No Recession Here—Move Along Now
Let's see now, President Bush doesn't think there's going to be a recession in 2008. Neither does Federal Reserve Chairman Ben Bernanke—though clearly he's pretty concerned about "downside risks." And, increasingly, neither do the betting markets. Over at Intrade, the odds of a recession have fallen to 55.8 percent from a high of 77.5 percent a month ago. Maybe the sharpies on Wall Street are figuring out what my friend Rich Karlgaard of Forbes already knows:
The subprime mortgage mess. How big a problem is this? No one really knows, but so far banks have written off about $150 billion in bad loans. Now, $150 billion sounds huge. But it is only 1% of America's annual GDP. It is also less than 1% of the market capitalization of U.S. stocks. In any typically volatile trading day U.S. stocks gain or lose $150 billion every hour. How often does one hear that?...The nearest historical comparison we have is the savings-and-loan crisis of 1986-95. On a constant dollar basis—so we can compare apples with apples—the S&L crisis saw $700 billion in bad loans. Nearly five times as much as we've seen in the subprime mess so far. The S&L crisis caused some damage, to be sure. But during the 1986-95 period the U.S. economy grew and stocks went up. We survived stock shocks in 1987 and 1989 and a mild recession in 1990. The country did not collapse into a 1930s-like depression.
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Reader Comments
The expotential factor is being ignored.
It is a combination of factors that is affecting this country, the largest being almost $10 trillion dollars of debt. All things considered, the country is essentially broke. The price of a loaf of bread and a gallon of milk is the canary in the mine. If we're not in a recession, we're teetering on a depression.
No matter how it is "spun", we're in serious trouble, due to numerous factorsWe can talk, or we can act. The case of talking, we're going to fall off the precipice; the case for action, we might be able to salvage the economy. But if we take the route that has been taken in the past, figuring that this will, "work it out on it's own", the road ahead will be very rocky.
We are not in a recession in the Midwest
Many businesses, including ours, are doing very well. Actually up 25% in the 1st 6 weeks of the new year. Only construction related areas are being impacted. People are ignoring the baby boomer spending effects and are paying way too much attention to certain coastal locations, over covered by the media. Stop running for cover and run your businesses and your lives.
No Recession Here Move Along
Ha! America can no longer be the worlds police force ,we can not afford to be . If we continue with our current policies,we will bankrupt our great nation. The weak dollar policy will compound this in very serious ways , our elected representatives had better look at the facts ,and not engage in politics as usual !! The stage is broken ! Lets get it fixed !
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