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View Full Version : When do you think the economy will get better?



humanrevolution
2009-Mar-03, 02:59 AM
First off, lets try to keep this non-political and most of all, please keep this POSITIVE.

Im honestly tired of hearing about how bad the economy is. Everyone knows we will eventually pull out of this, so please, keep the pessimism for another thread.

Thanks

Ronald Brak
2009-Mar-03, 03:22 AM
At the moment it is looking iffy if the US can avoid a 10% unemployment rate and that would probably take a few years for the US to pull out of. But increased stimulus might avoid that. So I would guess a couple of years until the economy starts to turn around. However, it will still take time for people to feel the benfit of the turn around, so I would expect high unemplyment in the US for the next three years. In general, Australia will be better off than the US, we will just have a recession rather than a possible depression like the US. I'm not voting in the poll because I feel that would suggest I have unwarranted confidence in my guesses.

humanrevolution
2009-Mar-03, 03:26 AM
Im am also confident there will be a turn around within the next 2-3 years

One question: When does Obamas Stimulus Package actually have the effect its supposed to? When does the money go into infrastructure, healthcare, etc.?

Ronald Brak
2009-Mar-03, 03:36 AM
I'm not going to comment on the details of the US stimulus package, but in Australia we are just getting about $900 or so Australian dollars if we have children or handed in a tax return last year and then we spend it on whatever we want.

humanrevolution
2009-Mar-03, 05:26 AM
Yeah families and singles are getting a check similar to that, I heard it they were being sent out on the 1st of April

Doodler
2009-Mar-03, 06:07 AM
First off, lets try to keep this non-political and most of all, please keep this POSITIVE.

Im honestly tired of hearing about how bad the economy is. Everyone knows we will eventually pull out of this, so please, keep the pessimism for another thread.

Thanks


As far as I've heard, this one's not quite as bad as the crapfest that we had back in the late-70s/early-80s. Most of what's making this painful is the pitiful sense of entitlement of my fellow Americans that leads them to believe they deserve economic prosperity as a birthright to be ridden into the ground like an idiot cowboy on a nuclear bomb. On the other hand(out), this is the wickedest economic fragfest the under-35 crowd has in living memory as a productive wageslave, so some of their pedantic whining isn't overly unexpected.

A depression isn't a likely outcome, too many people know how to avoid that pit. A wicked deflationary recession is the most probable outcome I see. The first glimmer of recovery should come within quarter or so, but I would bet that the "recovery", in terms of S&P or DJI numbers, won't breach the 10k mark for quite some time. Most of the wealth that propelled the markets to current levels was the result of junk bond grade abuse of leveraging in the insurance and real estate markets to a degree that comes pretty close to the same ballpark as the collapse in '32, if not that, then the dropkick in the crotch of '87. It was all phantom money in an epic scale game of "Bovine Droppings" that we've all been called on. The only thing that staves off a Big D is somewhat more intelligent monetary policy from the Fed...maybe, if Bernanke can actually show some backbone in the presence of Obama's economic team.

Economic growth will be extremely shallow, no more than a percent/year at best, if not flat, for the next two years. At some point, the revolution against the "burgeoisie" finance industry will run out of steam, on or about the time Americans realize the people we're trying to burn at the stake are the ones we need issuing us the lines of credit and loans that make economic recovery possible so that the common schlub can get mortgages for overpriced housing she/he/it can't afford in the first place.

For the long term, I see a return to pre-recession levels sometime on or about the same year we see American footprints on the Moon again.


Until then, its going to be one dog of a summer for the US.

Argos
2009-Mar-03, 12:48 PM
so please, keep the pessimism for another thread.

Well, you did include a 2013 option. If that´s not pessimism...

Swift
2009-Mar-03, 12:58 PM
Not to nit-pick the question, but I actually think of "get better" and "turn around" as slightly different things. To me, the turn around is the bottom of the curve, when things stop getting worse. Get better implies an upward trend. My ignorant guess is that things will bottom out by the end of 2009 or the start of 2010. I wouldn't be surprised if things stay flat for a while, before they slowly start improving.

Moose
2009-Mar-03, 01:10 PM
Not to nit-pick the question, but I actually think of "get better" and "turn around" as slightly different things. To me, the turn around is the bottom of the curve, when things stop getting worse. Get better implies an upward trend. My ignorant guess is that things will bottom out by the end of 2009 or the start of 2010. I wouldn't be surprised if things stay flat for a while, before they slowly start improving.

Yeah, my own instincts on the matter suggest this as well. If the economic world can keep from getting too 'creative' for a while, things should bottom out sometime around spring 2010. I suspect it'll be another couple of years beyond that (possibly longer) before we 'mere mortals' see any really tangible recovery in terms of our employment conditions.

Argos
2009-Mar-03, 01:36 PM
By 'we' the OP is probably meaning the US. Different countries will feel different impacts. Some will actually expand their GDP´s even in 2009. Down here the 'crisis' means a slowdown from 5.5% growth to 2 or 3%, with an unemployment rate of 8%.

BigDon
2009-Mar-03, 01:37 PM
Ah man, I can't post anything in this thread. Spent ten minutes trying to edit out the bannables and kept coming up with a blank post.

closetgeek
2009-Mar-03, 01:53 PM
Look, if my fellow Americans can just do me the favor of keeping things bad till around August 2011, I would really appreciate it. That is when my next opportunity to buy a house will come around. Thanks again!

As for the turn around, it's weird because the downward spiral is already starting to show a boost in certain industries. This is purely media based and I am acknowledging that it is very possibly 'the play on fear that sells' but local news stations are already reporting on an increase in crime. We are no longer in the A/V industry but my estranged husband works for an alarm company, which has already had an increase in calls and estimates. I predict that the crime has to hit a bit closer to home before people are willing to tap into savings to protect what they already have. Won't the increase in crime also effect the hiring of law enforcement? I wonder if gun sales are up. What other industries feel the benefits of increased crime? Is it possible for this lull to simply create another bubble?

Middenrat
2009-Mar-03, 01:54 PM
Our economies (lets say those using the Roman alphabet) will upturn once we reach some kind of parity with the leader in the field: China.
I'm certainly not an economist but how long could we have continued the largely one-way trading patterns with this huge elephant in the room without reaching a tipping point in the balance of our respective stock markets? The time was ripe for an adjustment and now we're getting it in spades. Ouch.

BigDon
2009-Mar-03, 03:15 PM
And not just that but China is actively recruiting our stock brokers and analysts who are leaving because certain parties want to try and limit their incomes for spurious reasons. I have lived so long that people are leaving America and moving to China to escape socialism.

nauthiz
2009-Mar-03, 04:18 PM
And not just that but China is actively recruiting our stock brokers and analysts who are leaving because certain parties want to try and limit their incomes for spurious reasons.

I recently read an article or heard a radio show or something that made a compelling case for income caps being a bad idea any way you look at it. It may limit the income of executives and financial professionals and whatnot, but it would put a brake on everyone else's income as well. But of course I can't remember what the details were. :doh:

I'm not necessarily opposed to the idea of reducing executive pay, but I do think the best way to do it would be using the same mechanism that got it so high in the first place: good old-fashioned market forces. If there's a solid practical case to be made that the CEO is being compensated in a way that ultimately harms the company*, just get the word out about it and wait for the next shareholder meeting.

*Like, say, that you could easily find someone who would do the job just as well for less money.

Chuck
2009-Mar-03, 04:28 PM
Won't it benefit the giant corporations to keep the recession going in order to keep the bailout money flowing? Bailouts will become part of their business models. They won't be able to function without them and they're too big for the government to allow them to fail. There's no end in sight.

nauthiz
2009-Mar-03, 04:57 PM
Won't it benefit the giant corporations to keep the recession going in order to keep the bailout money flowing? Bailouts will become part of their business models.

No.

First, the bailout money can't keep coming forever - if the government doesn't stop handing out large sums of money and start paying down the debt it incurs, it will bankrupt itself.

Second, the corporate bailouts are generally in the form of loans - the government expects to get that money back, plus interest. (That's largely how it plans to pay down its own debt.) Excluding special cases like leveraged investments, it's normally more expensive to take out a loan with interest than it is to spend money you already have.

Third, even if we ignore those first two contingencies, for most recipients the bailout money doesn't even come close to the profits they've been able to realize in the past when the economy was in good shape.

And finally, these companies are publicly traded and shareholders expect to get a return on their investment. They're not monolithic entities, either - they're run by people who have their own butts to look out for. If the leadership can't get the company back on a firm financial footing, then heads will start rolling. And even beyond that, top executives' compensation packages usually include a lot of stock. As long as the market doesn't see that the company is doing well their net income could very well work out to a negative number, and that hits a lot closer to home than whether the company itself is on a gravy train or not.


About the only case where it doesn't work out that way is for semi-public corporations such as Amtrak. Oftentimes those companies work like a government agency such as the Post Office as much as they work like a private corporation. (The government owns all of Amtrak's preferred stock, for example, so members of the board of directors of Amtrak are essentially appointed by the President.) And even then, there's still pressure to try and support themselves as much as possible because they have Congress and the Executive Branch breathing down their neck whenever it's time to pass a new budget.


(added: For further reading about the long-term viability of gravy train oriented business models, read just about any news article from early 2001. Especially ones that mention NASDAQ.)

Swift
2009-Mar-03, 05:02 PM
Good list nauthiz. I also heard yesterday the the CEO of Bank of America now regrets taking the bailout money. His reason, in the public (and stockholders) minds, it lumps their bank in with the companies in really horrible shape, like AIG and CitiGroup. I'm not sure I agree with that idea, but it was his statement.

nauthiz
2009-Mar-03, 05:20 PM
I can see how that might be true. My bank has largely steered clear of the whole mess, and apparently business was very good for them a few months ago. People were closing out their accounts with the banks that took a beating and taking the money elsewhere. A lot of them chose my bank, apparently because its name has managed to stay out of the news.

They're owned by RBS Group (http://news.bbc.co.uk/2/hi/uk_news/politics/7666695.stm), though, so I don't think there's been any benefit from a shareholder perspective.


It's like that Depression-era blues standard: Nobody Knows You When You're Down and Out.

Ivan Viehoff
2009-Mar-03, 05:24 PM
Not to nit-pick the question, but I actually think of "get better" and "turn around" as slightly different things. To me, the turn around is the bottom of the curve, when things stop getting worse. Get better implies an upward trend.

I think that in practice the bottom of the curve and the point where things start getting better are usually colocated. However the question is which curve do you measure the bottom of? Gdp can be increasing (slowly) while unemployment is still increasing. House prices can continue to fall (in real terms) for quite a long time after other things have started to pick up, or may turn around sooner. The stock market can start to increase well before anything else does, or may not. Also, the situation is still pretty poor at the bottom of a depression, so you may not consider it "mended" until gdp/cap has recovered to what it was before.

I can't remember whether it was Ronnie or George the First, but one of them once said something to the effect that although the level of inflation is not yet reducing, it isn't increasing as fast as it was. (Eg, using some made-up numbers, inflation had increased from 10% to 10.5%, whereas in the previous period it had increased from 9% to 10%). Now inflation is dp/dt. The rate at which inflation is increasing is d2p/dt2. So the president, not a man noted for his numeracy, told us that d3p/dt3 is negative!

Doodler
2009-Mar-03, 06:23 PM
Good list nauthiz. I also heard yesterday the the CEO of Bank of America now regrets taking the bailout money. His reason, in the public (and stockholders) minds, it lumps their bank in with the companies in really horrible shape, like AIG and CitiGroup. I'm not sure I agree with that idea, but it was his statement.

Even not taking it didn't help Ford, though.

chrissy
2009-Mar-03, 07:36 PM
I think things will start to slowly improve by the end of this year.

jfribrg
2009-Mar-03, 09:56 PM
I chose 2013. I feel that we are nowhere near "bottom" yet. Hopefully, I'm wrong.

KaiYeves
2009-Mar-03, 11:36 PM
I don't really know enough about economics to say anything. Too much math.

EricM407
2009-Mar-04, 11:51 AM
And not just that but China is actively recruiting our stock brokers and analysts who are leaving because certain parties want to try and limit their incomes for spurious reasons.

Wow, they're even dumber than I thought. Hope they enjoy it there.

mugaliens
2009-Mar-04, 05:55 PM
It's already begun pulling out of the dive... Expect the dive to end by mid/late 2009.

The resulting climb won't be meteoric.

Argos
2009-Mar-04, 05:58 PM
Those who´ve got savings should invest in the stock market right now. A bright future is in store for them.

Moose
2009-Mar-04, 06:13 PM
Even not taking it didn't help Ford, though.

True, but I don't think it would be fair to suggest that people who've been avoiding Ford products are doing so because of Ford's stance on the bailout.

nauthiz
2009-Mar-04, 06:13 PM
Those who´ve got savings should invest in the stock market right now. A bright future is in store for them.
And those of us who already had it in the stock market. . .

Well, I shouldn't complain too bitterly. At least my IRA is beating the S&P 500. And everything's just happening on paper. But still, ouch.

That said, I'm kind of hoping in an evil sort of way that the market doesn't come back in any kind of serious way before one of my CDs matures in a couple months. It's like there's a huge sidewalk sale on Wall Street and I can't get in on any of the fun because payday hasn't come yet.

HenrikOlsen
2009-Mar-04, 06:51 PM
The resulting climb won't be meteoric.
Since meteors drop, not fall, you're probably right. :)

SeanF
2009-Mar-04, 06:54 PM
Since meteors drop, not fall...
Indeed. ;)

humanrevolution
2009-Mar-08, 05:01 AM
Friendly bump :)

mike alexander
2009-Mar-08, 06:13 AM
The easiest solution would be to poison half the population. Maybe two-thirds. This immediately makes labor more valuable, as wages will have to be increased to compete for the remaining workers. Average wealth doubles. Strains on resources are lessened. Global warming self-corrects as CO2 emissions plunge. Plus, the increased difficulty of just surviving in the circumstances can't help but weed out the weak and incompetent, ensuring the survivors are tougher, smarter and less whiny than current people.

War (or general civil conflict) might have a similar effect, plus the devastation caused will have to be cleaned up and rebuilt. A bonus is newer infrastructure. I believe this is called 'creative destruction'. Maybe 'destructive creativity'.

humanrevolution
2009-Mar-08, 06:26 AM
The easiest solution would be to poison half the population. Maybe two-thirds. This immediately makes labor more valuable, as wages will have to be increased to compete for the remaining workers. Average wealth doubles. Strains on resources are lessened. Global warming self-corrects as CO2 emissions plunge. Plus, the increased difficulty of just surviving in the circumstances can't help but weed out the weak and incompetent, ensuring the survivors are tougher, smarter and less whiny than current people.

War (or general civil conflict) might have a similar effect, plus the devastation caused will have to be cleaned up and rebuilt. A bonus is newer infrastructure. I believe this is called 'creative destruction'. Maybe 'destructive creativity'.

Maybe during the Great Depression....ehhh, not so much for todays sitaution

sarongsong
2009-Mar-08, 06:57 AM
Friendly bump :)Too restrictive; a 2009-2013 timeline and
...most of all, please keep this POSITIVE...keep the pessimism for another thread...Offing half the population seems a bit unpositive to me. :)

mike alexander
2009-Mar-08, 07:18 PM
It may depend on which half you are in as well as your time scale. I recall reading Barbara Tuchman discussing the Black Death in the 14th century, and how in the long run, for some of the reasons I mentioned above, the plague may have assisted the final breakup of feudalism, the continuing rise of both secular states and the concept of universal credit, and ultimately the Renaissance.

So, that suggests that being hopeful on the scale of a century is justifiable.

humanrevolution
2009-Mar-09, 05:41 AM
No talk about killing off half the population! Its not gonna happen :doh:

Question: Would you guys even know we were in a recession if you didnt hear the media spewing it in your face 24/7?

I know I wouldnt, but then again, im only 17

sarongsong
2009-Mar-09, 07:49 AM
How are you funded?

BigDon
2009-Mar-09, 03:53 PM
Those who´ve got savings should invest in the stock market right now. A bright future is in store for them.

G.E. was at 6 dollars a share. Get it while it's hot.

nauthiz
2009-Mar-09, 04:04 PM
Question: Would you guys even know we were in a recession if you didnt hear the media spewing it in your face 24/7?
Business-wise, I think the first clue I'd have noticed is that my industry started into heavy layoffs a few months ago. Next would be that our sales staff has been having a hard time making sales because so many of our potential clients are in budget freezes. After that, it'd be a major trade show I went to a month or so ago - attendance was very low this year.

Personally, I saw it first when my IRA tanked. I also recently discovered the rates my bank is offering on certificates of deposit have dropped by about two percentage points over the past six months.

mike alexander
2009-Mar-09, 04:43 PM
What nauthiz said.

The flood of information available today makes it possible for anyone with access to the internet to make some well-informed estimates on the state of the world. The media 'spewing it in your face' could, I guess, be an annoyance if you are cushioned from the effects of a large economic downturn at this time. At 17, it's reasonable to be somewhat insulated for many people. On the other hand, my son will be starting college this coming fall, and his set-aside college fund is looking a bit anemic, despite a big chunk of it being in cd's and state bonds. My own company has had two 10% layoffs since September.

So no, some people won't notice much at this time. Others surely do, big time.

Torsten
2009-Mar-09, 05:08 PM
Question: Would you guys even know we were in a recession if you didnt hear the media spewing it in your face 24/7?


Absolutely. My business provides services to the forest industry, the guys that make lumber and paper. Not a very nice place to be right now.

I'm beginning to think the general economic conditions qualify as a force majeure (http://en.wikipedia.org/wiki/Force_majeure).

Argos
2009-Mar-09, 05:40 PM
A Sunday newspaper analysis down here featured 10 american economists commenting on the duration of the crisis. The good news is that one of them stressed that the average span of an American recession is 1 year [considering the last 10 recession episodes]. Now, on the flip side, recovery of pre 2008 levels of activity may take up to five years, maybe ten.

nauthiz
2009-Mar-09, 05:49 PM
Now, on the flip side, recovery of pre 2008 levels of activity may take up to five years, maybe ten.

Honestly, I'm not sure I want us to quickly get back to pre-2008 levels. I think that level of economic productivity was artificially high, the result of a bubble - just like in the late 1990s, just like the "Japanese Miracle". Chances are, if we get back to that point within 5-10 years it will be because everyone jumped on a new fad and started another bubble, just like they did in the early-mid 2000s.

Slow and steady wins the race.

mugaliens
2009-Mar-09, 06:54 PM
Maybe during the Great Depression....ehhh, not so much for todays sitaution

You haven't seen what some people actually do in certain countries... :cry:

publius
2009-Mar-09, 07:20 PM
Mish Shedlock just put this up on his blog, modern day shanty towns rising up in Sacramento:

http://www.dailymail.co.uk/news/worldnews/article-1159677/Pictured-The-credit-crunch-tent-city-returned-haunt-America.html

These shanty towns were a common thing back in the last depression of the 30s. So if you're in the middle of that, I'm sure you're keenly aware of the economic downturn, media or no.




-Richard

farmerjumperdon
2009-Mar-09, 07:51 PM
Echo what a couple others have said. Turnaround is when things stop getting worse and start getting better. Recovery is harder to define, and does not mean where we were at when the slide started, because the slide started from a false high. That is the entire reason for the contraction, a false high (or bubble) is bound to pop. (Nothing unusual about bubbles in a largely market economy).

Recovery to me is getting on a solid track of sustained real growth - minimum of 2 quarters.

I think we will bottom out 4Q09 to 2Q10, with sustained recovery by 4Q10. That is just an amateur economist's best guess - and since we are talking about a behavioral science that attempts to predict what Those Darn Humans will do - it is as good as anybody's.

Just as an aside; I did a half-lucky, half-educated guess bail from the market in November 2007 saving my retirement fund from going bye-bye. Most of my friends have lost 50 to 75% of theirs depending on the protfolio mix.

farmerjumperdon
2009-Mar-09, 08:00 PM
Absolutely. My business provides services to the forest industry, the guys that make lumber and paper. Not a very nice place to be right now.

I'm beginning to think the general economic conditions qualify as a force majeure (http://en.wikipedia.org/wiki/Force_majeure).

Certainly. Absolutely. Without a doubt.

I work for a Blue Cross plan. Laid off 200 this past fall. Enrollment dwindling steadily for the past year and expected to continue for as long as our customers are feeling the pinch. Small groups are going out of business and/or just plain forgoing coverage. Even the large group sector is in steady decline.

The next round of layoffs will probably come when we see how bad the mid-year numbers are; and merit increases have been cancelled outright for 2009. Seems harsh but is certainly not as bad as those taking cuts and losing jobs. And I'm not talking about what the news says; I'm talking about people I know.

Even without all that, there is a very noticeable increase in the number of closed storefronts.

Swift
2009-Mar-09, 09:56 PM
Question: Would you guys even know we were in a recession if you didnt hear the media spewing it in your face 24/7?

I know I wouldnt, but then again, im only 17
My 401K and my Roth IRAs have both lost about 50% in the last 6-12 months, the company I work for has a hiring freeze, a capital spending freeze, we've been asked to watch expenses and travel, and our orders are taking a fall. My wife's company got rid of all their temps and had some lay-offs. And all in all, I'm in good shape, compared to many people (like I still have a job).

Yeah, I noticed.

closetgeek
2009-Mar-10, 09:48 PM
Too restrictive; a 2009-2013 timeline andOffing half the population seems a bit unpositive to me. :)

Only if you're in the "offed" half. :whistle:


Honestly, I'm not sure I want us to quickly get back to pre-2008 levels. I think that level of economic productivity was artificially high, the result of a bubble - just like in the late 1990s, just like the "Japanese Miracle". Chances are, if we get back to that point within 5-10 years it will be because everyone jumped on a new fad and started another bubble, just like they did in the early-mid 2000s.

Slow and steady wins the race.

Nauthiz, I am inclined to agree with you. Any quick fix will not likely be a resounding solution.

mike alexander
2009-Mar-10, 10:20 PM
I must agree with the consensus above. The last thing needed is a too-fast bump. There have been two bubbles in the last ten years or so. Like losing weight, you can go on a crash diet or you can change your life-style. The first rarely works for long, the second is much harder to do.

nauthiz
2009-Mar-11, 01:01 AM
Looks like the uptick rule might be coming back. That should at least make Wall Street a bit happier.

Doodler
2009-Mar-11, 02:40 AM
Looks like the uptick rule might be coming back. That should at least make Wall Street a bit happier.

Yup, along with a little clarity on the mark to market rules wouldn't hurt.

humanrevolution
2009-Mar-21, 05:20 AM
Bump for some more debating :)

HenrikOlsen
2009-Mar-21, 10:38 AM
Bumps are discouraged here, please don't do it again.
If the thread deserves front page billing it's because someone has something to say.

Buttercup
2009-Mar-21, 05:41 PM
Early 2010.

But hopefully by mid-autumn 2009. *sigh*

NosePicker
2009-Mar-27, 05:01 AM
I'm on SSD, there's been no significant change for me. (The why's are too numerous to list.) If social security goes fins up, I would be in a world of hurt as I cannot work.

I have heard, that despite the economic blues for some businesses, that other business are thriving and developing. Bike sales, thrift stores (blooming in my neighborhood), electric bikes, motor scooters, and 'yard farms'

bikes: (http://www.cfpmidweek.com/weeks/IssuePDFs/vo3i08web.pdf)

yard farms: (http://www.voanews.com/english/archive/2008-10/2008-10-06-voa44.cfm?CFID=149618712&CFTOKEN=32012921&jsessionid=8830b554e08fecce49827f6d603d16444512)


electric bikes: (http://www.latimes.com/classified/automotive/highway1/la-hy-sns-ap-electric-bikes,0,5347882.story)

Romanus
2009-Mar-29, 02:16 AM
By the end of the year.

That said, we'll only have a few years of Indian summer before mounting debt, Social Security, and a withdrawal of Boomers from the workforce will give us a new set of problems.

flynjack1
2009-Mar-31, 03:43 AM
My guess is the current spending plan is going to make matters worse not better. I suspect a short term uptick followed by a lengthy recovery. 2013 would be optimistic if we dont get debt under control, but I voted for it as the furthest out choice. With any luck I will be retiring about 2013 too. Most likely retirement will simply mean a different flying job with fewer hours away from home.