The long and winding recession

A sliver of obvious seems to be escaping the Pollyanna camp! (i.e., everything is going to be fine, this too shall pass, leaders will get us through this.) As Franklin the other poster noted, there is a movie about this. A MOVIE! Not a documentary on late Friday night, not a 5 minute blurb on 60 minutes. We are talking a movie that is expensive to make! Who stars in this movie other than some of the most powerful men in the accounting world and financial world. Anyone want to take a guess at what Buffet’s speaking fee is? Walker has been screaming this from the highest mountaintops for a long time, he even quit his job to try and wake up Americans better! I wish we had politicians that acted like this man because he is a true American patriot! Sure Buffet has his own interests as the oldest truism still stands… people do what they do because it betters themselves. But our economy has been corrupted with debt, self serving politicians, lying government officials, and a Fed that has crossed the line of legalities! But there isn’t any public acrimony, no holding politicians or officials responsible, just continuance of letting the people that got us here to pursue the same game. Ah the heck with it, just ignore it ever one this too shall pass. Ignorance is bliss!

After further thought,why can the Bears give specific examples why they think the economy is going to be bad and the Bulls can’t or won’t? And does anyone know why oil jumped yesterday and the market was flat,then today it drops and the market jumps? Doesn’t make sense.

This isn’t a cyclical downturn,it was caused by the housing bubble.It will be over when people get out of debt and become more responsible and that could take several years.I’ve read that wages with inflation taken into account have been flat for several years,I think it’s because we are competing with low wage workers across the globe.I don’t think wages are going to go up anytime soon so people won’t be able to payoff their bills any faster.Does anyone wonder why companies have record amounts of cash and wages haven’t gone up much?

Paul, did you happen to see “IOUSA”? We are headed for a MAJOR catastrophe!!! We have a trade deficit, fiscal deficit, savings deficit, and a leadership deficit!!!!

Warren Buffet is not a leader. He adds to the leadership deficit. His idea of high taxes are to ensure that he remains King of the Hill! After the show, he talked about the pie becoming bigger and thus mitigating the negative effects of the worsening deficits. He was quickly shot down by star David Walker who said, “All of that is taken into account.” Warren looked very tired. Though Buffet correctly added the best thing a person can do is invest in themselves, he believed that human capital was more important than physical capital because of companies like MSFT and GOOG. Unfortunately, not everyone can work at those stellar companies. What does the rest of the U.S. do?!!

I don’t think we’re heading to a depression, but it will FEEL like a depression because the required belt tightening will be NOTHING like we’ve ever experienced.

The last 23 years will feel like a walk in the park compared to the next 23 years! I agree that you shouldn’t short the USA, but we’re FAR from bottoming out. It’s going to take time…

There seems to be total lack of willingness to acknowledge macro fundamentals.

An hour of labor from an American factory worker is not worth two days of labor from a Chinese worker.

The US government can not possible make good on the debt obligations it has in the next decade that amount to a stunning 50 Trillion (with a “T”).

The American consumer can not keep borrowing money to continue to increase lifestyle when real wages keep dropping.

The US trade deficit, current accounts deficit and Government spending deficits can’t go on for ever.

“Someday” really does arrive. It is arriving as we watch. This is not your normal cyclic “soft patch”. It is a major correction from decades of consuming more then we produce.

We focus on how the US$ fairs compared to the Euro. But what matters is how it fairs against the currencies of nations where we get our “cheap” goods and labor. It will balance.

We will have to live within our means, and we will have to produce as much as we consume and we have to either default on our obligations or reduce our lifestyle even further to pay them off.

And the only arguments that say different sound like the ones that said the .com boom would go on forever, housing would rise forever and more government spending will solve our problems.

Welcome back from vacation, Paul. We missed TheBuzz while you were gone.

This slump is another cyclical downturn not a structural depression. Many of these problems are self-correcting, such as housing prices coming back down to 2000 levels after bubbling up until about 2006/2007; this correction could last as long as the bubble, i.e. until 2012/2014. It’s simple, but it will take a long time. On the other hand, the politicians and bankers could fix the financial problems fairly quickly by closing down money-losing divisions and banks, then selling off the remaining assets; they don’t have the stomach for it, so we have ongoing write-offs for quarter-after-quarter, instead of one-and-done. We’ll be hearing about bank losses for at least another year, possibly until 2012/2014, like housing price corrections.

There are still areas of profits, and there are areas of growth, just not too many.

A lot of wealth will be transferred back from lenders/investors to borrowers, and this too shall pass.