December 2nd, 2008
09:54 AM GMT
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It's official. The U.S. is in recession and has been since December of last year, according to the National Bureau of Economic Research, the folks who keep track of business cycles.

The last two recessions (1990-1991 and 2001) lasted eight months each.  And of the 10 previous recessions, only two lasted longer than a full year. I predict this one will at least match the ones in the early 1980s and 1970s that each lasted 16 months. It may even exceed those, but this is not your typical recession.

This is a recession generated first by a downturn in housing which then led to losses by financial institutions - a full-blown financial crisis, the likes of which we haven't seen since the Great Depression.

Credit losses and writedowns at the world's largest financial firms are approaching $1 trillion and when the final ink is dry, that figure will be much higher.

Financial institutions are repairing their decimated balance sheets, hoarding cash, and making it tough to get credit. I suspect this process of deleveraging will last at least another year if not longer.

Oppenheimer Analyst Meredith Whitney predicts that credit card companies will pull back on lending by more than $2 trillion over the next 18 months in what she calls a "dangerous and unprecedented" move for U.S. consumer spending.

So how long will it take the U.S. economy to get back to normal? I spoke with Rob Carnell today of ING. He's worth listening to on the U.S. economy because he and his team have been ranked by Bloomberg as being the most accurate in their forecast for the past two years.

He told me it could be 2011 before we see more typical levels of GDP growth again, typical being about 2.5 percent growth.   If he's right, and I suspect he will be, a lot more pain lies ahead for the U.S. economy and other economies as well.

Manufacturing activity in the U.S. is at its lowest level in 26 years and at a record low in the Eurozone and China as companies and consumers pull back. Unemployment is getting worse.

Oil prices have plummeted by more than two thirds in just six months as worries about a worsening global economy accelerate.  As one analyst wrote. "It's hard not to be concerned about the prospects for a multi-year global contraction.  The daily flow of news is unrelentingly negative and comprised of many issues that should take quite some time to resolve."

The bottom line is this economic downturn is going to be a drawn out affair. Expect a lot more bad news to come, and expect it to come for sometime.

Let me know your thoughts.

Are you pessimistic about when the U.S. and global economies will recover?

Do you agree that it could be at least two more years before growth gets back to more normal levels?

What else could authorities do that they're not doing to try and speed up the recovery?



soundoff (75 Responses)
  1. Ray

    The self-fulfilling prophecy strikes again!

    The more we report on the decline of the economy, the more in fact it does decline. The feedback effect of reporting bad news is just that – more bad news!

    Todd, what I would like to see from CNN is an in-depth and detailed analysis of exactly how much CNN expects its advertising revenues in 2009 to decline as a result of the economic downturn. How bad will it get for CNN? Will the existence of the network be threatened and people be let go from their jobs? How about the stock price? Let's do some in depth reporting on how the people who lost their jobs in the CNN editorial department are making ends meet on welfare.

    In other words, let's report on CNN-Time Warner the same way we report on GM, the financial giants, and any of the others who are suffering under the currently (partially media created) loss of confidence.

    Come on, let's do this report! We all know, - conflict and human misery sell copy!

    My guess is – this is a report we will never get to see.

    December 2, 2008 at 11:55 am |
  2. Gerry Lewy

    it's about time the high living CEO's and other high-rollers get a grip on life. You come in to this Earth 'naked and penniless', and so shall you return....Learn to live within your means.
    As long as I can pay my monthly bills, anything else is sheer gravy !
    Learn to make things in America, instead of shipping it out to have some other country make it for you..what's so wrong with that?...Gerry!

    December 2, 2008 at 12:00 pm |
  3. Lwee

    It appear that Mr. Whitney's forcast may prove to be correct, and it may appears that this reccesion may turn into a depressions as in the 30's. To prevent this from happenning a lot of government 's priming may required as some analysts have predicted in the range of trillions.
    This thereby will lead America into heavily in debt, noting that even presently she is in debt something in the range of 1.3 to 1.5 trillion US.
    Sometimes I wonder where is she going to get this trillions sum, either by borrowing from Middle east countries or even increasing her debt from Asia who are facing a slow down as well. May be print more money and lower the standard of living of her citizen. Hence there is nothing proud of the USA. Thereby, the citizen had learn to save more and spend less and more carefully. I am sure Obama may have to increased tax just as what Clinton did during his time. Well American you ask for it!!! Problems presently are not so simple as it seem. Initially due oil price Airlines are in trouble. It was aggravated by subprime problem leading to credit squeeze by Banks resulting in failure of some merchant banks and insurance companies . Now you have Auto companies and even the Banks itself. What next maybe the
    Retailers or even the other manufacturing companies.There are possiibilities of increase umemployment. So American prepare for a rough ride for the years ahead and god bless the Obama regime.

    December 2, 2008 at 12:38 pm |
  4. allan sutherland

    Reference to the great depression in the article is incorrect. The causes of the great depression were different than the causes of todays problems. A more appropriate comparison is with the depression of the 1870's. The circumstances are similar and the causes are comparable.

    December 2, 2008 at 12:41 pm |
  5. Fazil

    When do we call this DEPRESSION? People keep talking about the worst economical crisis since 1930's and still call it recession. When does a recession become depression? Do you think we are slipping into a global depression?

    December 2, 2008 at 12:42 pm |
  6. Steve S

    If it "returns to normal" in 2 years we will all be very lucky indeed. There is a HUGE demographic issue that everyone wants to pretend does not exist. Perhaps there could be an article on how the pensions & health care time bombs are going to be paid for?

    December 2, 2008 at 12:42 pm |
  7. Michael C. McHugh

    To recover from this depression, there will have to be a great deal of reform and restructuring in the years ahead, of the banking and insurance system, the automobile industry, intenational institutions, and so on. Government will become more important in the global economy than it has been the free market era of the last 30 years. This new administration has a mandate to make reforms, and we'll see how far they are able to go.

    December 2, 2008 at 12:52 pm |
  8. Corne

    Everybody is absorbing the tough lessons from our irrational and unresponsible spending as well as manner in which we were conducting business the past number of years. As always the human race will push boundries until it is causing us so much pain and damage before we react. The real estate, financial and other markets will need at least 18month to 2 years to correct itslef and start the recovery process. We will all have to be responsible and take it on the chin until then.
    good luck all. I don't believe authorities can do to much to speed up the recovery, but any help is better than none.

    December 2, 2008 at 12:58 pm |
  9. Jackie in the UK

    Well – not sure why all the focus on the gloom. Why not have a balanced report and identify the triggers for economic turnaround? It would be nice to see balanced scorecard as to how these are improving in 2009, and compare with the rest of the world (Eurozone, Africa, Asia, China etc). Why hasn't there been more reporting about the failure of regulation and the mandated courses of action that should/will be required? I agree with Ray – all doom sayers will only lead to self-prophecy. Our confidence can only improve with the right evidence and trust built from those in decision making seats. I challenge CNN to start chasing them and getting committment for achieving these very things.

    December 2, 2008 at 1:03 pm |
  10. Jeff Stevenson

    Good Morning. Whatever you call this, recession or contraction, it seems to me that this is an opportunity for the United States and the world to re-associate itself with real prosperity which is based in real things not imagined or fictiious financial instruments. Things like advancing energy efficiency of world. Things like advancements in medicine and real improvements to each countries infrastructure. It also seems that never before has the world been so united to overcome a problem as they have with this global financial crisis. It will be overcome. We need to have foresight! We need to be innovative and forward thinking with real and positive solutions to the worlds problems. There is real and sustainable prosperity in this perspective. The people of the world need stability in their lives. We may see this type of unity and cooperation further marginalize the terrorist factions of the world. We need to put aside our differences and look to our commonalities. I suspect, that this will last a far shorter time than the folks at ING have forecast. We have some fantastic leaders in the world and we have just elected, what may turn out to be, the greatest President in this countries history. We need leadership and direction in this world and for far too long we have been going down the wrong trail. Thank you very much

    December 2, 2008 at 1:11 pm |
  11. Arman Ud Dowla

    I do agree that this recession will stay for about two years. I dont think it will take the same time for other nations to recover. US has a huge debt, of about 1.3 trillions which is mostly borrowed money from the Middle East, Japan and China.

    So, its a huge task ahead of them (Obama regime). Higher Taxes could be one solution ; but the US should have policies aimed at long term (say 5 years from now). The first thing they have to do is to save the industry that are most affected (auto,airline,etc). Credit has to be reduced and the people has to curb their spending. Lot of compromises is needed for all the citizens.

    December 2, 2008 at 1:21 pm |
  12. Kent Patterson

    This bubble burst was anticipated within many schools of thought for well over a decade (I did, and was the village idiot for that view). I read by some econimsts, that it could take "decades" to fully repair (does fully repair the economy mean decades to return to: ...a new bubble, or simply prosperity?).

    I (and you the reader) never saw such sloppy management of money on such a scale (banks underwriting loans with a rubber stamp is the most glaring example). – It was beyond my crazy artist's imagination.

    My opinion is that it will take 2-3 years before we see "some normalty"; people buying cars, art, vacations, new stores opening – and staying open, etc.

    But during that time, we will learn many ways to economize, not waste, and build new efficiencies in our economy that were lacking.
    While I'd venture to call this a depression – I won't say it will be anything like the great depression. I know some romantics are trying to over-paint that ugly type of picture.

    December 2, 2008 at 1:36 pm |
  13. Pat

    This type of predicting is detrimental to our current economic condition. We just do not know how long it will last – and the government cannot "fix it". We the American people have to fix it. The news people need to stop feeding the fear that's driving this mess. It is what it is – and sadly, we are all going to have to suffer the consequences of our misguided behaviour – whether or not we deserve it. My recommendation... is cut up your credit cards – stop buying cars and houses, and live on what you have for a few years. While you are at it – stop over insuring your cars, homes, etc. When insurance companies do not pay claims, cancel them! When doctors do not perform to your satisfaction don't sue them, fire them – and advertise that to everyone you know so they can't continue their bad performance.

    December 2, 2008 at 1:37 pm |
  14. Mark

    A report shown recently begins our current economic tale of woe with Greenspan and Enron. An interesting point made in the report is that the "rot" from Enron went on to occupy key executive positions at leading institutions, where they continued to do business as usual.

    December 2, 2008 at 1:48 pm |
  15. jonas

    this recession could be over more quickly than everybody thinks. When somebody says "we are in a recession" he is right for the moment and will be wrong tomorrow. The difference with 1930 is that most people where poor. Now, there are still a lot of people with money. Our communications are thousands of times faster than then and hunderds of times than in the 80's. when is gets better is will go as fast as the day that it got worse. People are postponing their purchases because of articles like this, worsening the economie but still have the money and a lot of them still have their job. As we speak, people are saving more and more money, witch they will spend sooner or later. The more they save, the bigger their purchase will be. if they save for a car, but still wait to buy one, the bigger the car will be. We now realise that fuell prises will never get to 150$ for the first 20 years, and that oil shortage was a hoax used to finance the exploits of the middle east spenders. Dubai is in financial need because they don't have enough cash to keep building. higher oil prices where needed to finance it all. Our way of living is high, and we will not give it up without a fight. metal, oil... where high because of speculations and made it difficult to make a profit, BUT WE MADE A PROFIT! now these are low, and we will make a killing! Stock are low because of sentiment, not because overproduction. we don't buy cars because we are scared, not because we don't have the money! 3 months ago we had a shortage of workforce, and guess what: WE STILL HAVE A SHORTAGE! when sentiment gets better, so will the economie. When there is a problem, people like to listen to the doomsday people and shout HE'S WRIGHT, I AM INDEED NOT RICH! after looking to the television show that shows us that "normal" people don't work and go to the beach every day. Just look how your grandparents lived and look at how YOU live. See any difference? We grew to fast, yes, but we are not going to the stoneage! Stop yelling DOOM DOOM, but be critical and look to yourself and your neighber, are you still spending? Do you still have food? Are you still dreaming of a new car, a new house? YES WE DO! As long as people dream, we chase the dream, en those who shase the dream have a chance to live the dream.

    December 2, 2008 at 2:03 pm |
  16. Dennis

    This down turn never would have happened in the first place if Corporate America wasent allowed by congress to let thier greed rule thier senses.
    Outsourcing jobs to Brazil to produce paper and lumber to make a huge profit is just one example. These corporate animals rely on cheap labour, no unions, no pension plans, no benefits etc which enhances thier profits. The greedy corporate pigs in the US caused the same problem in 1929.

    All these bandaids supplied by the Federal Reserve, the poor taxpayer, and several other entities is only a temporary fix to try and bypass this corporate cancer.

    The American people have to get rid of the cause of the problem if they want to survive. All CEO'S along with present corporate management have to be disposed of, and replaced with new management with government stipulation that that any future corruption will guarantee life long prison terms.

    December 2, 2008 at 2:08 pm |
  17. Woody

    You aint seen nothing yet, the financial mess the World is in will make 1930 seem like a Disneyland Holiday. If the US starts printing cash out of desperation then have a look at Zimbabwe.

    December 2, 2008 at 2:08 pm |
  18. LB

    I think that one way the government could help the economy is to offer partial subsidies to companies who are going to lay staff off in the idea that they company retains the staff, the government contributes to their wage cost. That way there are less people signing on for unemployment so it reduce the governments cost long term and also help strengthen the economy. Also if they want people spending, then rather than doing tax cuts which people can save why not use the same funding to provide high street vouchers to tax payers that cannot be cashed in and must be spent – it would ensure the payout is spent in the economy and cost them no more than the reduction in taxes would.

    December 2, 2008 at 2:18 pm |
  19. Fabio

    We should call this recession DEPRESSION: We are all so DEPRESSED by the bad news media is throwing at us every day... how can you expect economic improvement in a psychologically depressed society ?? The media promoted world doom!!

    December 2, 2008 at 2:23 pm |
  20. earle

    This recession – the bottom is yet to be seen- is compared by some to the great depression of the 30's. If it should be compared to the great depression, then we can consider some comparisons: the size of the market(s) and the population of those countries affected, compare to what is was in 1929. This comparison, is it telling us what to expect; keeping in mind the great depression took 3 to 4 years to bottom out, but should we expect less time for this recession to bottom out due to governments support in most countries affected.

    December 2, 2008 at 2:30 pm |
  21. Sam

    All major institution have lost money, and the end result is the public has to compensate, no clear explanation as to where the money went.

    December 2, 2008 at 3:02 pm |
  22. MUHAMMAD ALI SIDDIQUI

    West has seen tremendous growth in the past century because of lack of INTEREST/EDUCATION in Asia / Africa / South America.

    Most opportunities will be quite open to every one as these will be open to West.

    Japan, China, South Korea, Malaysia & India have already shown how much share they can have from Global Business. And I can see very huge awareness in other countries like Philippines, Vietnam, Sri Lanka, Pakistan, Thailand ……(a long list)

    South America & some African countries are already in the queue.

    * Near future (10~15 years) virtual world will remove all the remaining borders & business opportunities will be more open to almost every part of the world.

    It does not mean West has no future, but West will have to cut its living costs. And will have to learn “HOW TO LIVE AT PAR WITH OTHER HUMAN BEINGS”

    I am a small businessman in FAR EAST & SOUTH EAST ASIA.

    December 2, 2008 at 3:11 pm |
  23. DG

    What a pertinent comment by Ray- let CNN put istself under the same scrutiny that it showers on the others.

    December 2, 2008 at 3:30 pm |
  24. Dr.T.V.Mathew

    In knowledge based globalizing world knowledge is the most important asset.US has a monopoly in it. The US depression might last for a year.Us will remain as a super economic power in a globalizing world.What is needed is a ittle more regulation of the fiancial secor. A rebound is possible earler than expected if meausres are taken to boost up spending as well somehow. The more USA concentates on its domestioc policies the sooner the rebound will take place.US is a post industrial society. The axial principle for success in a post industrial society is knowledge/research and human endowments base.Extreme marketism cannot be relied upon.Regulation,restrains have a place in the course of the evolution of any economy.There have been many depression even before the 1929 Great crash.The depression history shows that just as when a man is tired he takes rest, the economy too follows that norm.looking forward to the rebound of the US economy and the entire globalizing world.............

    December 2, 2008 at 3:49 pm |
  25. Bill

    With the massive amounts of debt that the U.S. is enveloping itself in, I wonder how significantly the possibility of the U.S. bankrupting itself has increased. Who will be willing to finance the debt and for how long?

    December 2, 2008 at 3:57 pm |
  26. Elvis

    Frankly, the Asian nations dont give a damn regardless America will recover from recession sooner or later. After years of critisicms from several US presidents of how Asian leaders manage their economy, Asian leaders apparently taking their foot forward from current financial mess. By making their economy stronger and resilient, Asian leaders have voiced out that its time for them to be rightful future superpowers. And many asian nations have actually benefitted from current financial mess of America.

    December 2, 2008 at 4:22 pm |
  27. frans

    I believe the current economic situation is a turning point in history for all mankind. A paradigm shift is what is neccessary to move forward into the future.

    To enable most people to afford a house – housing must be cheap. So what then is the problem with a morgage meltdown..?

    To sustain any economy, we need cheap and clean energy.

    I hope people will realise that life is too short and precious to worry about the illusion of paper wealth (which is unsutainable)

    Therefore – choose your weapons well ..!

    December 2, 2008 at 4:28 pm |
  28. laurent

    Once again, an article written according to an American point of view !

    Todd Benjamin leads a good analysis, but one from the past century.
    He forget that making ecnomic prediction cannot work anymore in a globalized world. We do not have the tools to be able to make such predictions. The only tools Todd does have are natinal indexes which are added together to try to analyze the future.
    Instead of giving fake informations based on unadapted national datas, you'd better work on elaboarting modern way of thinking which would take into consideration that we , now, are in a global world where every national and transnational (i mean European Union) entities are interacting whith each other.
    making prediction in such a new world is non sense!

    December 2, 2008 at 4:48 pm |
  29. allon

    As #1 points out, CNN has its own biases. In the same way that they do not report on certain of their reporters who get in trouble with the law in central park in too much detail, they magnify existing panic because it sells and selling keeps their jobs.

    December 2, 2008 at 4:52 pm |
  30. baleine d'ivoire

    I love words ending by "-sion" : recession, depression...So fashion !

    December 2, 2008 at 4:55 pm |
  31. Spanky

    Finally, the countries that would take America for granted by having their cake & eating it too at the expense of the expanding American Middle Class will now pay for their negligence towards expanding their own middle class or consumer power. The U.S. continues to grow the global economy by creating value that can be leveraged. The generated cash, hungry for investment, could find no support in China or Europe so it resorted to paper instruments with inept-applied credit ratings to find an acceptable return for its excess cash. China spent their income from America on building infrastructure & modern cities rather than a middle class that would warrant investment in the production of consumer goods. Europe had already resigned itself long ago to never working like Americans in the pursuit of a better standard of living and opted for the retirement age of 55 after a life of 39 hour work weeks and 6 week annual vacations – not much incentive for growth in consumer power there. Once the paper bubble reached it maximum leverage without enough underlying support from a global absence of an expanding middle-class consumer- power, it crashed. Other emerging economies i.e. Brazil spent their money on becoming totally self-dependent on sugar cain for fuel while it's poor trawled the slums. What does a global economy hell-bent on growth & capacity expansion, in order to deal with the epic tasks confronting a planet in peril, do when the participants/members are not 100% commited to progress and the development of a middle-class-consumer-power growth engine opting to pick & choose what they will gain or loose in relation to American consumers? It pulls the plug on itself. Next time as we rebuild the global economy, it will be paramount that all members who wish to participate in the good life will need to commit to the expansion of the middle class and democratic reforms so that those consumers can have a say in their consumption choices. America will be once again at the front of the line in the boom cycle because it is still the biggest middle class in the world and it should rightly demand that the members are either in 100% or they are on the expressway to a second or third world power without a voice.

    December 2, 2008 at 5:02 pm |
  32. George

    Be it recession or depression, inflation or deflation, nothing matters or is more crucial than being jobless, no savings to feed the children, and a decent shelter to shield the cold. These are important issues that need to be address in any nation. The developed nations are much luckier because the government provide aids for the unemployed. But this is not so for the under-developed countries. The issues of falling prices of oil and other resources is infact a blessing for the poor countries. This will help ease poverty and provide them greater opportunity and means to produce human needs like food, grains etc. It helps to generate some income giving them some decent profits to purchase some material needs produce by the developed countries. This will inturn help the developed countries to reduce unemployment rates. Thus, my suggestion is that the strong nations should address the idea of stimulating the world economy by lending a helping hand to help poor countries to succeed and able to share some global wealth which in return help the developed countries economy.

    December 2, 2008 at 5:10 pm |
  33. EARL

    With all bail out funds, why not have government work out a deal with these companies that lay off 10,000 and 30,000 employees, to help keep individual with jobs vs. getting $600. per individual on stimulus package. Most individual are not buying when they do not know if they are going have Job the next day.
    2nd the banks which receive the bail out money need lower mortgage rates down below 5% for 30 year fix loan then people would be interested in refi and purchases as long as the banks close the loans in right matter with full doc., loans with money down on home. This is how I give bail out money, People need their Jobs first, bottom line will take care of it's self.

    December 2, 2008 at 8:34 pm |
  34. Onno Frowein

    It reminds of the film Tora Tora and the attack on Pearl Harbor when outside posts detected the Japanese fighter planes but nobody believed them.
    Now we have a similar situation many months ago Warren Buffett said that the USA was in recession and again nobody believed him. Now we are with the nose in it and too late to take precautions so not millions of people would lose their homes and jobs.
    The money spent on saving the financial system is a joke and is the laughing stock with the bankers. Those that were not fired keep their expensive jobs and ofcourse those that made millions with packaging the subprime mortgages will stay because they made big incomes for the bank. In the business world if I get screwed by a company I would be very dump to go back there. But most banks knew how these subprime mortgage were packed together but sold them to their colleagues at other banks with the recommendations of Moody's, Standard & Poor, etc. So no wonder there was a financial crisis amongst the banks but for that reason it was necessary to inject billions of Dollars in the institutions.
    Worldwide banks had already a louzy reputation and in my opinion it's not right that the US Government is pumping billions of Dollars in the financial institutions and let the Big Three en belly up with 3 million employess and then I am not talking about the workers at the suppliers.
    Finally, I believe that the US government has an obligation to the American people to help them to get through this crisis that are disrupting towns and especially families. Instead of supporting rich bankers it would be better if each American family that is laid off or is facing a foreclosure gets a direct financial support by receiving a check for Christmas.
    Every taxpayer is now part owner of the banks and deserves a check for taking this risk . Senate, Congress and the administration are only brokers in this matter the taxpayer, however, takes the risk and is holding the bag.

    December 2, 2008 at 8:49 pm |
  35. Alison

    To quote Mr Micawber of Dickens' David Copperfield "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." That's from 160 years ago.

    With the tacit approval of Govt's, financial institutions have sought to lower their credit requirements, whilst the same Govt's have dropped interest rates, both to "keep the economy going". Now it's catch-up, when the brown stuff hits the fan. Surely no one really believed that it could go on for ever. It was going to have to stop at some point in time. It just needed a straw to break the camel's back.

    "Annual income twenty pounds, annual expenditure twenty pounds ought and six" has become the norm for so many using "credit". "Result misery", and in my opinion the "misery" has just been put on hold for a while. There has been a huge bottleneck in Mr Micawbers "misery" stream, that's in the process of clearing.

    December 2, 2008 at 9:50 pm |
  36. d. griffith

    I believe we are in what normal growth really is. We have been over doing things. I am optimistic about the US and global recovery, because we have more than enough. Authorities need to return the livelihood(means of support or subsistence)back to the consumers so we can spend more money and everyone can enjoy the economy.

    December 2, 2008 at 9:50 pm |
  37. roger

    is Congress bailing out the three auto companies or the UAW. You cannot force Americans to buy their autos if they are not competive in prices compared to Japanese models or Kia etc. To be competive they must lower their labor cost. I realize working for the union pays good but if your products do not sell then the company goes bankrupt because there is no profit

    December 2, 2008 at 10:04 pm |
  38. gatkin09

    Let's stop mentioning the Great Depression. Business cycles can hardly be compared to those that happened 10 years ago let alone 80 years ago. Besides I would think that World War Two would have shaken up the global economy more than the Depression since the developed world spent a few years trying to wipe itself out.

    We should also stop pretending that any one of us can foretell the future, the current downturn will end when confidence in the financial system returns and when that is depends on thousands of decisions being made around the world each day. (from purchasing managers to investors and politicians)

    However the history of humankind tells us that the growth in world trade will return and eventually we will work ourselves into another financial crisis or bubble.

    Greg Atkinson

    http://www.shareswatch.com.au/blog

    December 3, 2008 at 12:35 am |
  39. earle,florida

    I'll start with the price of gasoline @ $4.25 /gal. Nat'l.Avg., at it's peak,similarly a barrel of oil @$150.00 was the catylyst (big factor in my opinion) in the United States tanking economy. It basically stymied consumer (disposable income) spending ,and I'm talking about ,"Joe Sixpack & Theresa the Homemaker" that support our consumer driven economy,here,and abroad! Consumer wallets closed,and banks/credit card companies suffered, Cash (liguidity) dried up,and those on the cusp(unworthy credit risk, and no-money down home-owners) started bailing from their fiduciary responsibilities in the housing market,etc.. Because the Banking/Real Estate markets had been leveraged so high(1/40 in some banking institutions) this small increment of defaults created a mad rush for the exits,(analogous to," yelling fire in a movie theatre")and we had a run on the banks! The current administration and government entities(SEC,Treasury,and Fed,etc.,)were fully aware of the precarious conditions the banking,and housing system were in since mid/2005, but hoped to pass it off to the (how cunning,just my humble opinion) incoming administration! There's alot more I could go on about but i'd like to finish with a glimmer of hope.Here goes the analogies again,I just can't help myself(picture=1,000 words):Once an alcoholic admits his alcoholism, the healing process begins,this holds true to our current financial crises. I feel that the only way to free up the markets is to throw a ton of "Cash"at it,and then, throw another ton of "Cash" at it,just like Paulson,and Bernanke are doing(I don't particularily care for either,But),and put aside the grievances for now. There will be pain,and there will be healing, we must learn to be patient,eliminating the pettiness,and highlighting the positive for our countries future.

    December 3, 2008 at 2:11 am |
  40. Sam

    Wake up America. Believe it or not there are small business oppotunities with small initial startup costs. Stop depending on a company for a job. That will not fullfill your dream – only someone else's dream. Our country was built on small businesses. Come on America, look at your forefathers who came here not for a paycheck but to create their own opportunity. We have become soft and dependent. We think we are entitled. The only thing we are entitled to is the opportunity for freedom – including economic freedom. We are innovators, smarter and more resourceful than we think. Don't look for help from a company because many company's need help as much or more than their employees. Wake up America and smell the freedom. Find your dream and ACT ON IT.

    December 3, 2008 at 2:32 am |
  41. Shan Saeed

    Todd,
    Its funny, when people say that recession has hit the economy. Yes, its true. However, we have to make one thing very clear that recession is not a buisness cycle. Infact, its a consumer cycle. When people dont spend, businesses dont invest, economy starts to recede, bringing down the overall activity in the economy.

    I think, right now there's crisis of confidence among investors when [individual or instituitional]. Now the question is, how to bring confidence/trust back to the economy. By giving more funds to the ailing banks and rescuing them is not the solition. It is just like giving charity to an addicted person to get worse from adiction with free money. The solution is either they straighten up or they go bankrupt in order to get thmeselves discipline. That's the way going forward....

    The US economy will remain slow down till 2010 3rd quarter and will pick up in the Q4 in 2010....The sentiments are bearish and very negative at the moment. However, I feel that the key is China. China will have to lead the global economy from the front. The leadership of policy makers in the chinese government has done in past and will do it again....Remarkable effort .......AVERAGE GDP OF 10% MAINTAINED BY CHINESE ECONOMIC MANAGERS IN THE LAST 11 YEARS.......I think, Asia, wil be leading in the economic race int he foreeseeable future. American economy will slowly catch up with the asian economic giants. Europe might become the sick child in the global economy for sometime...........

    Shan Saeed
    MBA Final year student
    Uni. of Chicago
    Booth Schoolof Business
    Chicago

    December 3, 2008 at 2:42 am |
  42. Joseph

    It is unfortunate to see a big portion of the Canadian work-force out of work. BUT, let me put my ‘two cents” here: Firstly, why do the smaller and the medium size companies are more likely no to let people go then a Large Company? Because they are more flexible and acceptable of the idea to change their day to day operation in order to stay ahead of the competition. So, the larger Organizations should learn from the smaller ones. They are to accept new ways and strategies to do business in this ever-changing world in order to stay ahead of the game at all times. We can see lots of small and medium companies using CargoAuctions.com, but not so many larger Organizations. As an expert in the Freight Industry, I know that ANY size Shipping Company can use RAP (Reverse Auction Process) and that’s exactly what this new Canadian Company offers to its users. They also have quite a few Charity Organizations affiliated with them, which benefit from Cargo Auctions profit (“one third” of their gross revenue – to be more precise). Cargo Auctions is a Mississauga based company and they launched their innovative B2B application in October 2008, through which the Shipping companies post their loads and save lots of money through a "Reverse Auctions Process" (15-30% savings). Secondly, as the application is brand new, they are looking to contract large number of Sales (Marketing) Agents and they pay like no one else "Life-Time Commission fee" to its Marketing Agents. So yes, Cargo Auctions is a very good option for the Shippers and Carriers to meet and at the same time for the newly let-go people to become Cargo Auctions sales force. I encourage you to visit them and enquire about their services – they will save lots of jobs in your community.

    December 3, 2008 at 3:29 am |
  43. Corne

    Yes, i agree 100% with many of the bloggers in here comments. The media is hammering home the message of fear/despair and doom and gloom for the sake of sensationalism, similar to the colors codes used back in the early parts of decade when terrorism threat paralyzed everybody. NOw this "snowball" effect is hitting us again.

    December 3, 2008 at 6:47 am |
  44. Thadeus RT

    Power to the People. The common homeowner has brought the money folks to there knees. And guess what, it was done in good and honest faith ... "just sign here" says the lender. You folks are getting a new house!!

    December 3, 2008 at 1:58 pm |
  45. John Walters

    I keep up daily with the stock market and CNN is not blowing anything out of proportion, if anything they're under reporting the severity of the situation.

    As they say, if you lose YOUR house, it's a recession, if I lose MY house, it's a depression. Depends on where you're at.

    Many more jobs WILL be lost. The big 3 auto companies need to go into bankruptcy and restructure their business. They are NOT part of the currency problem, which TARP was meant for, but they are private sector. Yes, there will be pain, but bad businesses go bankrupt and restructure and don't stick their hands into our tax-paying pockets.
    The airlines industry has done this a couple of times at least. Bankruptcy was created for just this sort of problem.

    Big, overpowering unions drive businesses overseas. The private sector businesses can set up business wherever they choose as we have a capitlistic democracy. If we no longer want that, then we will become another form of government that is owned by the government. Is that what we really want?

    December 3, 2008 at 2:43 pm |
  46. Ann

    Hank Paulson had no safeguards in place! Is anyone shocked or really surprised? We all observed his nervous manner at press conferences and his attempts to skirt around giving answers to news media who were asking him very direct questions. If it was not clear to the US Congress then, and to the American public as a whole, it should be obvious now, that Mr Paulson is a political baffoon and certainly too incompetent to trust with anymore of the taxpayers money!

    December 4, 2008 at 3:37 am |
  47. Dominic Holyfield

    With all the current economic stimulus co-operation from various Governments around the world, isn’t it time the whole world really joined forces to create a uniformed “jump start” to the dying Economy?
    Despite the doom and gloom with global deflating markets and recessions, imagine the awesome spending force the World’s Governments, Corporations, Charity & People could have on the global economy?
    We should have a “WSW” or “World Spending Week” where every single Government, Corporation, Charity & Person on the planet who cares about the economy should buy as many goods and services as they can afford in one week to help bring our economy back from the brink.
    It may or may not work but it is definitely worth a go! Heck we might even start a boom for 2009!
    Let’s arrange it!
    Dominic Holyfield – dholyfield@ukcapitalinvestments.com

    December 4, 2008 at 10:52 am |
  48. Levi DeRoche

    I believe it is time that we leave our emotion behind and face the facts that will actually help the country in the long run. Providing bailouts to the big 3 and the airline industry is no different than the banks givng people home loans knowing that they can't pay it back. The bailouts are nothing more than pumping money into industries that can't sustain themselves. These companies have not been competetive since the world price of oil started jumping in 1972 and Toyota showed up.

    Our old industries are too heavily unionized making the cost of per vehicle uncompetetive relative to the Japanese vehicles. The products are not durable.

    We need these industries to fold and diversify into trying to take the lead (since the world is experimental with other sustainable energy technologies) in manufacturing the equipment needed for these technologies. Even in good econmic periods the big three has struggled. There is no way that our car manufactrures will be able to compete with the Asian manufacturers, even if they switch to mroe eco-freindly vehicles. the Japanese has a much lower cost structure, better product and a 20 year lead in alternative/hybrid vehicles. The proposal that Ford's CEO made is not going to have any impact on market share and profitability. Pumping tax payers money into the Big 3 is no different than beating a dead horse.

    December 4, 2008 at 4:28 pm |
  49. Peter Kramer

    Any recovery will immediately be offset by rising oil prices. The infrastructure changes necessary to get us off oil and into something else will take years. Hence, I think the recession will take years.

    December 4, 2008 at 8:11 pm |
  50. Shelley Clark

    As an employee at a small firm with several large customers, I can tell you that there are big changes going on. Customers who honored 30 day terms are sending in purchase orders with terms of Net 50 or Net 60, while my terms with my suppliers remain the same.

    Several large companies are just blowing off invoices and refuse to pay for goods and services, even when there is a purchase order that has been processed and received.

    We've gotten to the point where we get a deposit, and have a credit card on file, just in case.

    But larger companies still believe they wield a lot of power and leverage, and have no problems leaving one small company behind in the dust, while they look for the next one to leave high and dry.

    I wonder if other small business owners have experienced this as well?

    December 4, 2008 at 11:22 pm |
  51. DU

    I think that this Global Economy Crisis is the worst in Financial History .
    And still more badand more losses will come.
    May be after 3 to 4 years we will see some positive news in financial markets .
    At the moment there will be a world wwide financial loss in all busineses and more losses are expecting to come more.

    December 5, 2008 at 9:55 am |
  52. Henry

    I think your analysis is very clear and realistic. Some thoughts to add here:

    1- If the "history repeats itself" model still applies to the current mess, then this situation will resolve, however painfully, with time – hopefully, as per the projections you cite.

    But... if the current crisis is actually a new paradigm – ie. an unprecedented phenomenom that is altogether different from any previous historical model – then I think we're in for unforseeable consequences that even the most trained experts cannot possibly forecast. Let's hope that this isn't the case.

    2- One key roadblock to recovery could be the problem that the U.S. economy has been running mostly on credit-funded consumer spending for a long time now without the traditional U.S. manufacturing /industrial base that made America a great economic power in the 20th century. With these foundations gone, what happens now? How do
    you sustain an economy – and keep it going strong – on credit and printed money without a core labor-intensive domestic manufacturing/ industrial base?

    I find it surprising that no major economists have addressed this important issue – which I think is perhaps not only the key to the current problems – but also the core issue behind the question the future economic survival of America.

    December 5, 2008 at 4:57 pm |
  53. Alberto Fernandez

    All the blame on CEO´s and well paid young investment bankers wearing Armani suits end Hermes ties?
    What about absurd lawsuit awards pushing up prices and insurance premiums?And destroying American industries.And making medicine more and more expensive.
    And lawyers charging hundreds of dollars per hour ,many times for mediocre legal advice.
    And labor lawsuits from disgruntled employees which has made broke thousands of small firms?
    Capitalism is not to blame.Abuses of the system are. This is the time to analyze the many problems we have including too many(not too few)regulations and revamping the tax system .Look at Chile ,New Zealand and Ireland. Lower Corporate Taxes to encourage investment,for example.

    December 5, 2008 at 5:57 pm |
  54. Ibrahim

    I agree with all that this recession will last longer and I cannot see an end . Prove me wrong , this time The Banks are also in trouble.Reason+=== All our wealth has been transfered to China and India. Once we stop manufacturing consumer goods and we import everything wealth creation ceases. All the profits companies were making , tax and national insurance people were paying stops all that is transfered to China and India. China and India did not have Foreign currencies and Cash reserves , now they have Trillions, WHY because all our wealth has transfered there by opening our markets to them called FREE TRADE. It is and was a wrong policy, better stop now and introduce dumping duty and back to quota and licence to inport and duty. Let us make our own goods and see many go back to work and employment. . How do we balance our books with imports , how do we pay for the trade deficit. We import billions more than we export , we are bound to run out of money . We dont want to print money to ay for imports.Wake up stop the imports now.Supermarkets , Sports Centres and Banking jobs do not create wealth.

    December 5, 2008 at 6:22 pm |
  55. Del

    It really is amazing that the media isn't reporting on the root-cause of failure of the U.S. economy (and therefore the world economy since without the U.S. consumer that is made fun of so frequently, there is no world economy); the root cause of failure is the $147/barrel oil prices we had recently due to market manipulation by oil commodities futures traders, resulting in over $4/gallon gas and over $5/gallon diesel. Since diesel trucks are used to delivery 99% of the goods sold in America, the more than doubling of diesel prices led to out of control inflation of as much as 50% (The government accounting of "inflation" as they call it is no logical nor honest), resulting in the all-important American consumer buying less, resulting in businesses going under, employees getting laid off (effects we are just now seeing since businesses take time to tank sometimes). Forget the effect of the default on home loans to moronic consumers who bought homes they couldn't afford to pay for, they make up a miniscule percentage of U.S. consumers, thereby having no significant effect on them. The current economic effect on most consumers, such as myself, of this "recession" have been positive; if it takes a damn recession to bring oil and gas prices down to where they should be, so be it. I have more disposible income now than a year ago, the effects of my stock market "loses" are irrelevant at this point, since i'm invested for the long term and they will recover. There are no effects on my home value since I bought a reasonably priced home and don't plan to sell anytime soon. I wish the media would talk about the "mortgage crisis" from a buyer perspective, since the best buying opportunity for purchasing homes in 30 years will be existant throughout next year.

    December 5, 2008 at 6:29 pm |
  56. Anon

    I am very alarmed that there is no spotlight on short selling. Extensive liberalization of this pure gaming activity signed by Bill Clinton in 2000 transformed financial markets into gambling casinos, with no regulation. In the UK, the Brits are talking about criminalizing it. Why no major discussion here? Why is this still going on in our stock market in the U.S.? Our financial system as a gambling casino totally negates investment (long term purposeful employment of resources) and negates our financial markets as a mechanism to allocate scarce investment dollars. Hedge funds and private equity firms act to strip corporate assets, also the opposite of investment. The economy we have today, in all respects, is not structurally an economy where the principles of economics that we have been taught in school for decades apply or are valid. We need a reconstruction of a functional economy as operated between 1933 and 1999-2000 before Clinton finished the Bush 1 imperatives of demolishing it and creating an unregulated financial gambling casino as our primary economic activity (producing debt) along with consuming useless Wal-Mart junk (not engineered or made here), all taken to severe extremes by Bush 2. All of them can immediately list legislative and signing statements of theirs that need to be RAPIDLY undone. By the way, I am a Democrat, weary of being cheated and betrayed by immature, elitist politicians and looking for the leadership of responsible grown ups. Making our past presidents accountable for their actions is required by the urgent necessity of discovering and undoing their “mistakes.” Having a genuine investment economy as our real economy is a keystone for progress on all other economic problems from employment (full employment being every worker employed at his/her highest skills – NOT all jobs reduced to Wal-Mart retail or flipping burgers style minimum wage jobs and available only as day labor), to the mortgage mess and affordable housing/home ownership, to health care, education and on and on.

    December 5, 2008 at 6:59 pm |
  57. Jean, Paris

    President George W. Bush, head of state and government for eight years, should be impeached for incompetence and resign immediately.

    The economic, social and political damage inflicted on the United States and the rest of the world by his policies and handlers has reached historic proportions.

    The buck stops there.

    December 5, 2008 at 7:26 pm |
  58. Steve - Australia

    Declare the entire financial system bankrupt, as it surely is; and start again!

    1. Freeze all derivatives debt
    2. Re-stablish a 'Gold Standard' or similar device that brings monetry policy back to reality. (Or hyperinflation will finally bring the entire system down)
    3. Utilize all Government financial resources for the purpose of rebuilding the 'Real Economy'.

    The current policy of 'bailouts' and attempts to hold the large banks up serves only to fuel the cause of the disease that is causing the problem.

    December 6, 2008 at 5:38 am |
  59. Tony Joseph

    Great capitalism does not override nationalism. The government has to put its "country/people first". Cheap goods from China and cheap L1/H1b workers from India are one of the root causes of down turn. If greedy corporatist wants to make huge profit by ditching USA then they should be regulated within the limits by law. Otherwise they should lose the chance of business in USA. So they will have the option and country has its option, is that too hard :-). The H1B and L1 visa pools are widely misused to get cheap labor and to have better control on the labor force. H1b and L1 visa is the lifeline for American corporate sweatshops in India. These sweat shops are very flexible, operates 24/7 and cheap down to earth. Recently Microsoft chairman Bill Gates advocating for more H1B to get 'talent' but it was purely for cheap technical labor and smooth functioning of its sweatshop in India. He denied it and claims all the migrants in his company gets more than 100000.00. But recent statistics from immigration dept reveals that average salary of green card applicant from Microsoft is below 45000. Remember they will be working for at least 5 years in US to apply Green Card. So its baseless if they say figure is the salary of an entry level Job. So US Govt. should stand by for its long term plans for its citizens. Not for its grass hopping corporations. Who knows corporate barons will dump US and buy huge land somewhere abroad and start their own country for more profitable operations

    December 6, 2008 at 7:26 am |
  60. anthony

    If you are in America, the going is tough and will get tougher. The credit thaw is slower and more tepid than Paulson had expected. Pumping money into the banking system floods it with liquidity – bankers still afraid to lend and borrowers still afraid to borrow while the deleveraging of liabilities and toxic assets continues. Debt is a dirty four-lettered word even in as far offshore as Australia as banks shrink their loan portfolio in fear. Profitable businesses with strong cash flows are no guarantee that any one particular bank do not suddenly demand enhanced security on existing borrowing triggering defaults in covenants which borrowers are bonded to other banking creditors. These trigger-happy fear panic bankers have caused more than a few mining houses collapse and others into financial distress which would NOT happen in ordinary economic circumstances. There is no major bank collapse in Australia whilst banking system in US and EU is much more severely distressed. To the extent of no relief in the sub-prime housing woes, the economy in US and EU must get worse before it gets better. The frozen credit market has only just begin to impact on its real economy in US and spreading to the rest of the world. It will take time to unwind the excess of the past.

    There is still some light at the end of the gloomy tunnel. In an environment of consumer lack of confidence, monetary policy relief is ineffectual. BUT THE CO-ORDINATED WORLDWIDE MASSIVE FISCAL STIMULUS WILL PUT SOME FLOOR TO THE ECONOMIC DOWNSWING. This include America as Obama promised infrastructure spending – they create jobs, restore confidence in the slide of unemployment while affording time for credit market to thaw further.

    Outside US, EU, many parts of Asia and Australia are spared of the worst economic turmoil. These will recover first from stimulus spending. The negative feedback loop from US economy downturn on Asian economies, will see a positive feedback loop for US companies operating outside US shores as Asia slowly recovers aided by fiscal stimulus. I see productivity gains, as business worldwide shed the lazy excess of good time and this productivity gain will spur demand for economy activities and services across the globe.

    With some stability in US financial market, and hopefully a tail-end to the housing and unemployment spiral, consumers in US may join in the recovery in late 2009 perhaps

    December 6, 2008 at 12:20 pm |
  61. Bob Bergstrom

    Bankruptcy IS an option for the dinosaurs called the Big Three. . It allows the companies to re-organize, get out from under onerous contracts, etc. etc. To give them money is no guarantee that they will be able to compete with the other companies making cars in the U.S. with American workers – Honda, Toyota, Nissan, etc. etc. They have to do what every other business does in the U.S. Succeed or fail.

    December 6, 2008 at 5:46 pm |
  62. Ann Jackson

    Has anyone considered the impact on the Federal and State governments if they are no longer receiving the tax revenues from the Big 3 auto workers? I think that tax revenue would be Billions of dollars & few companies in the U.S. contribute that much to our economy.. CERTAINLY NOT CITI- GROUP OR AIG.

    December 6, 2008 at 7:12 pm |
  63. bert

    As a person that come from a Auto buildind nation like Germany. I strongly think that the US Goverment cant let the Auto industry "Die". But rather the industy needs to take a long and hard look at it self and under stand that they build "CRAP" cars. That they need to build Smaller cars. Look at the Japaneas that build and sell cars in the US. They are hurting as well but they have the Products that are wanted. by the way it is not like this problem just jump up out of nowhere. They Car industry could have had Electric cars or hydro cars years ago. But no they wher in bed with the oil industry.

    So what the US Gov. should is yes give them money but with very hard and binding strings. Then if the Auto industry live up to thier comitments then the Gov. needs to take over.

    December 6, 2008 at 7:53 pm |
  64. Pete

    What I don't think most people realize is how important the auto companies really are the Americas economy. If the automakers are allowed to fall then they wont be bouncing back anytime soon. Sure the CEOs will be fine but how about the millions of workers and entire cities out in the midwest that depend on this huge plants for work.
    Also if the auto makers fall, many small businesses like transportation companies and little parts companies will also go down, and they certainly wont come back. The government must bailout U.S. auto makers and regulate what the money is spent on, the government cannot allow CEO's to give themselves bonuses and such when their companies are failing to foreign competition. If they had spent their money on better more efficient vehicles then American cars companies would be in better shape at this time.
    BAIL THEM OUT!!!

    December 6, 2008 at 8:29 pm |
  65. John

    A lot of companies went overseas to cheap labor. In doing so they fired their American workers, This is the main reason we are now in a reccesion. That is why free trade is broken. GREED by the CEO`s and their staff. Their policy of firing their workers so they can make outragious salaries then wonder why they can`t make their house payments. You ask if this recession will last long, of course it will. The banks will not pass on the reduced interest to refiance people at lower rates. These greedy people should wear t shirts saying WE Have destroried the American dream. Than you talk of bail out money. That is only for the rich period. Let them go under we are already under than we can start new . No one is worth more that 10 times the low mans wage, Think how sick it is that it is over 200%. Also think of what the Auto and Intel bosses said WE make 60% of our profits overseas it is about time Americans reconise this. Hmmm maybe that is why we are boycotting your products. the gov needs to bail out people not the firms/CEOs.

    December 6, 2008 at 8:48 pm |
  66. Uma in Liverpool, UK

    'Deep, prolonged, global recession'? When is it going to be called by its true name?

    When will the talking-heads come out and say 'Depression'.

    There is plenty of blame to go around. I am not even going to get involved.

    I am more concerned about how much PAIN there is going around.

    December 6, 2008 at 10:14 pm |
  67. Venerando C. Dulay

    The current global financial crisis to me is real. We see and hear many workers being laid off. Consumer demand is at low levels. Housing mortgage firms experience low amortization payments from house owners.

    From my personal point of view, a government could do is to resort to mandate its central bank to lower interest rates, so companies in distress can beef up their resources and be able to recover losses in terms of sales, profits. If firms fail to repay their loans to banks, they could lose their assets that would lead to partial or full closure and lead to retrenching all their workers.

    Banks for their part, (this is just my opinion/view) can do their share in initiating the lowering of loan interests. This move would encourage distressed firms to borrow and sustain their operations.

    Thank you.

    December 7, 2008 at 3:06 am |
  68. James Rodgers

    The main problem with America has been their love for oil, more to the point, foreign oil. American money has been flowing out of the country at huge rates. At this point they will never pay back their debt as too much money is flowing out. So the love affair of oil needed to be broken.

    Now inventing new technology won't break that love affair. The American population had to be turned off for the love for oil in a dramatic way. Companies will need to be forced to change quickly too.

    How to do this ... Easy .. create the biggest boom time you can and then crash it.

    Money is created by banks giving out loans. More money out there, the bigger the boom and demand (for things like oil). Silly loans that can't be paid back is a great way for making a boom and bust situation. With the higher demand for oil the price for it will go up.

    Now when we hit $147 a barrel, did anyone notice that is when the **** really hit the fan? The American people changed, they no longer wanted the gas guzzlers. But the problem would remain if auto companies were still in boom times. Now they need cash and will do whatever they are told to get it ... like making all new cars that don't need a lot of oil.

    If the main transport system doesn't need oil, then less money will be flowing out of the country therefore making it stronger in the progress.

    Bush's plan is just amazing. Oil will only need to come from local wells (for his mates). So America, Bush has shown that not only is he a bloody smart politician he is also a great actor too.

    that or .... he is bloody lucky.

    December 7, 2008 at 8:40 pm |
  69. Owen

    I think we should be glad we didn't let President Bush invest our Social Security in the market huh

    December 8, 2008 at 4:22 am |
  70. DENNIS

    the downturn will be a very long and a drawn out affair...

    December 9, 2008 at 6:24 am |
  71. Wayne

    Central banks around the world are printing money and Governments are trying to save every bank and company that made mistakes with just a slap on the wrist for the CEO's. More banks and companies will become bankrupt because of the freezing up of credit markets. There are starting to be demand supply imbalances in commodities that will lead to a super bubble in commodity prices when the global economy rebounds. With all this money printing I think gold and hard assets like commodity and food prices will go through the roof. Just like the 70's when gold went up almost 30 times. The dollar could collapse because they have borrowed more than $10 trillion. Who will finance it. Saudi Arabia, China, Japan. I think they would rather buy gold than U.S. IOU's.

    December 9, 2008 at 10:30 am |
  72. Mike in NJ

    I don't think there is any doubt that this will be a deep and painful slowdown. It's very difficult to project a recovery until we find the bottom. Perhaps instead of trying to slow down the recession, we should take the opposite course and speed it up so we can get on with a recovery. Since everyone seems to be pointing at the lack of credit availability as a major problem, I would suggest that consumers pick a date in January and withdraw all of our funds from banks and Wall Street unless they open up the credit markets, eliminate the exorbitant compensations and initiate market reforms. They say that all recoveries are consumer driven, so lets find the bottom and get on with the job of moving forward. The government can not do any more without hurting us in the long run.

    December 9, 2008 at 1:17 pm |
  73. ben

    My first recession was in 87 followed by 96/97 and now. I have benefited from every recession and have grown to work around it. The best lesson Ive learnt is never trust a banker, analyst and media report. They never have your best interest at heart. Im looking forward to another great Christmas and New Year.

    December 9, 2008 at 9:49 pm |
  74. MADaniell

    Since we are in a mood to give away all of the country"s wealth, I have an idea. Why not give everyone in the country $1million tax-free dollars? Going by census figures, this would come to a "paltry" $330Million, less than 1/1000th that given to the wonderful financial institutions. No more mortage bailouts. The credit industry would have to layoff all of the people that give out those annoying dunning calls. If a new vehicle is needed, encourage the purchase of US vehicles. What congressman would vote against this (if they value their sweet jobs)? 'Might take a little refining – maybe limit to 3-4Million/family. I'd like to hear what others think of this idea.
    (Sorry for any mis-typings, I have a broken finger on left hand, and sometimes drag on the KB)

    December 10, 2008 at 4:43 pm |

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