CNN says DA is wrong!

[Damnsammit]

http://money.cnn.com/2009/06/19/mark...buzz/index.htm

"With all due respect to Mr. Market, it is highly fallible as a forward looking barometer," said David Rosenberg, chief economist & strategist at Gluskin Sheff + Associates, a Toronto-based wealth management firm.

"We're still in a recession. Are we past the worst point of it? 100% yes. But is the downturn over? It's far too premature to make that assessment," he said.

Seems like most people are saying that the worst part is over, but you don't agree with that. I have read your points and it either looks like they aren't as big as you make them sound or every other economist is either overlooking that or just flat out lying about their views on the recession.

Why would they do that? To calm the fear and encourage spending? Or do they have put options on companies that they expect to fail?

[Tyler Durden]

both, shady bastards

[Deff Gordon]

hmm... i can name a few companies right now that are about to float tens of billions in loans. all those balloon mortgage payments and arm notes are not even called yet. most are due in the next year or so. so i'm leaning towards it ain't over yet.

[name change request]

CNN is just hatin' on DA

shake em off

[PETA]

CNN says DA is wrong!

all the more reason to believe David

Originally Posted by Deff Gordon

hmm... i can name a few companies right now that are about to float tens of billions in loans. all those balloon mortgage payments and arm notes are not even called yet. most are due in the next year or so. so i'm leaning towards it ain't over yet.

yup

My wife doesn't expect to be getting any less busy in the coming year...

[david austin]

Originally Posted by Damnsammit

Seems like most people are saying that the worst part is over, but you don't agree with that. I have read your points and it either looks like they aren't as big as you make them sound or every other economist is either overlooking that or just flat out lying about their views on the recession.

Why would they do that? To calm the fear and encourage spending? Or do they have put options on companies that they expect to fail?

This is the battle of V shaped recovery vs L, U, and W.

Under a V shape scenario you would have exactly what we have now by looking at a chart. A severe left side of a V with the right side meeting about 38% of the way back.

Most reasonable strategists are targeting more of a W shaped recovery. With the market forming the middle of the W right now.

The L and U would be people who believe we are going to go through a 5 year to decade long flat trade. The U would represent a very sharp recovery at some point (like say the sharp rebound in the American economy at the onset of WWII). The L would represent a very very protracted period of flat line trade and growth.

I for one believe this recession is targeting almost to the day the 1929 depression. In 29 the market lost nearly 50% in of its value in a very short time period... literally 3 weeks. Now after that there was a very sharp and significant bounce over the next few quarters that had the market rebounding an impressive 94% which placed the Dow barometer index a mere 20% from its highs the day before the crash.

Then look what happened. The market lost another 70% for a total of a nearly 90% loss... and a new trading range developed that experienced very impressive rallies including one that was 5 years long but really were nothing more than bulls in bear clothing. At the peak of that rally the market loped off another 40% (from the rally high) and really the only thing that stopped the bleeding was the onset of a global war.


Now think about what we have learned from this recession. Cheap and easy credit fuels growth at a cost. nearly 3 decades of massive wealth generation was essentially built upon the basis of leverage. The thing is that much of this wealth (as we are experiencing) was paper driven. Take a look at your 401k. What does it look like? It looks like a piece of paper to me. Granted it has meaning and substance... but its not tangible until you take receivership of it. All of the explosive growth we have had in service sectors, financial sectors, real estate sectors, consumer driven product sectors... its all based on a compounding idea that as we get money we can turn it into more money by using leverage. Then when we experience a slight down tick as this recession 'could' have been the entire house falls down. Why? Because leverage employs the power to use 1 real dollar and 10 play dollars to have the purchasing power of 11 dollars. The only problem is that if what you invest in ends up worth to say 5 dollars. You only have that 1 real one in the bank as they call you asking for at least 3 to cover an acceptable margin.

Basically we are experiencing the first wave of de-leveraging.

That money (which really wasnt there in first place) is GONE. Its not coming back for a long time if ever. Yeah you hear about all the cash on the sidelines and such just waiting to jump back into the market. Well... That is true to an extent but not nearly the extent the media makes it out to be.

I think of this recession as a tsunami that is about to unleash its second and far more severe flooding wave.

Sorry I have to cut this short. I have to finish an end of week report.

Ill add more later or monday.

[david austin]

Oh. I wanted to add to your last point.

Of course you dont want to spook people too much because at the end of the day NO economy can effectively recover unless people start spending and borrowing again.

This is the tricky see-saw during recessions. In this case I think its almost criminal what is being said to the avg joe public... but then again... this is a different era of media and government which makes this recession one that can be tugged and prodded at by the powers that be. The main problem is that the sheer vastness of leverage and debt here cannot be avoided that much longer.

The second wave will come as people are out and about surveying the damage.

[jaesun]

Here are some numbers --> Employment Situation Summary

[matt]

no snopes entry to disprove cnn' assertion the DA is wrong??? hrmmm

[PETA]

Originally Posted by jaesun

Here are some numbers --> Employment Situation Summary

executive summary?

[Damnsammit]

Yeah, I tend to trust what DA is saying more than CNN. The only thing I don't understand is why economists would purposely give false hope through the media. That would ruin their credibility as economists in the end, wouldn't it?

Where are the reports of more details on the de-leveraging? Obviously they won't be on mainstream media outlets, but is there a good resource online to get more information about the "How" of the recovery? I understand how we got in this position and why it happened, but I can't seem to grasp why everyone is reporting that the worst is over.

It seems to me that if the unemployment is getting larger, and more companies are failing, the stock market rising is just a false hope that some people are blindly buying. Do you believe that the market will suddenly crash overnight (or over a weeks span) or do you think it will be more gradual?

Are we in the middle of the W right now or is there a possibility it is something more complex? Like a V immediatley followed by an L?

Also, a very important question I have for you. I'm 24, so I am not retiring anytime soon. However, I do have a 401k with my company. I had it set at 5% until November of last year and dropped it down to 0%. Then recently I heard that even if the worst happens, it is still wise to put at least some money in the 401k right now so I bumped it up to a whopping 2%. In your expert opinion, should I increase it more?

I'm pretty positive my job will be safe no matter how bad the economy gets since I work for the DoD so that isn't an issue. I'm just thinking about my future.

[PETA]

Originally Posted by Damnsammit

Yeah, I tend to trust what DA is saying more than CNN. The only thing I don't understand is why economists would purposely give false hope through the media. That would ruin their credibility as economists in the end, wouldn't it?

you presume they have any to start with

Originally Posted by Damnsammit

Also, a very important question I have for you. I'm 24, so I am not retiring anytime soon. However, I do have a 401k with my company. I had it set at 5% until November of last year and dropped it down to 0%. Then recently I heard that even if the worst happens, it is still wise to put at least some money in the 401k right now so I bumped it up to a whopping 2%. In your expert opinion, should I increase it more?

we always fully fund in February but we're a typical I suspect....

I've never heard anyone advising not to fund one's 401k as much as was affordable.

[matt]

sentence out of control! run on from hell!

[Dionysos]

Originally Posted by St. Stalin the Apathetic

My wife doesn't expect to be getting any less busy in the coming year...

So she told you about me.

[PETA]

Originally Posted by Dionysos

So she told you about me.

hell yeah and you're lucky I don't share it with DDM