Contemplating the Deepest, Most Synchronized Recession of Our Lives

There seems to be tug of war between those who ” predict” this harsh Recession will be over this quarter or next year and those that react to the economic situation.

Truthfully, no one knows how long this Recession will last or when it will be over. The fact is that more money has been lost recently trying to call a bottom. The next reality is that there is further evidence that there is a deepening of the slowdown, not just in the US, but around the world.

1. Japan’s business-confidence fell to an all-time low

2. Europe has the lowest inflation at 0.6% in Euro dollar terms through March, the lowest level since official records began in 1996.

3. U.S. home prices fell 19% in January compared to the prior year.

4. The Organization for Economic Cooperation and Development has stated the the world economy will shrink by 2.75% this year.

5.The IMF and OECD both forecast a sharp drop off in world trade.

6. Klaus Schmidt-Hebbe the head economist of the OCED stated that it is his belief that the world economy is in the midst of its deepest and most synchronized recession in our lifetimes.

7. The U.S. has been in an official recession 17 months which is one of the longest since the Great Depression of 1929.

More than these stated facts, the big concern is: All this money being thrown around; can it really assist in getting banks to lend, companies to hire and foreclosures to stop? Or is it more of the root of the problem, lack of fiscal responsibility?

Unfortunately it is my opinion that too many have forgotten one of the simple ideas we all learned in college economics: Printing money leads to “INFLATION”. Inflation is a wealth destroyer.

Prove it to yourself. Open Excel in your computer…but in $100 and every year take out 2%..see what you are left with after 10 years… Now try the same with 5%…and 10%…and even 15%.. see what your $100.00 is worth after 10 years. You probably will not like what you see.

What do you think? Will the G20 come to a conclusion and save the world? Will all the stimulas money kick start the economy? I find it hard to believe. I believe the word “Bailout” is a much better designation than Stimulus. Instead of really addressing the issues, company after company is looking for a “Bailout”.

Who will be the Lender of Last Resort? Who will be left to bailout the those who Bailout?

Comments

[Roger Knights:]

"Who will be left to bailout the those who Bailout?"

The bailiff?

Apr 02 04:06 AM

[ciel:]

Just caught a few tiny errors in your #7 worth mentioning:

7. The U.S. has been in an official recession 17 months which is one of the longest since the Great Depression of 1929.

So far, the U.S. has only been in official recession for 16 months. We have just entered our 17th, but have not yet been in it for a full 17 (That will presumably come to be on May 1st)

The other part of #7 has to do with the comment: "which is one of the longest since the Great Depression of 1929"

According to NBER, the official arbiter of recessions in the U.S., there has been no longer recession than 16 months since the Great Depression's first recession (1929-1933). www.nber.org/cycles/cy...

Should NBER conclude the the current recession persisted until at least the end of April, it would officially become the longest recession since August 1929- March '33.

Apr 02 05:34 AM

[Andy Abraham:]

Too funny... great comment...


On Apr 02 04:06 AM Roger Knights wrote:

> "Who will be left to bailout the those who Bailout?"
>
> The bailiff?

Apr 02 06:28 AM

[Andy Abraham:]

Thank you for qualifying the exact.. NBER is a great tool... I am very happy you brought that out... all the best


On Apr 02 05:34 AM ciel wrote:

> Just caught a few tiny errors in your #7 worth mentioning:
>
> 7. The U.S. has been in an official recession 17 months which is
> one of the longest since the Great Depression of 1929.
>
> So far, the U.S. has only been in official recession for 16 months.
> We have just entered our 17th, but have not yet been in it for a
> full 17 (That will presumably come to be on May 1st)
>
> The other part of #7 has to do with the comment: "which is one of
> the longest since the Great Depression of 1929"
>
> According to NBER, the official arbiter of recessions in the U.S.,
> there has been no longer recession than 16 months since the Great
> Depression's first recession (1929-1933). www.nber.org/cycles/cy...
>
>
> Should NBER conclude the the current recession persisted until at
> least the end of April, it would officially become the longest recession
> since August 1929- March '33.

Apr 02 06:29 AM

[Larry House:]

Thanks, Andy. It is a once-in-a-lifetime experience, and the conclusion is very uncertain. We are in a period of euphoria at the moment, we have not turned any major corners. Harry Dent and other economists have been on record for some time that we would get a bounce, perhaps a big, multi-month bounce, but rising oil prices and inflation will hammer things down again in the near future. Not all the wolves are out yet--way to early to declare victory.

Apr 02 10:22 AM

[fireball:]

i have not seen anything that makes me want to be an invester again. trading is working.
i see lots of confirmations that savings should be in gold and silver.
i see indicaters that one should prepare to be self sufficient for an extended period if the need arises.
govt. broke it. they won't fix it.

Apr 02 11:16 AM

[Andy Abraham:]

And I thought I was somewhat pessimistic.. Hopefully at the G20 they will fix it... doubt it.


On Apr 02 11:16 AM fireball wrote:

> i have not seen anything that makes me want to be an invester again.
> trading is working.
> i see lots of confirmations that savings should be in gold and silver.
>
> i see indicaters that one should prepare to be self sufficient for
> an extended period if the need arises.
> govt. broke it. they won't fix it.

Apr 02 11:31 AM

[perceptions...:]

It still surprises me that there is little comment on why this is so Synchronized and so deep.

Think about it, there have been many Recessions, but usually some nations are down, whilst others are up?

Why is it so, I hear asked?

There are 3 major factors, if I can start in reverse -
3) Climate Change.
2) Peak Oil.
1) Demographics.

With Climate Change & Peak Oil, being largely caused and re-inforced by Demographics.

All three of these factors have come together, around the same time (2005-2007) and the result is a Perfect Global Economic Storm.

Whilst the worst effects of Climate Change & Peak Oil, may not be apparent for some time yet, the lead time required to change some of those worst effects requires the urgency for change starts now.

However, the Demographic issues have already impacted, stating around 2005, the Baby Boomer Bust started as the usual end of business cycle Bust got underway.

The Baby Boomer retirement cycle was always going to result in a Synchronized Global Bust.

As the bulk of the huge Baby boomer Generation, which dates back to the midst of the Great Depression, finished their Peak Earning & Spending years, they started into their thrift years around 2005.

About the same time, Greed assumed that the status quo would continue, as housing & real estate values would continue.

The start of the Baby Boomer change, from Spending to Thrift, stopped Greed in its tracks.

The Baby Boomer generation started the great economic expansion from 1945-2005, with higher birth rates and dramatic population increases.

Over the next 20-30 years, an economic reversal will follow, with the dramatically lower birth rate in generations X & Y, plus the retirement & eventual passing of some 2 Billion Boomer era people.

In short, the massive DEMAND that led to the 1945-2005 BOOM, is dissipating and the ECONOMY will find a New & Lower level.

Longer term imperatives involving Climate Change & Peak Oil, will ensure that another Baby Boom will not happen.

So, even with all the Effort & Good will put into the Economic Stimuli's in the US and around the world, GROWTH WILL NOT RETURN, to what it has been.

Regrettably, there will be many who will be badly affected, but I think it would be better to allow those new levels to be found quickly, rather than drawing out the process.

And then, those affected, could assisted back on their feet, with the real money that would otherwise have disappeared into bottomless blackholes, without being of any use!

Apr 03 03:07 AM

[Conan the B...:]

The G20 was a Bandaid but further Bandaids will follow.

The recession is not over but stockmarkets move long before recessions end.

If you believe this recession will Never end, then there is no reason to debate.

Bears. wolves come to me. Thor has given me his Hammer.

Apr 03 04:46 AM

[Andy Abraham:]

Very thought out... interesting... thanks for updating us..


On Apr 03 03:07 AM perceptions_now wrote:

> It still surprises me that there is little comment on why this is
> so Synchronized and so deep.
>
> Think about it, there have been many Recessions, but usually some
> nations are down, whilst others are up?
>
> Why is it so, I hear asked?
>
> There are 3 major factors, if I can start in reverse -
> 3) Climate Change.
> 2) Peak Oil.
> 1) Demographics.
>
> With Climate Change & Peak Oil, being largely caused and re-inforced
> by Demographics.
>
> All three of these factors have come together, around the same time
> (2005-2007) and the result is a Perfect Global Economic Storm.<br/>
>
> Whilst the worst effects of Climate Change &amp; Peak Oil, may not
> be apparent for some time yet, the lead time required to change some
> of those worst effects requires the urgency for change starts now.
>
>
> However, the Demographic issues have already impacted, stating around
> 2005, the Baby Boomer Bust started as the usual end of business cycle
> Bust got underway.
>
> The Baby Boomer retirement cycle was always going to result in a
> Synchronized Global Bust.
>
> As the bulk of the huge Baby boomer Generation, which dates back
> to the midst of the Great Depression, finished their Peak Earning
> &amp; Spending years, they started into their thrift years around
> 2005.
>
> About the same time, Greed assumed that the status quo would continue,
> as housing &amp; real estate values would continue.
>
> The start of the Baby Boomer change, from Spending to Thrift, stopped
> Greed in its tracks.
>
> The Baby Boomer generation started the great economic expansion from
> 1945-2005, with higher birth rates and dramatic population increases.
>
>
> Over the next 20-30 years, an economic reversal will follow, with
> the dramatically lower birth rate in generations X &amp; Y, plus
> the retirement &amp; eventual passing of some 2 Billion Boomer era
> people.
>
> In short, the massive DEMAND that led to the 1945-2005 BOOM, is dissipating
> and the ECONOMY will find a New &amp; Lower level.
>
> Longer term imperatives involving Climate Change &amp; Peak Oil,
> will ensure that another Baby Boom will not happen.
>
> So, even with all the Effort &amp; Good will put into the Economic
> Stimuli's in the US and around the world, GROWTH WILL NOT RETURN,
> to what it has been.
>
> Regrettably, there will be many who will be badly affected, but I
> think it would be better to allow those new levels to be found quickly,
> rather than drawing out the process.
>
> And then, those affected, could assisted back on their feet, with
> the real money that would otherwise have disappeared into bottomless
> blackholes, without being of any use!

Apr 03 06:29 AM