Recession?

Originally posted by Esoteric
Is the US heading into recession?

I have heard and read so many analysts, advisors and stock brokers all say yes, no, and maybe. Some say they are already in a recession, some say they are heading into a deep recession. What do you all think? Bad Republican fiscal policy while they had their eye elsewhere, or just a natural cycle?

Ballooning debt as a methodology behind the business of creating wealth has undermined the capacity of the system to rebound as spending and consumer confidence wanes. Private equity funds and the business models they have spawned which are heavily reliant on debt leveraging has seen an extraordinary amount of in house pruning of human resources by many companies as they have tried to minimize costs while their debt levels have soared. In order to satisfy market expectations of growth, these companies have borrowed even further amounts while the underlying strength of their respective companies has been whittled away to nothing as they have sold off all the profitable sections of their businesses to pay for their leveraging.

Where's the capacity within the economy? Where's the well trained efficient workforce eager to keep the wheels of industry turning? Whatever could be sold off has gone to China and if it were not for strong trade unions in the motor industry, America would not even still be doing that. With a Walmart on every corner and the economy turning from an industrial kingpin into a market dominated by primary commodities and bolstered by a steady growth in tourism and service industries what you will find is that instead of tackling the problem, which may already be impossible, they will simply redefine their terms such that successive quarters of negative growth will be spun into something else. Recession and depression will be something that occurred long ago in history.

UFM(utter fiscal meltdown) is what will soon be happening to an economy near you. Whether that will trigger the biggest re-think in the logic of allowing an un-governed engine rule the lives of billions of people remains to be seen, but my bet is that it will cause people to reconsider their naive view that something as vital and complex as the world's economic system is better left to run itself.

Its laughable that no-one in their right mind would suggest that something as complex as the underground rail systems of metropolis' like New York, London, Paris and Tokyo could run by themselves without the help of precision control. Yet we have all been deluded into accepting that something like the world's stock markets which are orders of magnitude more complex are best left to run themselves. When people start to realize that its not good for a society for people to be dumped randomly by businesses as they are taken over all because there are now debts to be paid. We have lived with this anomaly of people's labor being bought and sold like cattle, and being led to slaughter when that company mis-manages its wealth and blood-lets its human resources to create more wealth for those with capital. Its absolute insanity that societies the world over have thought that its okay to employ someone for their labor and unceremoniously dump them on the scrap heap by allowing companies not to practice due diligence and consider the social cost of some of its restructuring activities.

We have to stop living in this fantasy that imagines that you can crap in your own nest and not live to smell the consequences.

The post that was quoted here has been removed

Shucks! I'll end up blushing. Let me do my best Elvis and say thangewverrymush..

The thing I worry about is that this recession may be one long drawn out affair that we will eventually learn to get used to by taking ATY's relative approach and rationalizing its effects and compared to the third world we will indeed still seem fortunate.

I hope I am proven wrong but I think that the credit blood letting will go on for a long time yet and much like a spring that has been stretched past its limit and lost its tension, the ability of the market to rebound depends in part in there being opportunities for growth the way it has been in the past. But what if the investment centre of the world rotates away from the first and onto the third world and investors start chasing double digit growth over there instead?

The opportunities to make money out of the bric (thats Brazil Russia India and China to everyone else) may convince many to disband their choice of preferred stock spread and think about other less obvious alternatives.

For the first time the strength of the Chinese economy has meant that the credit crunch of North America has not put the rest of the world into a tail spin the way an economic fall out of this magnitude would have 20 years ago.

Stock is only as valuable as the markets willingness to speculate in it and if a pessimistic mood among brokerege firms sets in that sees the future away from the first world, then the rot will set in so quickly that lack of demand for once pre-eminent blue chip stocks will see the bottom fall out of the market and be depressed indefinitely.

I hope all the libertarians will be happy as they see their once great capitalist system stumble and fall as the smart money evaporates out of their free uncontrolled market to follow the highest return and best opportunity elsewhere.