US Could be Heading for Recession

US Could be Heading for Recession

www.telegraph.co.uk

Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany.

Traders are braced for another week of turmoil after the near breakdown of America's $2,200bn (£1,100bn) market for commercial paper.

(visit the link for the full news article)

This whole sub-prime mortgage fallout seems to be hanging on, confidence in the market seems to be shaking due to stories like these coming out in the news, and can certainly aid in a market drop.

www.telegraph.co.uk
(visit the link for the full news article)

Well I can not wait to see the markets tomorrow, but you know that money will be injected again and again until sept just to keep the illusion of stability.

Looks like the Federal Reserve is taped out. way to much dept out there.

US could be heading for recession


Headlines like these can effect the market, interesting that it's being reported in the UK instead of the US, just an observation.

A key factor in the 1930s Depression was imprudent bank lending

The repercussions of the shoddy loan practices are probably not over with yet.

[edit on 26-8-2007 by the_sentinal]

So the federal reserve is going to # with things again.

Great.

We all know how well that helped stop the great depression.

We've been heading for a recession if not a depression for 2 years or so now
the economy can only go up on false hope for so long and now that people can't carelessly refinance their home to buy things they don't really need and wait for the rest of the tax payers to bail them out (end rant)

This is a potentially big deal the spending habits are gonna change and since the spending is slowing the wholesale buying will slow and as a result of that the manufacturing is going to slow which makes paychecks smaller and more intermittent if not non existent so you see the problem ahead...


at any rate it wouldn't surprise me whichever way it falls who knows how the rules can be bent and changed when needed after all necessity is the mother of invention and when you start taking away money we all become inventors...

Respectfully
GEO

It's my understanding that it wasn't so much the overborrowing that preceeded the depression rather, alot of that overborrowing was being borrowed for speculative gambling on the stock market...
of course, this could have just been the scapegoat that was used at the time, to give the people something to blame.

kind of like it's all those homeowners out there now who bought houses that were way out of their means...the sub-prime way.

I found an interesting article today


www.reuters.com...


about a little community in California that has had it's bubble burst. It's interesting in that it seems to be painting a different picture than the media is. It's a story of a nice little community that was downgraded...not by those sub-primers with their bad credit and lack of funds, but rather by the speculators and house flippers whose only intention was to invest in the property long enough for it to be flipped. and well, the flipping seems to be ended and now they're defaulting....

it seems that these flippers didn't read in the history books about the mistakes that were made in during the depression.. heck they were probably using the sub-prime loans for their investments also...no money down, bad credit, no credit, what does it matter!! Get rich today!!

there's probably alot of businesses that also using the lax lending rules in rather risky gambling ventures of their own...

and well, let's not forget the federal, state, and local governments here...who have no problem borrowing an obscene amount of money for such risky ventures as bridges to nowhere, super malls, football stadiums, and yes, they'll even borrow an outrageous sum to send a few bolts across the country....they've been making their own rather risky bets, on borrowed money..

everyone who's ever honestly tried to keep a household budget balanced knows that borrowing more ain't gonna get you out of a deep hole, let alone make you rich!! but it seems as though our federal policy has been just that for the past decade or so. and they've been encouraging the public to follow their lead..
maybe it's time to pay the piper now.

Originally posted by Johnmike
So the federal reserve is going to # with things again.

Great.

We all know how well that helped stop the great depression.

the banks made a killing during the great depression (it's a dog eat dog world)


btw the stock market has been DIS CONNECTED from the economy for awhile now.

the spin miesters on tv, are only concerned with controlling the perception and confidence of the consumers. recession is a TABOO word

and we could be into one alreay, and nobody would say it, most of the big businesses do so much of their transactions globally, they they would not be hit as hard as joe six pack working 9-5



[edit on 27-8-2007 by cpdaman]

the biggest problem is the federal reserve system. the ability for the fed to create money as fast as their printing presses can turn and people can type numbers into a computer is frightening. even though american's have been the biggest benificiary of it's policy of exporting inflation (dollars) to the rest of the world. (esp. ASIA)

Gov't realized exporting paper (dollars) was more profitable than exporting manufactured goods (the latter required paying employee's wages), the only fall out from this can be seen with increased underemployment.

Right now, the yen carry trade is propping up the dollar, along with american military muscle. they are both needed to keep the dream alive.

biz.yahoo.com... bad credit is now considered a bigger threat among sheeple to the economy than terrorism and defense.

the federal reserve is the most fraudulant, unconstitutional, ABOVE THE LAW and PRIVATELY owned corporation to EVER be created. they were created to SOUND like a gov't organization and even look like one. they are not

the fed was invented "according to them" to creat stability in the economy, smooth or iron out the business cycle, maintain a steady, healthy rate of manageable growth; create price stability and control inflation basically for the betterment of everyone. they failed in in 1921, 1929 the great depression numerous recessions and and even inflationary nightmare's in the late 70's and early 80's. but more troubling is the amount

of soaring consumer debt and government account deficits piled up under their watch

a trememdous widening gap between rich and poor, a tremendous government (natiional debt) as well as the elimination of the manufacturing sector, ( i could go on and on) housing bubble, etc.

the coming years will have such a shake up (globally my friends) that everyone will be effected, regardless if their heads have been burried 5 feet underground in the sand

we are facing such huge uncertainty in the upcoming years and decades, that NOTHING would suprise me. most people can't comprehend the kind of options that are likely being debated, and it's seems global warming is one possible scape goat that has been marketed by the elite's with the help of the manipulated enviornmentalists who realize that the enviornment is such a large issue that they need something so huge as global warming on their side. i am not saying that the climate of the earth may not be changing, and running in cycle's. i am not saying that the government military bases are some of the biggest depositors of waste and pollution( they are). i am saying that making people aware of global warming will allow them to implement any kind of technology that will cause earthquakes, tidal waves, heat waves, droughts which will lead to food shortages, and DEATH that can be blamed on GW and profited on by those in the know. and people will be in the dark because the surpressed military tech. is not even in the DECISON SET that people will access in their minds for reasons the weather craziness is occuring.

the god fearing people will think it is god's wrath
and the "smart people" will think it's global warming

the need is for DEMAND to decrease in oil because the oil cartel is approaching PEAK OIL. now yes oil suppliers, short the supply to spike prices, and old dry wells eventually and slowly beign to fill again, but the rise in emerging markets makes the emerging demand put a great threat on the ability for economies to be able to run and the cartel to sustain itself for the decades to come.

one things about the rich and powerful. they are constantly trying to figure out ways to maintain that power, they ponder decisons that the would cause the general public to want to disbelieve (like mk ultra, or operation north woods) where us citizens would be killed to carry out policy's that may benefit a group or even the greater country as a whole.

any kind of shift in energy use from oil to some alternative source would only be "allowed" to happen if the same oil cartel running the energy game was to own and have a monopoly in whatever the alternative fuel may be. i pray they have found away to do this, and that the world recession , and coming world governemt is not accompanied by any kind of MAJOR widespread DEATHS to better sustain the oil game and decrease demand to a level of sustainability. yes the oil cartel may be in a unique position where decreasing demand may increase the sustainability by prolonging their supply. and since they have a monopoly they are not worried about losing customers to alternatives, and they can charge what they wish.

the above is speculation and only hpothetical obviously

the existence of any kind of technology that produces energy manipulations and weather modification like russian wood pecker or HAARP may or may be able to trigger seismic activity and on top of that it may not be used to decrease demand for oil, it may simply be used to create food shortages and water shortages, which can be a reason to privatize and make MONEY off of the the scarcity. and if death was to be created it could just as easily be committed thru the use of some air born chemical virus or in conjunction with the above mentioned paragraphs. intrestingly the coming global recession would be a good time to open pandora's box and the civil unrest that occurs globally would be enough to scare most citizens into believe a cashless micro chipped population would solve the violence.

problem reaction solution the elite plan and profit from all 3



[edit on 27-8-2007 by cpdaman]

Well the Yen better support the dollar they will fall along with the US if something happen, after all they hold 645billion US dollars.

For US to be a super power it sure has become dependant to other nations to be able to support its economy.

From biggest producer to biggest debtor is not a very profitable way to go. No only that but even we citizens also have accumulated personal debt.

all posters on this thread,
the OP linked article is OK,

but for a greater landscape of the possibilities
of recession & the % chance of of any listed scenarios ocurring,
you might find this article/Blog more rewarding;

"Projecting Some Possible Outcomes for the Panic of 2007"

see: www.survivalblog.com...


also of interest are the blogs of 27 August
and last Thursday......all related to the credit mess/subprime messes etc


thanks

[edit on 27-8-2007 by St Udio]

i enjoyed the blog

especially the scenario's


the one problem i have is that the dollar WILL NOT collapse it will continue to fall slowly

I was watching BBC News tonight at 18:00 and it featured the mortgage crisis in America and how it will impact around the world. Anyway I couldn't believe my ears when the presenter said that over two million families will lose there beloved properties this year!! It had a feature where the presenter was standing in one well to do street, she said over half the families living in this street are struggling to keep there payments going. Very sad indeed, and to top it off, BBc showed a auction on a street corner selling the recovered houses to property dealers.

Originally posted by cpdaman

bad credit is now considered a bigger threat among sheeple to the economy than terrorism and defense


[edit on 27-8-2007 by cpdaman]

This very phrase was said by Sheppard Smith today on Fox news (studio-B) I wonder if you heard him say it too ?? or did you hear this somewhere else???

as for the media being afraid to say the word recession, I heard the word multiple times today on several news stations, the taboo seems to be over. the only thing left is the event. I enjoyed your post BTW.

I hate to hear people loosing their homes. The banks should work with the owners because who else will take care of those homes. When no one is in them they tend to fall apart and there goes the banks investment. It's better to take a small loss then a huge long term loss.

The News source is bunk!

Firstly, the market for commercial paper has NOT gone bust, its just a readjustment to reality that is kicking in. By this I mean that no longer will you be able to dump your paper if you're credit rating is below investment grade ( i.e BBB). The bond market is still VERY robust. Its just that there is a flight to quality due to the FEAR! The true culprit here is FEAR not this "collapse" for the US economy that people at home reading news stories and stupid articles come to understand.

Secondly, the Fed is not "dumping" money into the system. The Fed has actually directly injected less money than say other banks in the world together ( remember the US market is half the value of world market value! ). All the Fed did was reduce the rate at which banks can borrow money from the Fed so they can fulfill their commitments without defaulting. This is perfectly safe, normal and prudent.

Lastly, this whole sub-prime thing is blown WAY out of proportion. The actual damage is very small and confined to very few institutions that make up in fact a TINY part of the US financial system. This whole exaggeration of the issue is typical "Black Swan" even when the markets are moved by IRRATIONAL ideas that have no bearing on the fundamentals. The markets today are STABLE and strong because their fundamentals are GREAT.

Even if you just blindly make a DJIA basket or go Long on the DIA or SPY in the Far month horizon the outlook is still GREAT.

So all you people who get wet dreams of the US bankruptcy and ruination, I am sorry to for the rude awakening but that is not going to happen anytime soon.



Now coming to another absurd and quite irrational fear that the Fall of the Dollar is somehow this Armageddon event; which it is exactly the opposite of. The $ currently is over valued, over bought. A correction would be extremely health for the US economy and the economy of the world also but MOSTLY for the US economy because every cent the Dollar falls means an extra cent earned for US companies. Add to this the bonus of making imports less lucrative and this again means decreasing deficit. The short term repercussions might be alarming for those dumb companies who bet against the US economy but hey thats what happens when you bet against the US of A.

wrt to our external Debt, I would like to quote; "IF you owe a billion dollars, the bank owns you but if owe a trillion dollars, you own the bank!" .

Originally posted by IAF101


this whole sub-prime thing is blown WAY out of proportion. The actual damage is very small and confined to very few institutions that make up in fact a TINY part of the US financial system. This whole exaggeration of the issue is typical "Black Swan" even when the markets are moved by IRRATIONAL ideas that have no bearing on the fundamentals. The markets today are STABLE and strong because their fundamentals are GREAT.

This Idea goes against everything being reported currently in the news media, if what you say is true, then why is the market diving everyother week on the sub-prime concerns, and we wouldn't be hearing phrases like "bad credit is now considered a bigger threat to the economy than terrorism and defense " things like this being said in such contrast to your view create confusion and make people wonder "what the heck is really going on" is someone trying to cause the market to tank on purpose?? if so, for what reason??

The simple answer to your question is that journalists dont know JACK! They dont sit in front of a terminal all day long and neither do they know what is driving the markets. Mass media is junk. If you want to get your news on financials go to bloomberg.com or best yet take a look at the Change in CoC and OI values for the various ETF's and indices for the past two months. Most of these "news" outlets get their view from some trader who wants publicity or some fund manager trying to swing the markets his way so he can buy low and/or sell high. The journalists serve as morons ready to print every piece of crap any moron they call on tv would like to spew. These guys are also mostly giving trading calls and thus only tell you the traders side of the story. Fundamentally, the damage is very limited when one takes the markets as a whole. Thats the reason most foreign fund managers are so perplexed at the sheer fear that the bears have induced.

As for markets tanking every day thats not true. Just look at August, true there has been a bearish trend in the markets since July 27th but the market has also shown some good supports at 13000 and 12800 for the DJIA. This is expected for an overbought market and things should return to normal by December or even sooner depending on how the Fed plays it. Any rate hikes would be seen as a kick in the balls but I think people have already begun to revalue their portfolios and adjust their risk exposure accordingly. This is a period of consolidation and if you ask any good fund manager he would say that its a pretty good time for investors now.

I have personally seen nearly 5% on my portfolio only in long positions when investing in the beginning of this month. I wouldnt be caught in the derivatives market with naked longs at this time but I feel the time is excellent for some equity scripts in an investment portfolio.

Interesting today in the markets when the old timers warn that we are in a recession but the younger markets gurus claim that is not a recession but a markets slow down.

It makes you wonder why the markets are going the way it goes when the new generation of investors can not take away their pink colored glasses.


!!!!!!Its a market slow down dummy no a recession grand pa.!!!!!!!!