federal Reserve are accommodating -- the present situation needs to be put into perspective. After the successive failures of two of the largest asset bubbles in history, our present situation is an outlier; that is, it isn't a normal cyclical downturn of the business cycle.
Morgan Stanley economist Richard Berner is looking at two "adverse feedback loops" that could pull things lower:
"Spreading weakness beyond housing to consumer and capital spending, and from a global slowdown to U.S. exports, will promote further declines in employment, in turn pressuring income, consumers, and their lenders. A second vicious circle runs from tighter credit to a weaker economy, then to a deterioration in credit quality, in turn increasing reluctance to lend."
The depth and length of this downturn now depends on the policy response out of Washington D.C. and the willingness of foreign governments and investment pools to fund the resulting budgetary deficit.
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
Thursday, October 9, 2008
Sunday, August 17, 2008
Where is The Economy Going?
Recession.org
Where is The Economy Going?
http://recession.org/library/where-is-the-economy-going
Fifteen key economists, policymakers and strategists weigh in on the current volatility and economic turmoil.
A Meltdown: Nouriel Roubini - professor of economics and international business at New York University's Stern School of Business.
Financial Folly: Kenneth Rogoff - professor of economics at Harvard University.
U.S. Recession: Stephen Roach - chairman of Morgan Stanley Asia.
Innocent Victims: Robert J. Shiller - professor of economics at Yale University and a cofounder of MacroMarkets LLC.
Losing Momentum: Jim O'Neill - senior economist at Goldman Sachs, specializes in emerging markets.
A Return to Growth: Holger Schmieding - head of European economics at the Bank of America.
Tug of War: Mohamed A. El-Erian - co-CEO and co-CIO of PIMCO.
Discontent: Ruchir Sharma - head of global emerging markets at Morgan Stanley Investment Management.
Averting the Abyss: Barton Biggs - managing partner of the Traxis Partners hedge fund in New York.
Much Uncertainty: Heizo Takenaka - director of the Global Security Research Institute at Keio University and Economics minister of Japan.
We Need Greater Transparency: Lawrence Summers - professor of economics at Harvard University and a managing director at D.E. Shaw & Co.
The Prospect of Stagflation: Sri Mulyani Indrawati - Finance minister of Indonesia.
Now We Have a Mess on Our Hands: Robert Reich - secretary of Labor in the Clinton administration, is the author of "Supercapitalism: The Transformation of Business, Democracy and Everyday Life"
Now the Illusions Are All Gone: Masaaki Kanno - chief economist at JPMorgan in Tokyo.
Optimistic: Rupert Stadler - chief executive officer of Audi.
Where is The Economy Going?
http://recession.org/library/where-is-the-economy-going
Fifteen key economists, policymakers and strategists weigh in on the current volatility and economic turmoil.
A Meltdown: Nouriel Roubini - professor of economics and international business at New York University's Stern School of Business.
Financial Folly: Kenneth Rogoff - professor of economics at Harvard University.
U.S. Recession: Stephen Roach - chairman of Morgan Stanley Asia.
Innocent Victims: Robert J. Shiller - professor of economics at Yale University and a cofounder of MacroMarkets LLC.
Losing Momentum: Jim O'Neill - senior economist at Goldman Sachs, specializes in emerging markets.
A Return to Growth: Holger Schmieding - head of European economics at the Bank of America.
Tug of War: Mohamed A. El-Erian - co-CEO and co-CIO of PIMCO.
Discontent: Ruchir Sharma - head of global emerging markets at Morgan Stanley Investment Management.
Averting the Abyss: Barton Biggs - managing partner of the Traxis Partners hedge fund in New York.
Much Uncertainty: Heizo Takenaka - director of the Global Security Research Institute at Keio University and Economics minister of Japan.
We Need Greater Transparency: Lawrence Summers - professor of economics at Harvard University and a managing director at D.E. Shaw & Co.
The Prospect of Stagflation: Sri Mulyani Indrawati - Finance minister of Indonesia.
Now We Have a Mess on Our Hands: Robert Reich - secretary of Labor in the Clinton administration, is the author of "Supercapitalism: The Transformation of Business, Democracy and Everyday Life"
Now the Illusions Are All Gone: Masaaki Kanno - chief economist at JPMorgan in Tokyo.
Optimistic: Rupert Stadler - chief executive officer of Audi.
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