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Impression of US Economy in 2008
- Thread starter nealvan
- Start date
14.81% now think
"There will be a global depression and perhaps the breakout of WWIII."
Wow am I seeing this correctly? That would be the worst of scenerios. Could some of the voters please expand on your reasoning for this. I'm assuming this has to do with the current situations in Iran no and perhaps a nuclear confrontation?
http://www.atimes.com/atimes/Middle_East/IK28Ak01.html
"There will be a global depression and perhaps the breakout of WWIII."
Wow am I seeing this correctly? That would be the worst of scenerios. Could some of the voters please expand on your reasoning for this. I'm assuming this has to do with the current situations in Iran no and perhaps a nuclear confrontation?
http://www.atimes.com/atimes/Middle_East/IK28Ak01.html
I'll give an example. The market was doing real well, then it sensed weakness, then it started dropping, then even the leaders dropped. Now it has bounced.
What comes next?
As I see it the "strengths" seem to be any reduction in calamity risk. Maybe they will come up with some way to keep millions from getting foreclosed, for example, or maybe the Fed cuts rates 25 or 50 basis points. But the reality is the economy is getting weaker very quickly. Look at jobless claims. Look at consumer confidence. Look at CEO and CFO confidence.
All those things point to a much weaker 2008, and weakness will begat more weakness, IMO, till things turn around. My guess would be that the number of homes for sale starts coming back towards a normal number of months supply. I'm sorry, but I just don't see that happening anytime soon.
There are 2 big problems. One is we already are in too much debt. More and more there is investor fear of not getting repaid plus interest. The second is that the only way to "grow" our economy seems to be to increase the total debt. I'm not sure if that's a cause or effect, but it occurs to me that when the economy grows, debt levels increase. If people are afraid to lend and others are afraid to borrow, it seems to me that the credit expansion will slow or end.
Anyway, I see at least a slowdown and likely a recession in 2008, and I believe we will drag our suppliers into it with us.
One last thing. When their economies slow down, how will they continue to finance our deficits? And at what price at that point? I think that could become a problem because it would force rates here higher, and that's about the worst thing that could happen to us with all othe outstanding debt piled up everywhere nowadays...
What comes next?
As I see it the "strengths" seem to be any reduction in calamity risk. Maybe they will come up with some way to keep millions from getting foreclosed, for example, or maybe the Fed cuts rates 25 or 50 basis points. But the reality is the economy is getting weaker very quickly. Look at jobless claims. Look at consumer confidence. Look at CEO and CFO confidence.
All those things point to a much weaker 2008, and weakness will begat more weakness, IMO, till things turn around. My guess would be that the number of homes for sale starts coming back towards a normal number of months supply. I'm sorry, but I just don't see that happening anytime soon.
There are 2 big problems. One is we already are in too much debt. More and more there is investor fear of not getting repaid plus interest. The second is that the only way to "grow" our economy seems to be to increase the total debt. I'm not sure if that's a cause or effect, but it occurs to me that when the economy grows, debt levels increase. If people are afraid to lend and others are afraid to borrow, it seems to me that the credit expansion will slow or end.
Anyway, I see at least a slowdown and likely a recession in 2008, and I believe we will drag our suppliers into it with us.
One last thing. When their economies slow down, how will they continue to finance our deficits? And at what price at that point? I think that could become a problem because it would force rates here higher, and that's about the worst thing that could happen to us with all othe outstanding debt piled up everywhere nowadays...
Quote from thriftybob:
I'll give an example. The market was doing real well, then it sensed weakness, then it started dropping, then even the leaders dropped. Now it has bounced.
What comes next?
As I see it the "strengths" seem to be any reduction in calamity risk. Maybe they will come up with some way to keep millions from getting foreclosed, for example, or maybe the Fed cuts rates 25 or 50 basis points. But the reality is the economy is getting weaker very quickly. Look at jobless claims. Look at consumer confidence. Look at CEO and CFO confidence.
All those things point to a much weaker 2008, and weakness will begat more weakness, IMO, till things turn around. My guess would be that the number of homes for sale starts coming back towards a normal number of months supply. I'm sorry, but I just don't see that happening anytime soon.
There are 2 big problems. One is we already are in too much debt. More and more there is investor fear of not getting repaid plus interest. The second is that the only way to "grow" our economy seems to be to increase the total debt. I'm not sure if that's a cause or effect, but it occurs to me that when the economy grows, debt levels increase. If people are afraid to lend and others are afraid to borrow, it seems to me that the credit expansion will slow or end.
Anyway, I see at least a slowdown and likely a recession in 2008, and I believe we will drag our suppliers into it with us.
Ok thanks all good points. So from what I gather you expect a recession based on unhealthy growth from dept expansion in essence digging the hole deeper. So from that I could gather you would expect a recession to last let's say a couple of years and of couse would go beyond 2008 along with that analysis.
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I'm reading this other post here on the dollar and it's interesting although very weighted for positive outcomes and ads yet anouther twist to our recession calculation (if there will if there won't) although this may amplify our current situation even though some would argue that a weak dollar increases US exports.
http://www.elitetrader.com/vb/showthread.php?threadid=110913
Yes, I think by January that there will be many more pink slips replacing paychecks.
If you were a CFO, would you be allowing new big spending projects in 2008?
Do you think consumers will continue to spend more than they earn in 2008?
Do you think the housing market can return to normal in 2008 with tightened lending standards and all the foreclosures keeping things "ugly"?
Its just common sense. And as things slow, growth in sales and profits evaporates.
If you were a CFO, would you be allowing new big spending projects in 2008?
Do you think consumers will continue to spend more than they earn in 2008?
Do you think the housing market can return to normal in 2008 with tightened lending standards and all the foreclosures keeping things "ugly"?
Its just common sense. And as things slow, growth in sales and profits evaporates.
Quote from thriftybob:
Yes, I think by January that there will be many more pink slips replacing paychecks.
If you were a CFO, would you be allowing new big spending projects in 2008?
Do you think consumers will continue to spend more than they earn in 2008?
Do you think the housing market can return to normal in 2008 with tightened lending standards and all the foreclosures keeping things "ugly"?
Its just common sense. And as things slow, growth in sales and profits evaporates.
Personally I don't know I would have to do more research to answer those questions the economy is a complex organism. I don't use fundamentals but would like to learn more about it. I think that this is a more global market than ever before and that would change some things including a transfer of wealth. Also there are more crisises than ever before that seem to be more prolonged as well which changes the scale of things. Of course we can easily think of subprime and oil right off the bat which are heavy factors. What happens when the subprime completly unfolds is one issue while oil problems being another. I'm more of an optimist about oil though and think most of the problems are political right now and I think a few alternatives will be a viable replacement with the next 5-8 years but who know's. Lots of bad decisions are being made though. People are prone to habit is also another problem. Stangly enough there are corporations that are spending on growth products such as Google but mind you that these are companies that don't stock goods and there was the recent Citibank deal which I think is the largest US bank. Housing has already collapsed in my opinion and will continue to crash because of the nature of real estate. It's one thing to sell liquid goods but when you have a house that is put on the market it takes a whole differn't process being a big ticket item.
There are tight battles going on here: (global recession vs volatile markets)
27.03% (10 votes) There will be a global recession led by the US.
21.62% (8 votes) There will be no recession but the markets will see alot of volatility and sideways action.
Battle 2 (no recession vs a global depression)
16.22% (6 votes) The worst is over. No recession and the US and global markets will continue a bull run led by China.
13.51% (5 votes) There will be a global depression and perhaps the breakout of WWIII.
27.03% (10 votes) There will be a global recession led by the US.
21.62% (8 votes) There will be no recession but the markets will see alot of volatility and sideways action.
Battle 2 (no recession vs a global depression)
16.22% (6 votes) The worst is over. No recession and the US and global markets will continue a bull run led by China.
13.51% (5 votes) There will be a global depression and perhaps the breakout of WWIII.
How about US in stagflation. EU will see a slow down. China will balance between raising their currency to fight inflation which will export inflation to US, and slowing growth. Growth of the whole world will be a wash. ( IE, not much changes in commodity prices - recession will hold commodity prices down, while competitive currency devaluation will keep commodity prices up )
Quote from poyayan:
How about US in stagflation. EU will see a slow down. China will balance between raising their currency to fight inflation which will export inflation to US, and slowing growth. Growth of the whole world will be a wash. ( IE, not much changes in commodity prices - recession will hold commodity prices down, while competitive currency devaluation will keep commodity prices up )
Interesting answer. So you think that unemployment will continue to rise in the US then?
Quote from nealvan:
Interesting answer. So you think that unemployment will continue to rise in the US then?
I think it will be either
1) not too bad unemployment, bad inflation, weak dollar or..
2) rise in unemployment, mild inflation, not too weak dollar.
Whether it is 1) or 2) will be determined by the fed. If fed cut regardless what import price is telling us, we will have 1), otherwise 2)
The $64000 dollar question is : what will equity do? Hard to tell...