Definition of "Economic Recovery"

[Yuma]

I was watching CNBC the other day and they brought up the topic of the economic recovery. The average person on the street is saying we aren't in a recovery, or recession being over. Every Economist on TV is saying were are! So CNBC is saying what gives? The difference in viewpoints is the definition of recovery. To economists, a recovery is when a recession or depression has reached a trough, or an evening out of the lowest point in that recession or depression. So it doesn't mean we are actually doing well, like the majority of people think that term means, but rather we have hit rock bottom! LOL! No wonder people hate economists!

 

[LVG]

Heard the same thing on NPR the other night - exact same explaination.

Economists are saying that the recession has ended (e.g. it has bottomed out);

The public believes that the recession is on going because we have not fully recovered yet.

 

[82CardsGrad]

Heard the same thing on NPR the other night - exact same explaination.

Economists are saying that the recession has ended (e.g. it has bottomed out);

The public believes that the recession is on going because we have not fully recovered yet.

Fully?? Hell, have we partially?? Fractionally?? I wouldn't say scrapping along the bottom is anything close to "recovering"... I am still seeing people losing houses every day. Foreclosures still mounting with so many more to come. And companies still not willing to invest in themselves via hiring and capital expenditures. People and companies remain locked in Cash Hoarding mode... and I don't blame them one bit...

 

[jefftheshark]

The reason that the first Great Depression was so painful was that people believed the "experts" that the mess was over, went out and bought stocks or real estate, and then the next downturn took them out at the knees. If you look at a graph of stocks between 1929 to 1939 you'll see that while the general trend was down, to the tune of 89%, there were several periods where things went up. Those poor souls who bought and held based upon the leading commentators of the day were basically led to the slaughter.

I guess the answer is, you need to use your own eyes and ears and keep a very skeptical view of anything the "pump and dump" people say on CNBC.

JTS

 

[Rats]

The signs show that even with the US Dollar rally of the past few months, we are in a Japan style deflation on a massive scale. Comparing anything to GD1 from today is shortsighted. We should see the $$Dollar again begin to take a dive mid year as it will be obvious that Ben is still running the presses 24/7 and Real Estate markets are not recovering but getting worse with CRE imploding in most states. The DX will again be used as a carry just as the JPY was the last 20 years. Zirp will be held for a very long time as we are now in a Bernanke Box and can't get out of it. We have literally bought the rope we are to be hanged with and we have been sold down the river by our masters on Wall St. and the Politcal machine. The Fed has been the only buyer of the market for the last year and has artifically prevented a collapse. This cannot end well . I believe the USA as we have known it is not going to be the same 5yrs from now. No Nation has ever printed or spent there way to prosperity. It is unsustainable. A collapse must come and we are in a Grand Supercycle if you believe in such things. Only solution is band together with like minded neighbors. Prepare for the worse and hope for the best. Our Politicians have made available to the Wall St thieves a bailout fortune to the tune of 23 trillion to date They have availed themselves of 12.4 trillion and we still have no growth in jobs, wages, or real estate which is where most joesixpack get there money. The CDO mess that has unfolded is still in the 5th inning. We had 54 trillion dollars worth of CDS insurance written since 2003 and have only disposed of 12.5 trillion. The fraudsters on Wall St. want everyone to believe they are paying back the Tarp but it is only a small fraction of the money the .Gov gave away to them and are still giving to them. They are taking bonuses from future taxpayer $$ and there is no silver bullet to stop these beast. They will limp along looting the treasury at every turn until one day the window will be closed due to insuffiecent collateral and that will be that. Bank Holliday and where we go from there who knows.

 

[conraddobler]

The signs show that even with the US Dollar rally of the past few months, we are in a Japan style deflation on a massive scale. Comparing anything to GD1 from today is shortsighted. We should see the $$Dollar again begin to take a dive mid year as it will be obvious that Ben is still running the presses 24/7 and Real Estate markets are not recovering but getting worse with CRE imploding in most states. The DX will again be used as a carry just as the JPY was the last 20 years. Zirp will be held for a very long time as we are now in a Bernanke Box and can't get out of it. We have literally bought the rope we are to be hanged with and we have been sold down the river by our masters on Wall St. and the Politcal machine. The Fed has been the only buyer of the market for the last year and has artifically prevented a collapse. This cannot end well . I believe the USA as we have known it is not going to be the same 5yrs from now. No Nation has ever printed or spent there way to prosperity. It is unsustainable. A collapse must come and we are in a Grand Supercycle if you believe in such things. Only solution is band together with like minded neighbors. Prepare for the worse and hope for the best. Our Politicians have made available to the Wall St thieves a bailout fortune to the tune of 23 trillion to date They have availed themselves of 12.4 trillion and we still have no growth in jobs, wages, or real estate which is where most joesixpack get there money. The CDO mess that has unfolded is still in the 5th inning. We had 54 trillion dollars worth of CDS insurance written since 2003 and have only disposed of 12.5 trillion. The fraudsters on Wall St. want everyone to believe they are paying back the Tarp but it is only a small fraction of the money the .Gov gave away to them and are still giving to them. They are taking bonuses from future taxpayer $$ and there is no silver bullet to stop these beast. They will limp along looting the treasury at every turn until one day the window will be closed due to insuffiecent collateral and that will be that. Bank Holliday and where we go from there who knows.

All very true.

Historically Republics do not survive these things.

However a good deal of people, perhaps more than ever in history before know what's going on.

I've kind of made it my mini mission / crusade to talk about this and lately have reached the conclusion that no one knows for sure what the future holds.

I am quite certain though that there is only one real way out of this box that will maintain our freedoms or a country like we all grew up in.

That's simply knowledge.

There is some tipping point, a point at which enough people know that they can lead others out of this mess, it's not that 100% know, heck I don't think in history more than 1 out of a 1000 knew.

Is that point 1/100, 1/50?

Who knows but I do know you better find someone and impart the knowledge, not necessarily to save the system at all, but to rebuild it later on.

The only other alternatives aren't worthy of discussion, unless you like tin pots and such.

I really think what the country needs is a national BK.

We agree to pay what we can pay reasonably and stop borrowing and move on.

All other debts are forgiven, a national reset, jubilee with a turn towards another way.

We shouldn't give our country up for money, that would be wrong.

 

[conraddobler]

The reason that the first Great Depression was so painful was that people believed the "experts" that the mess was over, went out and bought stocks or real estate, and then the next downturn took them out at the knees. If you look at a graph of stocks between 1929 to 1939 you'll see that while the general trend was down, to the tune of 89%, there were several periods where things went up. Those poor souls who bought and held based upon the leading commentators of the day were basically led to the slaughter.

I guess the answer is, you need to use your own eyes and ears and keep a very skeptical view of anything the "pump and dump" people say on CNBC.

JTS

I also don't think you'll ever see us in exactly any previous scenario.

Buy and hold is claimed dead, unless of course you bought Ford at under 2$ a share.

Times of stress are incredible opportunities, fortunes are won and lost at times just like now.

We're a reserve currency in a sea of fiat currencies, eventually it will be clear how this will turn out, but in the fog now it's easy to get knee capped.

In my 401k I follow the simple 50 and 20 week moving averages, when the 20 crosses under the 50 by more than one percent I sell or buy, depending on the direction, downward on the 20 I sell and upward through the 50 I buy, and stay invested as long as it stays above and does not cross below by at least 1 percent.

I only buy back in when it crosses back by 1 percent or more, it takes all emotion out of the equation.

In my trading account I get headfaked all the time but I'm getting closer to timing these asshats.

I'm 180 degrees out of sync at the moment, so if I'm bearish as I am I buy.

But I'm only playing with play money, none of this is investment advice, heck mostly you should just watch and either buy or sell gold, depending, it's a messed up world out there.

 

[Rats]

I agree with a jubilee to an extent but that has it's own set of consequences. We should never trade our country away for temporary security(ie, money). We will never regain the footing that made this country great if we do. In some instances we may already have done this. Knowledge of what is happening in real time is still lagging and is fraught with elected bodies and there special interests. This leads to to many corrupt bargains that will tear at the underpinnings of our country. I have little confidence in elected bodies to do what is right and expect only expediancy that furthers there agendas. Our country has cancer from the Top down and refuses to get the required chemo. Our grandchildren will be left with little more than the vestages of what we dreamed this country could become. I thank you for what you do here in this forum Conrad. There are to few Patriots for the cause these days I am afraid.

 

[jefftheshark]

The signs show that even with the US Dollar rally of the past few months, we are in a Japan style deflation on a massive scale. Comparing anything to GD1 from today is shortsighted. We should see the $$Dollar again begin to take a dive mid year as it will be obvious that Ben is still running the presses 24/7 and Real Estate markets are not recovering but getting worse with CRE imploding in most states. The DX will again be used as a carry just as the JPY was the last 20 years. Zirp will be held for a very long time as we are now in a Bernanke Box and can't get out of it. We have literally bought the rope we are to be hanged with and we have been sold down the river by our masters on Wall St. and the Politcal machine. The Fed has been the only buyer of the market for the last year and has artifically prevented a collapse. This cannot end well . I believe the USA as we have known it is not going to be the same 5yrs from now. No Nation has ever printed or spent there way to prosperity. It is unsustainable. A collapse must come and we are in a Grand Supercycle if you believe in such things. Only solution is band together with like minded neighbors. Prepare for the worse and hope for the best. Our Politicians have made available to the Wall St thieves a bailout fortune to the tune of 23 trillion to date They have availed themselves of 12.4 trillion and we still have no growth in jobs, wages, or real estate which is where most joesixpack get there money. The CDO mess that has unfolded is still in the 5th inning. We had 54 trillion dollars worth of CDS insurance written since 2003 and have only disposed of 12.5 trillion. The fraudsters on Wall St. want everyone to believe they are paying back the Tarp but it is only a small fraction of the money the .Gov gave away to them and are still giving to them. They are taking bonuses from future taxpayer $$ and there is no silver bullet to stop these beast. They will limp along looting the treasury at every turn until one day the window will be closed due to insuffiecent collateral and that will be that. Bank Holliday and where we go from there who knows.

I understand the comparison to Japan, but I'm not sure about the rational behind the tumbling dollar. With the impending problems with the PIIGS, it would seem that the floating basket of currencies are all headed down, so on a relative basis, we could actually end up seeing a stronger dollar. And a stronger dollar would result in an unwinding of the carry trade, wouldn't it?

The rest I pretty much agree with, fwiw.

JTS

 

[conraddobler]

I agree with a jubilee to an extent but that has it's own set of consequences. We should never trade our country away for temporary security(ie, money). We will never regain the footing that made this country great if we do. In some instances we may already have done this. Knowledge of what is happening in real time is still lagging and is fraught with elected bodies and there special interests. This leads to to many corrupt bargains that will tear at the underpinnings of our country. I have little confidence in elected bodies to do what is right and expect only expediancy that furthers there agendas. Our country has cancer from the Top down and refuses to get the required chemo. Our grandchildren will be left with little more than the vestages of what we dreamed this country could become. I thank you for what you do here in this forum Conrad. There are to few Patriots for the cause these days I am afraid.

America won't die that easy.

America is an idea.

You can't kill an idea, you can only forget it.

So don't forget, tell others, it is that simple.

No one said we all get to just bask in the good times, you'd expect at times people would have to come to the aid of their country, if that's the gig, well it's a small price to pay in the scheme of things, all they really ask of you is to be informed and be a citizen, and we screwed up but nothing we can't fix if we try.

 

[Yuma]

Well, since this turned to stock trades partially in this thread, I sold off 90% of my stocks in December. I got in last November when no one was buying. Now it seems people are TOO optimistic and I have gotten out again. This is my self directed IRA, so I am not getting to spend any of my wealth. (DAMN!) Real Estate has hit pricing in the 1990's here, and I may buy a rental house with my money. Kicking that idea around. I am also kicking around the idea of buying foreign stock indexes in select countries because I believe we may be heading for some real inflation when the economy turns. That may still be a year or two down the road. We could see double digit mortgages again. That's why now is the time to buy if anyone wants a house.

 

[conraddobler]

Well, since this turned to stock trades partially in this thread, I sold off 90% of my stocks in December. I got in last November when no one was buying. Now it seems people are TOO optimistic and I have gotten out again. This is my self directed IRA, so I am not getting to spend any of my wealth. (DAMN!) Real Estate has hit pricing in the 1990's here, and I may buy a rental house with my money. Kicking that idea around. I am also kicking around the idea of buying foreign stock indexes in select countries because I believe we may be heading for some real inflation when the economy turns. That may still be a year or two down the road. We could see double digit mortgages again. That's why now is the time to buy if anyone wants a house.

I've heard a lot about inflation comming, and I don't think so personally, credit is too tight for that.

The demand for credit is too low to have high rates IMO, unless the government chokes out everyone, then it's possible.

If you're strictly looking at cash flowing a rental house then yeah buying when the rates are low isn't a terrible idea but the house price will crater based on the new unafordibility of it.

So you could buy it say at half as much with a rate say twice as high and still be right where you are, only having paid much less for it and later when the rates crash everything as they would then refinance it cheaper.

That's one possible scenario.

 

[Rats]

I understand the comparison to Japan, but I'm not sure about the rational behind the tumbling dollar. With the impending problems with the PIIGS, it would seem that the floating basket of currencies are all headed down, so on a relative basis, we could actually end up seeing a stronger dollar. And a stronger dollar would result in an unwinding of the carry trade, wouldn't it?

The rest I pretty much agree with, fwiw.

JTS

Jeff, the we are screwed but they are screwed worse scenario was fine until we began bailing foreign investors out. The real trouble begins if the $$ peg is broken. We could see out right collapse in confidence because Benny boy has paid 100 cents on the dollar for assests that are worth 50 cents and has incumbered the Feds balance sheet with these MBS. They will go lower still and the Treasury has to continue to debt service our spending. This means printing more and more dollars. I believe the UK is the only country as frivolous as the US. Net savors in Japan and China and that still did not work for there economy. We are a debtor nation that lives on credit expansion and with this down turn that is the sword we will empale ourselves on ultimately and our masters know this. They will spend to bailout the banks and shore up there balance sheets to insure there survival but the middle class very well may not survive. America may be a dream that needs an infusion Conrad but at what price to the future generations. The current group is so far in debt because they must get an education and to do so they have large recourse student loans. With no job creation they become disillusioned by there american dream and there debt load. We again are in a box that we created and cannot escape without much whaling and knashing of teeth. I still believe the derivitive problems in the finance arena will never be solved and cannot be sustained pragmatically. The BK may be the only way and only the elite survive for a period of time. Who wants that American dream...not me.

 

[conraddobler]

To try and turn this back on topic.

I found this video fascinating, it talks about an event we rarely hear about the depression of 1920 an 1921.

It's very seldom talked about and it's one of the best modern examples we have of our government taking a completely different route than we are now.

You can't completely compare any two financial downturns but I still found this very interesting.

 

[Yuma]

I've heard a lot about inflation comming, and I don't think so personally, credit is too tight for that.

The demand for credit is too low to have high rates IMO, unless the government chokes out everyone, then it's possible.

If you're strictly looking at cash flowing a rental house then yeah buying when the rates are low isn't a terrible idea but the house price will crater based on the new unafordibility of it.

So you could buy it say at half as much with a rate say twice as high and still be right where you are, only having paid much less for it and later when the rates crash everything as they would then refinance it cheaper.

That's one possible scenario.

It all depends on the supply of houses where you are buying. Where I am supply is tight even after this economic mess. A lot of people are NOT buying here, forcing the prices low because there is a big renter mentality after a lot of these folks bought at the peak, and we have seen housing values drop hundreds of thousand here, literally. I have looked at houses here that in 2006 are literally 50% off that price now. One I just looked at was 260K when I moved here and it is now listed for 140K.

Where I live there's been a historical influx of Californians that retire here because of no state income tax. Those Californians are stuck with their houses because no one has the credit or jobs there to buy right now. So I am looking at this being the time for people who have just a small amount of cash to get in my market before it frees up in California and all these cheap houses go away. I sold a house about 6 months ago to a smart couple from Californis who could afford to buy here, and wait for their house in California to be sold when the market changes. They hit the sweet spot of rates versus prices where they bought, I believe.

 

[conraddobler]

It all depends on the supply of houses where you are buying. Where I am supply is tight even after this economic mess. A lot of people are NOT buying here, forcing the prices low because there is a big renter mentality after a lot of these folks bought at the peak, and we have seen housing values drop hundreds of thousand here, literally. I have looked at houses here that in 2006 are literally 50% off that price now. One I just looked at was 260K when I moved here and it is now listed for 140K.

Where I live there's been a historical influx of Californians that retire here because of no state income tax. Those Californians are stuck with their houses because no one has the credit or jobs there to buy right now. So I am looking at this being the time for people who have just a small amount of cash to get in my market before it frees up in California and all these cheap houses go away. I sold a house about 6 months ago to a smart couple from Californis who could afford to buy here, and wait for their house in California to be sold when the market changes. They hit the sweet spot of rates versus prices where they bought, I believe.

Here in the midwest after the first time buyer credit expires in April I expect one more housing price dump that could last up to two years.

However, I also believe like you do that this may represent a unique buying opportunity you may not get again for quite some time.

House building here has halted and at some point the population growth along with other factors will take up the slack in the overbuilt makret and then rents will start rising, as that happens, no matter what else happens house prices will begin to rise again.

People have to have a place to live, and I think the sweet spot is right in the mid range of housing.

Not the hyper expensive stuff, the McMansions but the nice sized sweet spot of 2000 to 3000 square feet.

That is for here, anything bigger is too big given the maintenence costs and anything smaller is probably too small given all the people living with multi generations under one roof.

 

[Yuma]

Here in the midwest after the first time buyer credit expires in April I expect one more housing price dump that could last up to two years.

However, I also believe like you do that this may represent a unique buying opportunity you may not get again for quite some time.

House building here has halted and at some point the population growth along with other factors will take up the slack in the overbuilt makret and then rents will start rising, as that happens, no matter what else happens house prices will begin to rise again.

People have to have a place to live, and I think the sweet spot is right in the mid range of housing.

Not the hyper expensive stuff, the McMansions but the nice sized sweet spot of 2000 to 3000 square feet.

That is for here, anything bigger is too big given the maintenence costs and anything smaller is probably too small given all the people living with multi generations under one roof.

Plus, people are migrating out west. Not so much during this job cycle now, but they will keep coming. I remember as a kid how SMALL the Phoenix area used to be. Heck, even Yuma is ten times the size it used to be!