2009 will be worse than 2008 and 2010 will be worse yet becasue nothing has been done (so far) to correct the culture of deregulation and easy money that led up to this. Also most industry is now overseas (unlike 1930) so we may never completely recover
One of the reasons 2009 might not get better is because of what the FED is unable to do. That is, the FED cannot increase aggregate demand via more Debt.
Most of us know from Economics 101 about the Supply-Demand curves and their relationship to price levels.
For example, all other things being the same, if prices fall, demand goes up. But if prices go UP, demand FALLS.
So what does the FED do? Everything in its power to make sure prices DON’T fall.
Yes, I know there are some good reasons for avoiding General Price Deflation. But if people have fewer cash resources, does it make sense to try to increase Consumer (aggregate) Demand by raising prices?
Yeah, OK you say that if prices fall, people will not spend because they will wait for prices to fall even more.
So what? The prices will not fall forever. Wages are not going up. Where do you see us increasing so-called Aggregate Demand if wages fall, and prices go up?
That is one massive conundrum in my mind. It almost gives me a headache.
The FED says that it is focussed on increasing Aggregate Demand. Seems to me that if prices fall a little, demand might go up?
That, anyway, is what they taught me. Are the times so different now? If so, please explain why, dear Dr. Bernanke. You owe us that much.
You are after all, employed by the American people. And more WIDELY in another sense, since your actions affect everyone in the world.
High oil prices got us into this fix, and low oil prices will lead us out. Now the challenge is to come up with a plan that offers a realistic challenge to the oil economy. It will be good to have a President and VP not tied to the oil industry. That at least will give us a good start.
We knew thirty years ago that oil wasn’t going to last. We’ve lost a lot of time, but maybe the momentum to do something different is here. I think 2009 is going to be better than 2008.
Maybe LaMonica can start writing articles on psychology with his psychology degree. Better yet, open a deli, clearly economics is outside of his field, this article is pure bologna
The reality is that the world is governed by a bunch of fraudulent and incompetent people. The system is broken and they are doing nothing to fix it. The witchcraft economy of the last 20 years benefited mostly the filty rich. Now, the governments are taking the people’s money to save those filty rich. Eventually, it will look like things are going better because the stock market will stabilize in nominal dollar terms. However, the reality is that the people will be significantly poorer in real terms. This is 1929 all over. It will take a long time to fix this mess, at least five years. It may take 10-15 years for the markets to
definitely get back to this year’s high.
I think it will be much worse for me because Obama will not keep his promise to eliminate income tax for retired people with less than $50,000 income. I have about $48,000 income and pay over $4,000 per year for income taxes.
Sure, it will get better next year.
The ramifications of our government needing to float something like three trillion in bonds wont effect us.
The banks will be lending money again and we are foolish to think the fact that people can’t afford the credit they have is going to slow them down, or slow the banks down.
Housing will roar back to being grossly over priced and this is truly a good thing.
Government sponsored infrastructure projects will make up for private sector job losses.
Retail sales and banking really can substitute for productive business. Especially since everyone is going to go back to borrowing money to buy consumer junk that wasn’t built with our labor.
This is all just a little blip in the banking cycle and the ramifications of decades of a huge trade and current accounts deficit (both nationally, and as individuals) wont actually ever come back to haunt us, much less now.
Yup, next year is going to get better. I’m gonna run right out and buy me some stocks. I think I will go for Gap and Wells Fargo.
In addition, I am also amazed at all the people who claim that if the bailout money would have gone to taxpayers then all thise would be over. I think you guys should all re-take basic math. 700 Billion/138 Million Taxpayers=$5,072.46. Would that really turn the economy around, when you factor in back taxes owed and amoutn of credit card debt out standing, that would be a waste of money.
I actually agree with you and I work in banking. Granted, it’s harder to get things approved now, but I think the worst is over, or, we are in the bottom right now. Corporate bond spreads are decling and the TED spread is narrowing, which are usually good signs. Neverthless, the pessimistic attitude of most Americans doesn’t take any of this into account. Eventually asset prices will stabilize and they will nowehere else to go but up. I think the FED has done a fine job and I look forward to 2009 with great optimism, assuming there are no more surprises, but I am not in the business of trying to predict and we should be wary of those that are. Overall, I see many positive things happening.
Thanks to you too Paul!
I am sure your readers share your sentiments, at least on a personal level, for 2009.
And, who really knows, maybe there will be a fantastically strong recovery starting in the middle of the year? If anyone can pull it off, it would be the hard-working people of America.
My problem is not with the American (or Canadian) people. It is with some of the theoretical approaches to fixing the problems that seem to come ‘down’ to us from on high. They come to us from Central Bankers here in Canada as much as in Europe and China and the U.S. They come down to us from our Treasury and Finance Departments.
For example, in reaction to our Central Bank calling for more lending and to our Banking Regulators calling for more bank reserves, I wrote my own reaction of amazement. I used the example from RAISING ARIZONA, where the bank robbers yell out one after the other: “Everybody freeze!” followed by “Everybody down on the ground!” Please see http://www.theglobeandmail.com/servlet/story/RTGAM.20081218.wrcarneybanks18/CommentStory/Business/
Of course, little people like us are not privy to everything that goes on behind the closed doors of high-level authorities. Nevertheless my faith in the Fourth Estate in America is strong enough to make me believe that, through the media, we find out just enough about what goes on to make an informed judgment.
And on my part that judgment is not all that positive.
The TARP thingamajig was rushed into prematurely. What confidence can you have in the experts when they tell you “let’s do it NOW – better something than nothing”?
Then they change the rules and instead of buying impaired assets, they invest in banks, mimicking what the European authorities had just done. At the same time, they forget to set ground rules, for where the money goes, and how fast it goes.
Then they let GM and Chrysler almost flounder, with requests for oversight that seem to try to make up for the prior lack of oversight built into TARP.
Then the FED does its own thing — not necessarily without awareness of what the other parties are doing, but with little oversight of its own initiatives, as if the FED’s all-seeing eye is somehow also all-knowing.
This does not give confidence to me that things will get better. If things do get better in 2009 it might be despite what all the fixers are doing, not because of them.
Paul, I hope you are right. Slashing interest rates to zero would work in other times (not that I would like such intervention). But these are not other times IMHO.
Ben Bernanke, God bless him, has studied the Great Depression to death from a young age. That may be one problem. As one of your contributors once wrote, he may be a general fighting the last war. That is, his strategy may be flawed.
I happen to think that it is flawed, for many reasons. One is because, as his strategy, he seems to have brought to bear the full arsenal at his disposal. He seems to have employed all of the FED’s available ammunition against what he imagines as his worst-case-possible scenario.
And that can lead to failure. If he builds a Maginot Line against a deflation that is not impending, he will have made one mistake. This is not a cost-free error. These are expended resources we won’t get back.
Stimulus from governments is another question mark. It’s not as if governments in Canada and the U.S. are debt-free. As others have pointed out, we never saved during the 7 fat years, so that we would have something set aside for the 7 lean years. The cost of this ’stimulus’ if it fails, is even worse stagnation later. Besides, while our governments can carry the burden of additional debt now, if we assume interest rates don’t go higher and if tax revenues don’t fall much further, what happens if these assumptions are wrong?
We might have no ammunition left. Can you imagine if we wake up a year from now, in 2010, realizing that not the FED, nor the Treasury, nor anyone else can help stimulate the economy in some artificial manner at that time?
Talk about loss of confidence. Imagine the sorry state of our confidence if these measures fail. That is just one reason that a lot of pundits thought lowering the rates to something close to zero was a misstep by the FED. The FED could have achieved exactly the same without lowering the headline rate to that level. It has backdoor methods that would have amounted to exactly the same thing, stimulus-wise.
One thing that worries me is that maybe FED chairman Bernanke is thinking along the same lines, and that in a kind of CYA pre-emptive move, wanted everyone to know that he had done everything in his power to help.
And he may have been thinking about a limited chairmanship time-wise for his watch. If so, then some of his moves make sense politically if not economically.
Most of us know from Economics 101 about the Supply-Demand curves and their relationship to price levels. For example, all other things being the same, if prices fall, demand goes up.
So what does the FED do? Everything in its power to make sure prices don’t fall. Yes, I know there are some good reasons for avoiding General Price Deflation. But if people have fewer cash resources, does it make sense to try to increase consumer demand by raising prices?
Yeah, OK you say that if prices fall, people will not spend because they will wait for prices to fall even more. So what? The prices will not fall forever. Wages are not going up. Where do you see us increasing the so-called Aggregate Demand if wages fall, and prices go up? That is one massive conundrum in my mind. It almost gives me a headache.
The FED says that it is focussed on increasing Aggregate Demand. Seems to me that if prices fall a little, demand might go up? That’s, anyway, what they taught me. Are the times so different now? If so, please explain why, dear Dr. Bernanke. You owe us that much. You are after all, employed by the American people. And more widely in another sense, since your actions affect everyone in the world.
So, OK, you are flooding the financial marketplace with easy money. But how does that easy money get into the hands of the average overly-indebted consumer. The logic-mechanics don’t quite jibe for me. How do they jibe for you?
We have used the Bubble-Building approach for far too long. Can it really work again? I don’t have much faith that it can. The FED’s mopping up of the last bubble by blowing up another one, is most likely going to blow up in our faces, probably in a worse manner than the Housing Boom.
How many economic busts do we have to see before we acknowledge that there is something rotten in Denmark?
But we are so worried about Deflation that we are fighting a Depression that has not even arrived. Why? Is the cost of pre-emptive mitigation, much like a pre-emptive war, low enough to warrant such an approach? Might we not be taking a road that takes us needlessly closer to depression than would otherwise be the case?
Why take out insurance that is more costly than the events it mitigates against?
What most scares me is the way that decisions, involving millions of people, and literally trillions of dollars, are concentrated in so few minds and hands. This is a high-risk gamble. What if these few people, and the consensus thinking that surrounds them, are wrong?
Are we not jeopardizing the Golden Goose that is America’s strength?
There is one last thought. Whatever else, protect your health. All of the rest of this will pass. But if you let your family break apart or allow your own personal physical or mental health to suffer, then you have lost a lot more than mere dollars.
I heard a great Yiddish expression on the radio this morning while I was driving into work. It was on an advertisement for OMNI Jewelcrafters here in Toronto on CFRB by a Jack Berkovits, I believe.
The proprietor said that so long as your health (and that of your family) was good, who really cared about the rest?
The expression was “Abi gezunt!” which means – As long as you’re healthy!
God bless you all, and Merry Christmas.
P.S. Now maybe we realize why they passed the Sarbanes-Oxley low in the depression. Banks should NOT be allowed to bundle and re-sell debt. This was changed in the late 90’s by a bill sponsored by Phil Grahan. Another great idea from the Republican party that was un-fortunately signed by President Clinton.
Until you get to the root of the problem there is nothing to base a recovery on. I remember when all the “experts” said that this mortgage crisis was nothing to worry about and we could handle this. I thought “what planet do you live on!” The root of the problem is that the banks (and those they sold bundled debts to) do not know how much debt is involved. Everytime they think they do, the prices fall again due to the flood of additional forclosures hitting the market. It is this unknown that froze the credit markets which caused this financial crisis to spill over into the general economy. Until the amount of bad debt can be determined and the foreclosure deluge comes to an end I don’t see this coming to an end any time soon. The only thing we have going for us that did not happen at the onset of the Depression is a government and a Federal Reserve willing to intervene. The only question is whether that will be enough. If it is then this will be a recession lasting through 2009 with a recovery sometime in 2010. If it is not enough, then we are in for a long stretch of pain.
I believe that the stock market has suffered too much collateral damage to recover, even after the economy does. The “it always comes back” mantra that sprung to life from the one day crash of 1987 led people to buy on every dip. This dip is here to stay for a while. People got burned and stocks as an asset class in general could languish for half a generation. The Dow was flat from 1929-1954 remember.
The financial industry caused all this by its gross and indefensible irresponsibility and arrogance. They still want their bonuses? If the costs are covered by those who caused them, perhaps 2009 will be better.
Awwwww, do the poor wealthy people making posts in here have to survive on only 200k and a bonus that is 80% of their pay. BooHoo….ROFL. You people have no idea what work really is and to perform that hard work for little or no pay.
Are you kidding? You ain’t seen nothin’ yet! Because of the government intervention, the “natural” decline of the economy has been postponed. Sooner or later, the true market forces will prevail. 2009 will be worse than 2008.
“Instant gratification,” isn’t that how we Americans are described?
Nor can we imagine that WE should have to experience a bad recession or perhaps something even worse.
2009 is likely to be worse than 2008 and 2010 the worst of all three years as the recession/depression just drags on and on.
It took us about two decades to burn through the “santa claus-credit-presents” and the unwinding of this debacle coupled with near future catastrophies with the Social Security/Medicare debt bubble are going to flatten us for a long time.
Be risk averse.
As an MBA in Economics, I can assure you it will get worse before it gets better. This bailing out of corporations will have negative repercussions that will be felt locally and globally as well.
I am a realist, and the reality is, we are headed for a depression in 2009. I sure do hope I am wrong, but the numbers don’t lie… and I’ve crunched them using several different financial/economic scenarios, and the outlook is not any better than now, but rather worse!
I have personal hope that things will get better. Unofrtunately, Recessions take years to recoupe from. I do believe that a large part of the problem is the “Global Economy”. We have become a service country that is turning to machines to do service work. We need to bring jobs back to this country and stop relying on cheap labor over seas. We need to encourage business owners to keep work here for our own Citizens.
Nothing could be worse than 2008!! Next year will see a modest recovery. Americans who have lived within their means will feel a whole lot better about their situation this time next year.
HONESTLY I FEEL THAT THE ECONOMY STILL HAS A GREAT DEAL OF DECLINING TO DO. THE SYSTEM HAS BEEN ABUSED. CORRUPTION HAS BEEN EXPOSED. IT IS GOING TO TAKE ANOTHER COUNTRY, EVEN A DEVELOPING MARKET LIKE DUBAI OR SOMEWHERE IN ONE OF THOSE SAN BLASTED NATIONS TO ASSIST THE UNITED STATES IN A RECOVERY PROCESS. I THINK THE STOCK MARKET MIGHT SEE MORE STABILITY in 09 THOUGH, BUT IT PROBABLY WONT HIT 10,000 AGAIN UNTIL LATE 2009 OR EARLY 2010. LAYOFFS WILL CONTINUE AT SKYROCKETING PACES ESPECIALLY IN STATE FUNDED PROJECTS. I THINK BEFORE ALL THIS IS OVER SOMETIME IN 2010, WE WILL SEE UNEMPLOYMENT REACH 9% OR 8-13 MILLION PEOPLE BEING OUT OF WORK. THERE WILL BE WAVES OF SHORTLIVED STABILITY SEEN. THE HOUSING MARKET WILL BOTTOM OUT FINALLY IN 2009 BECAUSE NOW THE INTEREST RATE IS ALMOST 0. RETAILERS WILL EXPERIENCE DEVESTATING LOSSES AND MAY NOT START SEEING ANY REPAIR UNTIL 2011. WALMART IS IN A SCANDAL ALSO THAT MAY HAVE SLIGHT IMPLICATIONS. UNTIL WE CAN GET THE GDP OR GROSS DOMESTIC PRODUCT FROM SHRINKING OR CONTRACTING WHICH WILL PROBABLY BE CONTRACTING FOR ANOTHER 3 QUARTERS OR UNTIL 2010, THERE CANT POSSIBLY BE A MEANINGFUL RECOVERY. JUST HOPE THE GOVERNMENT WILL ENACT A LEGISLATURE IN CONGRESS THAT WILL EXTEND EVERYONES UNEMPLOYMENT BENEFITS OUT TO A TWO YEAR CYCLE. THE ONLY HIGH POINTS I SEE FOR THE ECONOMY IN 09 IS THE STIMULUS THAT WILL BE SO SORELY NEEDED TO SPUR ANY ATTITUDES IN SHOPPING, BECAUSE CONSUMERS ARE STILL PUSHING UP THE NATIONAL DEBT DURING THE CURRENT HOLIDAY SEASON, THE POSITIVE FACT ABOUT THAT IS THEY MAY ONLY BE PUSHING IT UP SLIGHTLY INSTEAD OF AT STAGGERING LEVELS LIKE IN RECENT YEARS
I think a distinction needs to be drawn. First of all, the housing “mess” is only a SYMPTOM and not a CAUSE. Overpriced housing and the ensuing collapse in prices (which still in my opinion still have a long way to fall) are targeted as the “problem” simply and only because out of control price appreciation was the catalyst for countless folks to live a lifetsyle that, to be quite blunt, had no business living. It was a vehicle that again, for awhile, sustained the unsustainable. And now it’s gone and everyone is panicking. It’s true that so much economic “growth” was tied directly or indirectly to that bubble. It propped up everything from the granite countertop to the Detroit and their SUV’s to spending orgies at the Bed, Bath, and Beyond. Problem is it was a fantastic hoax that Houdini would’ve been humbled by. An illusory, phantom economy based on: nothing. Pure speculation. The REAL damage to the economy was caused by gutting out our manufacturing base and in effect, selling off America piecemeal for a fast buck all in the name of “Global Markets”.
Now that the truth has been revealed, everyone has the gall to act surprised. And assign the blame to everyone but themselves.
As has been noted in earlier replies. Until someone can explain to me how the effects of out of control borrowing and spending can be cured with….more borrowing and spending, anyone who believes that any of these bailouts of stimuli have a snow cones chances in hell of accomplishing something useful, anyone (including…ESPECIALLY including Mr LaMonica) is living in a fantasy land and is in for a VERY rude and perilous awakening.
yes i think both will turn around. one of the biggest reasons is the liberal democratic media has gotten their man in. the “end of the world as we know it” will now change to “we can see the light at the end of the tunnel” as far as their reporting goes. of course this will give people hope, they will buy and invest and things will get better.
Had the bailout money gone in the hands of tax payers instead we would all be celebrating by now. Think about it.
Do you want less manufacturing jobs and other jobs moving overseas? Raise import duties for finished goods and tax brake businesses bringing back jobs or keeping jobs in America.
More responsibility from Corporate America? Accountability.
First and second tear management gets base salary not higher than 200 thousand plus bonus based on profitability. The sky is the limit, or just base salary.
You always and only get what you focus on. If financial crisis and drama it is than that’s what you’re gonna get more of next year.
For the rest of us Happy New Year!
Paul… Thank you! I have been reading your sentiments–and the varied answers to them–for quite a while, now. I have appreciated both your opinions and those of your other readers without comments of my own up to this point. That being said–and in deference to this chaotic year’s end–I will offer a few of my own thoughts.
What a year, eh? Your faithful readers don’t need to be reminded of how tumultuous it has been. Instead, I would like to insert, IMO, a much-needed Pollyanna uplift…
THINGS ARE GOING TO GET BETTER!!!
Slowly, surely, things will change. They always do. In 2009, however, I predict we will see a change that will energize us individually as well as the economy. Once Americans are back on track as to what is most important to us–pride in ourselves, pride in what we produce, and pride in how we present ourselves to the world–we will once again prosper.
I am very aware that the costs of foreign oil and the greed of those on both sides in this housing market debacle have caused us all to pull our heads into our shells which has put us in the recession we are in right now. But we are not going to stay there for very long. Americans are nothing if not resilient. We are not a “nation of whiners”–we are a nation of optimists. That is why we can make a free market work. When things strike us down, as they have recently, we reel for a bit. But we will all be back on our feet, hard at work, and moving forward in 2009.
I believe in this–in US–wholeheartedly.
Let’s go, America!
And once again, Paul…thank you so much for giving us this forum to vent–sometimes all over you, I know–our frustrations. Keep on keepin’ on…
AJ, Elizabethtown, PA
Paul,
This past spring and summer the majority of your articles were a bit on the Pollyanna side. Nothing to worry about, no major slow down, soft landing for home prices, etc. You pretty much blasted everyone with a depressionist attitude. Well look at the facts of the last few months. Please logically convince me why we the readers should believe you now?
There is no way the economy will recover until something is really done about the housing mess. The peak in volume of the 5,1 option ARM loans was in 2006. The teaser rate for these will not end until 2011. It is widely known that these were the most popular home loans in the years from 2003 to 2007. These were not sub-prime. Unfortunately, most of these loans are now under water and can not refinance. Housing prices will continue to fall for at least two more years as this happens.
Why do so many journalists ignore the obvious?
I strongly feel that jobs will be the first issue, if jobs do not pick up then there goes a slow start for the economy . Also, people that lost their homes, jobs and bad credit now, how will they get back on track.
The reader who says that this is when fortunes are made doesn’t understand wealth. He’s one of those dimwits who believe money is wealth. It’s not. Production is wealth.
Both America and Britain thought they could forget about manufacturing and maintain their status by becoming the bankers of the world. This was the dream of madmen… persuasive madmen… there’s an entire political party in the US based on that misguided ideal, a party that is ready to throw away whatever little manufacturing we have left as long as it ensures the demise of labor unions.
The same madmen told us that deficits don’t matter and believed that they could wage two wars and cut taxes at the same time.
The writer of this column is a small part of the echo chamber that was built to convince the masses that madness was the new normal.
And now we’re all going to pay for this madness.
I dont think anything will get better until people learn from their mistakes. do not make mortgage transactions to people who can not afford to buy a home. stop being greedy for one moment and do the right thing. take the necessary steps and precautions to people who want to buy a home and make sure they are truly qualified and know the responsibility of being a home owner. this is why you are a licensed mortgage broker. stop sending all our manufacturing overseas to china. remember when your were little and basically everything was made in the usa. bring manufacturing back to the united states. try to create jobs for people.stop bailing out people in the financial industry who make millions a year. focus on the over 1,000,000 people that have lost their jobs and try to develop more work for people that should be your main two focuses. i think once you can balance responsibilty and doing the right thing for americans then everything else will slowly fall into place. for me, i am making my mortgage, paying my bills on time. becasue i didnt have someone talking me into buying something i could not afford. and right now, honestly the oil prices, gas prices, housing and clothing prices in my opinion are where they should be. which is making spending money now a little more enjoyable.
Paul,
You mentioned one of the most notable “cures” to our economic ills is the low, low, low interest rates set by our benevolent Fed. How will low interest rates help boost corporate profits? Did they boost corporate profits and “help companies feel comfortable about hiring again” in Japan during the Lost Decade?
Over-abundance of credit was the sole cause of our current economic situation. How is the addition of credit (bailout payments, expansive wars, exorbitant stimulus packages, etc. all brought about by increased government debt) going to help? You help out insolvent Americans by further insolvency? The way we are handling this “crisis” is the very definition of madness.
David: to answer your question the talking heads are bought and paid for by advertisers. They are living nice and don’t notice the mud the rest of us have to drag ourselves thru to survive. That’s the happy land you speak of 
I like the people that say “This is when the real fortunes are made”. If they mean stock market FORTUNES, those are made at the expense of the losses from others. REAL fortunes are made the old fashioned way; they take a long time and a hard work by adding value to raw materials – MANUFACTURING. Not the GIANT CASINO called Wall Street. Wall St is the definition of the Greater Fools Theory!
I agree with the blog below that says we REALLY need to grow our manufacturing base.
And to answer the question “Will 2009 be better?”, doubt it. There are SO many lost finacial and MANUFACTURING jobs that will be impossible to replace with other living wage jobs that it frankly scares the hell outta me. If someone has some positive information on WHERE good paying middle class jobs will be created in the very near future I’m all ears. But DON’T say health care because with all the good paying job losses (i.e. financial and auto workers and the millions of connected jobs) who will be able to afford it? I make six figures and the company I work for makes me pay for the first $6000 of health care per year! Basically I only have health care coverage for catastrophic events. I DON’T (can’t afford) use the health care system and am very carefull not to get sick or injured.
09 will be awful. Without the stimulus of funny money mortgages, housing will eventually fall 50-60% below its peak. With more jobs lost, there will be more foreclosures and less buyers. So housing is nowhere near the bottom.
Japan just announced a 34% drop in exports and Taiwain a loss of 28 %. This is catasrophic and will lead to more unemployment and bankruptcies.
We ain’t goin nowhere but down next year. Here’s hopin I’m full of it!
Why is it that most of the CNN talking heads seem to be living in an alternative universe–sort of a “Happy Land”. In the spring and summer of 08 things weren’t going to be all that bad. No, it was going to be, you know, just a little “slow-down”. If I could prescribe what you are smoking to may patients (I am a psychiatrist), I could cure the most pernicious depression.
But my dear friend PLM, Fed is also out its bullet… Other than print more cash, I don’t think it can do anything else to help the economy. I say, time to think out of the box, maybe nationalization is the only way out of this?! I realize that this will piss a lot of Reagan republicans off, but what better ideas do you have at point??
As soon as we take out the rotting skunks out of the room and open up wide all windows … things will then be just peachy …
Thankfully the internet didn’t exist back in the 70s and 80s — otherwise all of the armchair economists would surely have also been crying “DEPRESSION!” and “You’ve ain’t seen nothin’ yet!!!! Just wait for next year!”.
You happen to live in the land of opportunity and freedom that millions of people every year try to join but are denied.
Get off the armchair and begin to make a difference in your community and country at large — and it all begins with your attitude. Demand justice for those who ruined America’s banking system, and help those who are much less fortunate than yourself.
my financial prediction for ‘09: the Buzzzzz gets canned. CNN charged with news tampering and market tampering Merry Christmas and Happy New Year everybody!
I’m looking at this coming year as a “reset” year. I don’t see 2009 as the major recovery year. I do, however, see it as a year that will lay the ground work for a much stronger economy and way of thinking for all of us. My hope is that those who made financial mistakes in not carrying enough cash on hand start doing so, debt is paid down if not off completely, and our kids learn from this experience. Personally, I believe 2009 will be a good year. I’m planning on staying as positive about the economy as possible while recognizing the tough issues that do come along and figuring out how to work with them. To all, I hope you turn to look at things in a better light. It really helps the stress level.
You know what no one has even considered is the situation where banks are more willing to lend BUT consumers are less willing or able to borrow. Look…. lending, borrowing and spending is not a sound basis for any economy. This country has to start building it’s manufacturing base up from 22% of the economy to something more formidable that can sustain our economy when consumer spending peters out from time to time, I have a house, two cars, three televisions, three refrigerators….etc. etc. They are all paid for and in re4ally good shape. Why would I and all those people like me get rid of these things..borrow money at loan-shark rates…and go back to not sleeping at night worrying about losing our jobs and not being able to pay for these ‘new shiny’ things.
We can’t go back to an economic model based on leveraged acquisition…i,e consumer spending fueled by irresponsible borrowing…..home equity loans and credit cards……
Those that don’t learn from history are doomed to repeat it!
Unfortunately I think the worst is yet to come after 4Q retail numbers are reported in January and all of the seasonal hires are let go. But as I continue to dump money into my 401(k) I do it with the thought that I will be making absolutely HUGE returns on the contributions. Someday…
The overall economy will turn the corner and start growing again around the end of 2009. The sectors that caused this problem (finance, housing, mortgages, etc.) will take much longer to bottom, possibly as late as 2012; it could take 5 years to deflate the 5-year bubble that inflated from 2002 to 2007. In the mean time, we’ll need the government to stimulate the economy directly, or we’ll see lots of bread lines, which are already forming.
The stock markets are bottoming right now (looking at charts, moving averages, new lows, etc.), and they will probably start growing again around the middle of 2009.
We must all conserve water (cash) to make it across this desert.
Why would it get better next year? We’re still picking up steam going down!
How’s the Christmas shopping season? Terrible! Take a look at the data coming out. What’s the consequences of a bad season? More layoffs. More store closings. More commercial real estate foreclosures.
What does the credit system look like? Frozen solid? Consequences? Consumers can’t use credit cards (they don’t want to anyway). Businesses can’t expand. Some businesses can’t get credit for normal operations/orders, which means more layoffs and closures. Many banks themselves are barely holding on.
What about the 22 states staring at the bankruptcy abyss? More workers getting laid off and services getting cut.
And then there’s AIG and the derivatives market. That’s a bomb waiting to go off.
I may be a Depressionist, but you’re a Polyanna if you believe 2009 will be better. None of the fundamentals are there for an upturn. It’s going to take years to crawl out of this. The rats in Wall St. and Washington really screwed this up big-time.
I think we are still near the top of the hill heading dow, many more jobs to export! Keep’em going, LOL
I really wonder how it is that the banks don’t have to explain what they are doing with the “bailout” money. In the Buffalo News today the columnist asked…when is the last time you went to a bank for a loan and ddin’t have tosay what you were doing with the money.
I still want to know what color the sky is in Mr LaMonicas world. It’s still pitifully obvious he’s one of these perpetual Bull market cheerleaders that’s in a state of vehement denial. The hogs have already been slaughtered and the bulls are being carved into hamburger. Too bad they don’t know it yet. It has been often said that bovine animals have such dim consciousness that they are scarcely aware of their own presence. But I digress with the anthropomorphic metaphors…But they are fitting nonetheless.
To answer the question, no. It will not get better. It will remain as bad or worse. And here’s why.
1. We need to pry this obsession with housing prices away from the Bulls hands (paws?). For all the gloomy rhetoric they espouse about them being in “freefall”, they are still far too high in price. As an example, housing prices in Orange County rose approximately 150% from their inflation adjusted trend lines during the bubble years. They have come down approximately 40% from those highs to date. A “drop” of 40% makes a sensational headline for sure. But the [unreported] rest of that story says that the prices are STILL overinflated to the tune of approximately 110%. You guys need to let it go and resign yourselves to the fact that stability in the economy will NOT return until either A) housing prices fall back to their sustainable fundamentals (roughly 2.5 X per annum median income) *OR* B) wages and salaries double or triple. We can’t have it both ways. Despite the Feds desperate (but ultimately futile) attempts to artificially prop up home prices, it’s not going to work.
2. Bailout after bailout after bailout. That money HAS to come from somewhere. Either taxes are going to have to be raised to the moon (somwehere in the 50% ballpark) or else look to see a hyperinflation. We have tried to buy our way out of a recession. Every effort put forth to date. Every single one. Has not only NOT solved the problem it was to address, but was actually counterproductive and only made things worse.
3. Forget “growth”. Anyone today who uses that word as a form of hope or expectation is an idiot, plain and simple. This country and our economy has gotten as big as it’s going to get. To predicate our system on an assumption of infinite and perpetual growth and ever escalating consumption just isn’t possible. The planet can’t sustain it. When we start to have a paradign that shifts towards “sustainability” as opposed to “more”, “higher”, and “up”, then and ONLY then can we talk about good times coming back.
2009 is going to be horrid. We are only seeing the start of big business layoffs, these 500,000 jobs lost in November are going to be looked at as the salad days come late 2009…Get out of debt people, cheaply made plastic goods paid for on plastic cards is not the way to live anymore.
? why does everyone skate the true reason our economy is where it is at.answer-NAFTA-fast track. Our depression started with these two un-American programs. A stimulous package will only benefit China not American workers as everything in our stores are from china.
John I envy you, You work with the most beautiful ladies in the world.