Greenspan Warns of Likely U.S. Recession

Posted:
in AppleOutsider edited January 2014
Batten down the hatches



Another view is here.



For a little historical context we can look here.



Based off the average age of this forum, most people were not of an age where they would have really encountered and felt the last true recession in the United States. (1992 or so depending upon where you happened to be.)



The second article notes the following information.



Consumers also face high energy prices, higher interest rates, stagnant wages, negative savings and high debt levels, he noted.



Some of these factors, for example energy prices, can't be controlled for with regard to personal choice. However some of the other factors, higher interest rates, negative savings and high debt levels can be controlled.



As someone with a few more years under the belt than some on here, I cannot emphasize the effect that lack of liquidity will have on this next recession. Debt has been so readily available and cost so little for so long in this country that it will truly be interesting to see how people deal with less availability of it in a the future. Credit has so distorted the economy that things are no longer valued on what they are worth, but on what they can get in terms of credit. It is so strange to think of people thinking of interest rates being at 6.25 percent for homes loans as being high or even crippling. I still have an 8% mortgage on one of my properties and was thrilled to get it that rate because that was so much lower than the previous rates.



So the point of the thread, if you have experiences of memories of prior recessions, please post them here. If you have any advice or thoughts, add them as well.



Nick
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Comments

  • SpamSandwichSpamSandwich Posts: 24,943member
    Quote:
    Originally Posted by trumptman View Post


    Batten down the hatches



    Another view is here.



    For a little historical context we can look here.



    Based off the average age of this forum, most people were not of an age where they would have really encountered and felt the last true recession in the United States. (1992 or so depending upon where you happened to be.)



    The second article notes the following information.



    Consumers also face high energy prices, higher interest rates, stagnant wages, negative savings and high debt levels, he noted.



    Some of these factors, for example energy prices, can't be controlled for with regard to personal choice. However some of the other factors, higher interest rates, negative savings and high debt levels can be controlled.



    As someone with a few more years under the belt than some on here, I cannot emphasize the effect that lack of liquidity will have on this next recession. Debt has been so readily available and cost so little for so long in this country that it will truly be interesting to see how people deal with less availability of it in a the future. Credit has so distorted the economy that things are no longer valued on what they are worth, but on what they can get in terms of credit. It is so strange to think of people thinking of interest rates being at 6.25 percent for homes loans as being high or even crippling. I still have an 8% mortgage on one of my properties and was thrilled to get it that rate because that was so much lower than the previous rates.



    So the point of the thread, if you have experiences of memories of prior recessions, please post them here. If you have any advice or thoughts, add them as well.



    Nick



    Could present some great buying opportunities for stocks and defaulted loans on houses. The longer term question is: What kind of effect will boomer retirements and shrinking workforce have on the US (and world) economies?
  • hardeeharharhardeeharhar Posts: 4,841member
    Prior recessions...



    Riots in LA.



    Racial antagonism.



    Yeah... you know the drill...
  • mydomydo Posts: 1,888member
    Quote:

    "While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 ... with some slowdown," he said.



    Greenspan said that while it would be "very precarious" to try to forecast that far into the future, he could not rule out the possibility of a recession late this year.





    How one get from the above quote to "Greenspan Warns of Likely U.S. Recession". Is it just bad reporting or did Greenspan say more than what was reported.
  • @_@ artman@_@ artman Posts: 5,231member
    Quote:
    Originally Posted by trumptman View Post


    Batten down the hatches



    Based off the average age of this forum, most people were not of an age where they would have really encountered and felt the last true recession in the United States. (1992 or so depending upon where you happened to be.)



    Nick



    I recall the recessions of Nov. 1973-Mar. 1975 and July 1981-Nov. 1982. Though I was only a teenager and twenty-something, I remember the troubles my older brother had keeping his job and paying the bills. \



    Source
  • backtomacbacktomac Posts: 4,579member
    I remember 92. I was in grad school and that was a good place to be. Many a friend who had good jobs out of college lost them in that recession and went back to school.
  • trumptmantrumptman Posts: 16,271member
    Quote:
    Originally Posted by mydo View Post


    How one get from the above quote to "Greenspan Warns of Likely U.S. Recession". Is it just bad reporting or did Greenspan say more than what was reported.



    I think the statement relates to parties having differing views on the timeframe as opposed to recession versus no recession.



    Quote:
    Originally Posted by @_@ Artman View Post


    I recall the recessions of Nov. 1973-Mar. 1975 and July 1981-Nov. 1982. Though I was only a teenager and twenty-something, I remember the troubles my older brother had keeping his job and paying the bills. \



    Source



    The early 90's recession showed some very interesting values with regard to government to me. It is what makes me such a believer that the U.S. will go through a period of very strong to possibly hyper inflation.



    A recession hits, the government which is supposed to protect shows it's own self interest and simply begins ignoring its own rules.



    I was attending the CSU system in California. There were state laws instituted that limited tuition increases to 10% a year. They promptly ignored them and began passing 50%+ increases. I was paid by the state (teacher's aide) with a warrants instead of checks during a budget stalemate. Government will absolutely ignore the interests of anything but itself when the shit hits the fan. They'll suspend inflationary increases, they will ignore benefit promises, they will magically ignore caps and rates for fees and taxes, they will simply lie.



    Quote:
    Originally Posted by SpamSandwich View Post


    Could present some great buying opportunities for stocks and defaulted loans on houses. The longer term question is: What kind of effect will boomer retirements and shrinking workforce have on the US (and world) economies?



    My first property (which I ended up flipped to the tune of $20k on for several years) was signed over to me for free by the person who wanted to get out from underneath it. People did this often. Debt demands cashflow and in a recession, you might not have any so cars, homes and especially toys (rv's, boats, etc.) become very cheap.



    As for the upcoming boomer retirement. That could be several threads unto itself. My belief is that the U.S. government will magically unlink benefits and inflation calculations and run the printing presses. Boomers who have run record national debt levels all while saving nothing will be given the option of moving to someplace like Mexico to get by (they can send us workers, we can send them retirees) or they can enjoy the true silver bullet solution, a literal bullet.



    Nick
  • SpamSandwichSpamSandwich Posts: 24,943member
    Quote:
    Originally Posted by trumptman View Post


    Boomers who have run record national debt levels all while saving nothing will be given the option of moving to someplace like Mexico to get by (they can send us workers, we can send them retirees) or they can enjoy the true silver bullet solution, a literal bullet.



    Nick



  • @_@ artman@_@ artman Posts: 5,231member
    Stock selloff deepens



    "Dow tumbles 150, Nasdaq slumps as investors eye selloff in China, thwarted attack on Cheney, drop in durable goods orders.



    NEW YORK (CNNMoney.com) -- The stock selloff worsened near midday Tuesday as reports of slumping stocks in China and Europe and a steep decline in durable goods orders raised worries that the recent rally may be tapped out.



    News that Vice President Dick Cheney was the apparent target in a Taliban suicide bombing attack in Afghanistan added to the morning concerns."







    attack on cheney?!!!
  • jimmacjimmac Posts: 11,898member
    Ah! Just when SDW thought the economy was doing so well. Kind of soon isn't it? However not inconsistent with a cycle I've previously talked about.
  • trumptmantrumptman Posts: 16,271member
    The economy has been and is doing well. The prediction is for late 2007 and 2008.



    Nick
  • hardeeharharhardeeharhar Posts: 4,841member
    Tell that to the urban dwellers that surround me...
  • trumptmantrumptman Posts: 16,271member
    Quote:
    Originally Posted by @_@ Artman View Post


    Stock selloff deepens



    "Dow tumbles 150, Nasdaq slumps as investors eye selloff in China, thwarted attack on Cheney, drop in durable goods orders.



    NEW YORK (CNNMoney.com) -- The stock selloff worsened near midday Tuesday as reports of slumping stocks in China and Europe and a steep decline in durable goods orders raised worries that the recent rally may be tapped out.



    News that Vice President Dick Cheney was the apparent target in a Taliban suicide bombing attack in Afghanistan added to the morning concerns."







    attack on cheney?!!!



    You must have some serious mojo power artman, the sell off is almost at 400 points now.



    Nick
  • sdw2001sdw2001 Posts: 16,218member
    Quote:
    Originally Posted by jimmac View Post


    Ah! Just when SDW thought the economy was doing so well. Kind of soon isn't it? However not inconsistent with a cycle I've previously talked about.



    Gee...I couldn't have predicted that. You've been licking your chops, just waiting for some less than stellar economic data to come out. Today's drop in the market is like Christmas for you. Of course, it's been five years of waiting for you, so I guess I'll let you have your day. enjoy.
  • @_@ artman@_@ artman Posts: 5,231member
    Quote:
    Originally Posted by trumptman View Post


    You must have some serious mojo power artman, the sell off is almost at 400 points now.



    Nick



    500



    But recovering...

  • jimmacjimmac Posts: 11,898member
    Quote:
    Originally Posted by SDW2001 View Post


    Gee...I couldn't have predicted that. You've been licking your chops, just waiting for some less than stellar economic data to come out. Today's drop in the market is like Christmas for you. Of course, it's been five years of waiting for you, so I guess I'll let you have your day. enjoy.



    We never really recovered SDW!



    More like 3 years for most of us!



    I'm sorry but while you haven't felt a thing others have.



    I've never wanted this sort of thing but I did predict it!



    Bush is still in office and we're headed back for the hole again. Good job!



    Let's have some more tax breaks!



    http://articles.moneycentral.msn.com....aspx?GT1=9114





    From that article :



    " The decline was the biggest point loss for the Dow since Sept. 20, 2001 when the blue-chip index fell 383 points, or 4.4%, to 8,376. The biggest point loss ever -- nearly 685 points -- occurred three days earlier, when markets reopened after terrorists flew airliners into the twin towers of the World Trade Center and the Pentagon.



    The Dow's loss was also the biggest percentage decline since the index fell 3.67% on March 24, 2003 -- just before the United States invaded Iraq. The Nasdaq's point loss was its biggest since it fell 116 points on Sept. 17, 2001, the day the markets reopened. "
  • mydomydo Posts: 1,888member
    Quote:
    Originally Posted by trumptman View Post


    I think the statement relates to parties having differing views on the timeframe as opposed to recession versus no recession....



    Uhhhhhhhh? Not buying. There's some long bridge between "Greenspan Warns of Likely U.S. Recession" and "cannot rule it out". "cannot rule it out" is not "likely".



    Bad journalism. The AP is known to be very lazy.
  • ronaldoronaldo Posts: 439member
    http://onlinejournal.com/artman/publ...cle_1777.shtml



    This is an interesting aritcle. Could it be true

    It makes sense to me.
  • @_@ artman@_@ artman Posts: 5,231member
  • trumptmantrumptman Posts: 16,271member
    I had a post with some links to the nice 250 point "other shoe dropping" market close the other day. I didn't get to finish it and since then I have run across this.



    Top investor sees crash



    Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.



    "When markets turn from bubble to reality, a lot of people get burned."




    Those who have bought at the top, or who believe they can continue some huge payment during downturns and bumps might be in for a large surprise.



    "This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."




    I'm not hoping anything goes wrong and for a lot of folks, things really won't be especially bad. They'll stay in their homes which were overpriced and now will become reasonable in price.



    I cannot emphasize enough that the principle cause of harm in this recession will be lack of liquidity. The credit has been so easily available for so long that lack of it is as foreign to people as lack of electricity.



    Put some money in those savings accounts!



    Nick
  • brussellbrussell Posts: 9,812member
    Nick, as a property owner, are you worried about this at all? I only have one mortgage, a 15-year fixed, so I don't see how it could harm me. But I have a friend who own about 100 properties in my city. He says he's not worried at all, because we're not in a bubble region, but I can't help but wonder.
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