December 5th, 2008
07:12 PM GMT
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LONDON, England - This is all getting seriously ugly.  The U.S. labor market shed some 533,000 non-farm jobs in November, and it now turns out that in September - before the collapse of Lehman Brothers and the consequent severe volatility on global stock markets - U.S. unemployment was already starting to surge.

It was just a few days ago that we were told the gurus at the U.S. National Bureau for Economic Research had decided that we could use the word "recession" to describe the economic conditions in the United States. But now, with jobs disappearing fast, confidence in shreds and the "Big Three" carmakers holding out the begging bowls in Washington, the word "depression" is starting to be on everyone's lips.

I admit to being the eternal optimist.  I'm not ashamed to say so - I would actually hate to be thought of as a pessimist - but must also confess that it comes with a big personal price tag: for example, ever hopeful, I hung on in there in the stock market for longer than was wise. Watch Michael O'Sullivan of Credit Suisse discuss Europe's options

So it pains me to write this, but given that this recession has already lasted longer than many of its peers - and is widely forecast to last longer than most of them – perhaps we can no longer rule out a depression, a prolonged and dramatic downturn lasting well into 2010.

It's a scenario nobody wants.  But every government and every central bank in the world is now united in fighting to avoid it

Hours before those U.S. labor market numbers stunned financial markets, Europe was launching a broad-fronted counterattack.  The European Central Bank, the Bank of England and Sweden's Riksbank slashed their key interest rates; in the case of the ECB, the 0.75 percentage point reduction was the biggest cut in its 10-year history.  In Germany, the Bundestag voted through the federal government's $39 billion fiscal stimulus package, just as the French President Nicolas Sarkozy chose the car-making city of Douai to announce a similar package worth $32 billion.

In fact, each day now brings news of European Union leaders and the European Commission working closely together to show they are putting up a united front against the recession.  But what is striking is that nobody says they can stop it in its tracks, whatever they do.  The most they can do, say most economists, is soften the pain of recession and ensure it lasts no longer than it has to.

All this comes at a price.  France's latest effort to boost its economy will probably lift its national debt to 3.9% of GDP, and like all prudent governments, it will have to pay that back out of the taxpayer's pocket once normality has returned.  Virtually every European government will be doing the same: borrowing big-time now, and repaying later.

Central banks also face a dilemma.  They have had no choice but to loosen the monetary floodgates in an effort to induce the commercial banks to start lending again; that is essential if businesses are to invest and employ more people, and if individuals are to restart consumer spending.

But lower interest rates take many months to generate their full impact on the economy, and central bankers worry that growth will snap back, forcing up prices and unleashing inflation.

Imagine trying to drive a car along a highway with steering that only responds, say, 30 seconds after you've turned the wheel.  How long before you dive into the ditch?

So there is an argument which says that governments and central banks might do better to stay on the sidelines and let the recession take its course rather than take expensive and risky measures which are never going to stop it anyway.

What do you think?  Are Europe's governments and central banks doing enough to fight off recession, apart from avoiding policy measures which might make things even worse?  Should they actually bother to do anything?  Are they just making things worse? Watch Michael O'Sullivan from Credit Suisse Asset Management answer your questions



soundoff (56 Responses)
  1. glenn

    How many of the 1.9 million jobs lost went overseas with NAFTA

    December 5, 2008 at 7:32 pm |
  2. bigjoerice

    So we can afford to lose 2 million assorted jobs, but not 2 million auto industry jobs so the government – old and new – has decided we'd better get serious about stopping the financial rot. As one of those unemployed and not working in the auto industry, with its 95% pay guarantee if you're out of work, I know I'd feel better if it wasn't for the fact that nobody in the financial world that matters, seems to have a damn clue what they're doing.

    December 5, 2008 at 8:30 pm |
  3. earle,woodstock,vt

    Your article is spot on regarding the latter course of action/inaction? Just weathering the storm should suffice. It's a classic case of: "The Cure ,Killing the Patient ". PS,Quote: What happen to common sense,Mr. Einstein? Common sense is neither common,nor does it make much sense!

    December 5, 2008 at 9:04 pm |
  4. Norman Leonard

    Instead of giving 25billion directly to the auto makers why not pay off 25billion in auto loans for the middle class American and help everyone

    December 5, 2008 at 9:41 pm |
  5. Ogo

    I think that governments are part of the problem. They knew exactly how banking works and that almost all the money in the world originates from loans generated by banking sector directly out of thin air. And they knew exactly, because that is the same way central banks were generating money – Out of thin air. And now bubble has burst and air is escaping out, world is catching up with reality.

    December 5, 2008 at 9:51 pm |
  6. Norman Leonard

    Since two thirds the U.S. economy is based on consumers why dont the government take half of the bailout and pay off 300billion dollars worth of middle class Americans mortgages in good standings. This will instantly turn around the economy for the auto, banking, retail, and housing industries and fuel this country for years to come!

    December 5, 2008 at 9:54 pm |
  7. Angela from Philadelphia, PA

    While there are reasonable, responsible moves governments can and should do in a recession environment, the US govt seems to be on a completely wrong track. It seems the Europeans are handling this better than we are in what is suppose to be the center of capitalism. The 700 BILLION dollar bailout was a hand out to the big banks and Wall Street. Now we have the autos wanting 34 BILLION MORE dollars- the cause of this was and is the housing crisis. NO ONE has taken any tangible steps to halt the foreclosures and stop the bleeding. The banks that were given all of this money are just holding on to it, paying dividends, or buying other banks. NONE of that money has made it to Main Street. Now we have the fool Democrats in Congress bending over backwards to find a way to give the autos 34 BILLION. They choose not to see the realitythat 34 BILLION wont be enough and there are thousands upon thousands already getting laid off- its already happening but for us , the workers, there is no bailout, no nothing. GM and Chrysler should merge and go through pre pack bankruptcy- Ford should also go through pre pack bankruptcy- the managers/ exces should be fired- and the govt should step into to keep the pensions and the healthcare funds safe.

    The American people are against more bailouts but Congress just keeps giving out t he money. What do we do when China quits buying our debt.?

    Lets have a real bailout for the workers from Wall Street who have lost their jobs and dont even have a severance package- Not the fat cats on Wall Street who can continue to live off their millions- they dont have to work.

    It seems the whole country has to go bankrupt for Congress to get it. And dont forget we heard all the fluff and nonsense about how there will be tremendous oversite with the 700 BIllion- Well there is not even anyone in place to do the oversite- the auto bailout will be the same and they will be back needed 75 – 100 BILLION more.

    HELLO CONGRESS??????????????????????????

    December 5, 2008 at 11:21 pm |
  8. Howard in US

    Hello, Charles.

    You ask if Europe's governments are doing enough to fight off recession. One could write volumes about this, but here are a few thoughts.

    I really don't think it matters at this point what anyone does. We are entering a global economic restructuring which represents the unwinding of decades of delusional economic growth driven by totally unsustainable government and private debt. For decades, economists have been saying that Americans need to spend less and save more. Well, they (and everyone else) are spending less and we are seeing the totally predictable result.

    One could argue that by any rational measure of debt vs assets, the US was teetering on the edge of the cliff . In 2007, total public debt was roughly 65 % of GDP. Total consumer debt has been estimated at 2.5 trillion dollars (about $8000 for every man, woman , and child , or roughly 17% of GDP) and was, of necessity, growing faster than the GDP. The US housing market was simply the most extreme example of the desperate attempt to to preserve "growth" by pulling in ever more buyers by creating ever more bizarre financing schemes which ultimately had to blow up in the buyers faces. Meanwhile, financial institutions worldwide were creating ever more speculative and fanciful investment schemes (such Credit Default Swaps), many of which had all the financial solidity of Ponzi schemes. All it took was one tug on one little thread to cause the whole financial fabric to begin unraveling.

    One fundamental problem is that we have a worldwide industrial productive capacity which far outstrips the ability of the world to consume its output. This has been exacerbated by the dependence of emerging national industrial economies on the US to be their consumer. And we can't do that anymore.

    The world economy is like a high-flying patchwork hot air balloon which has blown out and crashed. All the government efforts to stave of the dire results (bailing out industrial and financial companies, stimulating new lending, buying toxic assets, subsidizing new consumption, etc) ultimately amount to nothing more than stitching on a new patch, relighting the burners, and sending it on its way until the patches give out and it crashes again.

    December 6, 2008 at 12:18 am |
  9. gatkin09

    It is a curious thing that when the Japanese government went on a spending spree to drag Japan out of the it's economic woes in the 1990's that it was roundly mocked by the western media,economists and government officials.

    And yet here we are 10 or so years later and what is the U.S and Europe doing? Trying to use government money to spend their way out of trouble.

    Of course what people seldom discuss is what would have happened if the Japanese government did not act as they did in trying to stabilize the economy in the 90's...I suspect the outcome would have been much worse.

    So let's forget economic theory for a while and just think of the alternative...i.e. do nothing. We have already seen one major blunder when Bear Stearns was allowed to fail, so to allow the U.S automakers to fail (as inefficient as they are) would be unforgivable. We are talking about thousands of people being without work and the misery this would cause to families and children must be avoided.

    I think the European governments and central banks are now doing the right things, they probably dropped the ball earlier but that is all in the past now. They cannot afford major sectors of their economies to fail and they need to support their economies through these tough times.

    Economic theory may suggest there are alternatives, humanity does not.

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

    December 6, 2008 at 3:10 am |
  10. Lars Hoglund

    The current financial crisis is an irreversible redistribution of the wealth across the globe. The western nations have lost their technological and educational edge and have been living beyond their means with budget deficits and negative trade balances. We might as well realize that China and India can do what we can and sometimes do it better. Unless we face up to the new reality and adjust to it, we cannot achieve the long term perspective that is needed to save what can be saved.
    Lars Hoglund,
    Greensboro, North Carolina

    December 6, 2008 at 9:51 am |
  11. george

    If you want a recession-proof, go to work for the damn FEDERAL BUREAU of PRISONS. Half of the people in the U.S. will be prisoners and the other half will be guards. With martial law coming,we don't have a snowballs chance in hell for survival. With all the snitches already working for the government, nobody is safe. So get a job as a guard or you WILL be a prisoner one day if you don't get shot first.

    December 6, 2008 at 4:53 pm |
  12. Synde75

    Once again, none of the so-called expert economists predicted this huge loss in jobs. The problem is there is a complete disconnect between
    Wall Street and Main Street. Bailouts are only going to postpone the pain we all must go through to get back a truly viable market structure. By printing money to achieve these bailouts, we're going to have a currency collapse. They should have let the market fail on Sept. 15 (the new 9/11). Once crashed, the market either corrects or we change from capitalism to a new economic model.

    December 6, 2008 at 5:32 pm |
  13. Sharon

    I have a 15 year 5% fixed 1st and a 2nd mortgage with Countrywide. I lost my job the week before Thanksgiving. I called Countrywide to see what they could do to help me. They said they are only helping people with adjustable rate mortgages. I was hoping to get an extension or a switch to a 30 year term. They would not even consider discussing it. This company just got their help and now they won't even help their customers. I have a 660 credit rating and my husband has a 780 but now that they know I lost my job it's like I have the plague. These banks just don't get it. WHERES THE HELP FOR ALL OF US WHO DID THE RIGHT THING WITH OUR CREDIT AND ARE NOW VICTIMS OF THIS FINANCIAL MESS!!!!

    December 6, 2008 at 8:47 pm |
  14. d. griffith, TX

    Because recessions and depressions come and go, they can only try to soften the impact and put things in place for the future. Fear not because no matter had bad it gets we will have basic needs. Fear to me would be a global drought.

    December 7, 2008 at 5:22 am |
  15. Jobby

    Hi,
    I did write to you about this yesterday, but I never got a reply. But I will keep on trying till I get a reply.

    Well, the plan in place is like a child who is being readied for a tonne of milk powder to be forced down his throat, because he is sick.

    Nobody seems to address the real issue, people not being able to pay up the loans, who are being charged exorbitant finance charges, late payment fees, loan,mortgage extension fees and the most dreaded NSF fees.

    The banks were able to walk away with cool billions in their pockets, what did the common man demand for himself/herself.

    The real package/medicine is when these charges if possible taken away or held back for sometime so that people could put their lives back on track.

    But who has it in him/her to take up the cudgels with the govt., so that the people's real issues are taken up?

    First let us treat the patient and later let us decide on his diet.

    Regards,

    Jobby,
    Bangalore, India.

    December 7, 2008 at 11:25 am |
  16. Sidsel S Sandberg

    To me it seems a contradiction between trying to get the consumers
    buy more to ceep the economy going, while sustainable development
    force us to buy less.

    The "buy and throw" can not be the answer now, when the planet is in peril.

    December 7, 2008 at 12:33 pm |
  17. Kevin Maitland

    I know we can't "think" our way out of a recession or depression but the media have a lot to answer to with nothing but negative press leading the lemmings over the cliff of dispare. Come on consumers start acting normally with your expenditure instead of putting everything on hold, because if you "think" recession that's exactly what you will get and you media barons start looking on the bright side of life with the language you use through your distribution channels.
    Think and act in positive ways and that's what the markets will reflect
    and we might get out of this mess with a mild bruise!

    December 7, 2008 at 1:26 pm |
  18. Diana

    I do believe the European countries have it all wrong. Not only now but since forever. It's not by chance that only as a whole they make up the biggest economy in the world.
    The Central banks in Europe usually focus on controlling inflation instead on growth. Eventhough inflation needs to be controlled, I don't believe it's necessary to stamp down growth and in my opinion this is what the European countries do.
    Growth is not the same as high inflation.
    Anyway, I write from Denmark where eventhough the economy seems to be holding for now, I think it will take a dive into hell in 2009. I have been prediciting it since 2 years ago because unemployment has been extremely low and the danish industry is not really competitive. It only exists because of all kind of benefits to compensate for the ridiculously high wages and sky high taxes (the highest in the world).
    The Danish Central Bank was increasing the interest rates while all of the world was lowering them. They argued that they had to protect the danish crown. That is probably true but at the same time it's probably going to be the reason why many people will go bankrupt.
    Thanks and best regards,
    Diana

    December 7, 2008 at 1:39 pm |
  19. Sam in Spain

    Charles, Let me first ask you a question, What do you think?
    I have no idea what amounts of money that the Central Banks have so it is impossible to say if what they have Poured into the market will have the desired effect.
    Recessions come and USUALLY go and how long they last is really an unknown. My own opinion, for what it's worth is this one will last until 2011 and I believe on the stockmarket in the UK. nothing will turn round until the FTSE hits3500. It got close last week when it went down to just over 3800 so I still believe (like Todd) that we are in for a very rough ride.

    It is good to be an optomist, but it is better to be a realist and face facts as they are known. Then again we don't have all the facts DO WE?

    What we do know is that money is being pored into the banks to bail them out in order that they start lending again and that spending will start ....this is the optomist view!!!! my view (hinging on the pessamist side) but being realistic is that any money that the ordinary people get they should use it to pay off their Credit Card Debts and return to living within their means.

    The money that the banks have been given is solely for the purpose of trying to sustain businesses in order to avoid massive unemployment such as what the "car beggars" are doing in the US, but it didn't work before in the UK and it won't work in the US. They will still be uncompetative against the Koreans and Japanese. On this one I think Mitt Romney is right.

    2009 will be a year of very high unemployment, irrespective of what Central Banks in the UK and Europe try to do to halt the recession.

    Once it really bites, you tell me what the unions in France, Spain, UK,
    Germany etc. are going to do?

    The recession will just have to work it's way through and we have to pray it does not become a depression.

    They are putting too much hope on what Barack Obama can do, but he is only mortal, and has too many problems to handle, which of course will effect all of Europe and the rest of the world.

    December 7, 2008 at 3:00 pm |
  20. Ray

    Europe's governments are doing what they can, but their efforts are having little effect. This is because Europe, and in particular the country from which I write this, Germany, is/are caught up in the downward spiral of American financial and business markets.

    We sell primarily to the U.S., invest in the U.S. stock market, make loans to the U.S. so that they have money to buy our products, and then wonder why we are doing so poorly when the U.S. economy goes into the tank.

    It's time for a new global economic paradigm which offers a more non-U.S., non-dollar centered option for investors and producers who don't want to place all of their eggs in one basket. The U.S. may be in a recession leading to a depression. The rest of the world is simply like a junkie going into withdrawal because he can't get a fix. This is the real problem and it is a structural one.

    I'm not saying ignore the U.S. altogether, I'm saying let's begin to innovate and look INSIDE at what Europe and other markets have to provide more strength and structure (and demand) domestically here in Europe. It may take a long time but it will be worth it.

    December 7, 2008 at 3:15 pm |
  21. Wayne

    No , the European Union knows more than they are saying, Who move over 882 Billion dollers of of American in the Year 2006, the use of tjhe Vatican bank payed off.

    December 7, 2008 at 3:26 pm |
  22. Franky, Land of Lincoln

    "But what is striking is that nobody says they can stop it in its tracks, whatever they do. The most they can do, say most economists, is soften the pain of recession and ensure it lasts no longer than it has to."

    You know, one of the "veteran" boys who's been in this game for over 40 years said that is kind if like a sore throat. When you have a sore throat, of sourse your gonna take medicine, right? But if you dont get cured, then it might turn into a flu and so forth. He said that's how you could compare it to. Is not so much that your terrible sick, but it has an impact on your well being and if you don't do anything soon or take care of yourself, consequences can be bad. Is not like getting your leg amputated because enough boold ain't flowing there but because your leg can fall anytime soon and let the pain go away. You might tnot have your leg but you definitely have your well being and it won't spread from there. Is interesting because one of my boys said that is not so much that the "flu" is severe, but rather is spreads little by little and sooner or later, you will have to do something...

    I gotta say though, I think is more complicated than that. I don't think is one problem but is actually a complex of problems. People have said it came on top or from the bottom but I know for a fact it came from the two. And I noticed you said that in Europe and in some particular contries, they cut interest rates and you made a good point about it. I mean, we won't see any effect on interest rates until many, many months. I mean, it takes time and we need to see the effect, if it had. Let alone the economy is complex and so many things have been said but I just don't think is easier than what people may thing. Should companies just drop low and see how it goes? Maybe. Maybe someone can pick up the company and thrive it back up or drive it back down. But in my personal opinion, I think the biggest X-factor in this is one thing...cash. The high volume of cash flow being flown around today is 10x as much or more than it was 20+ years ago. Not just for businesses but for everybody that is involve in this process. And to give you one example, gas can be as low as $1.50 by next year or something like that. There's no question the economy played because according to the economists, this "recession" happened over a year ago and wasn't it during that time when gas was over $4?? Do you know how that happen? I may not know the full theory behind it but I know if the Titans are a 10 point favorite and if people invest on that team, that number should increase at least a 1 or 2. But if no one in that team invests on them, then the value won't change but if they invest on the opposing team, then the Titans are gonna be as low as gas...

    I think is complicated, is not easy to find any answers. And by the way, with how people are reacting and losing jobs by the minute, are you sure companies should fall? Is one thing if one company does have recognition but if Citi talked about its "flu", you know something must be done...I know people are upset that money is being thrown around because quite frankly, I'm upset but like I said before, cash killed us and is gonna make us learn the hard way as we can see from now on...I think is a reality check.

    Nice article.

    December 7, 2008 at 4:30 pm |
  23. Ed

    The economic adjustment is necessary. There are still many unknowns, perhaps the biggest of which will be the effects of resource depletion and climate change. These could create a perfect storm, if things go the wrong way at the wrong time.

    But, what is the net external debt of Europe versus the U.S. As I see it, the U.S. has to print lots of money because its external NET debt is high. Do the Europeans merely owe THEMSELVES, rather than foreigners? If so, they too would want to deliberately depreciate their currency by printing money, so as not to have to pay as much real worth as they borrowed to foreigners.

    I live in Canada, and I feel fortunate compared to others. Even though we are mainly an exporting nation, and also mostly dependent right now on the U.S. for our exports, we are at a better latitude if there is climate warming, have resources aplenty, hand ave social structures that work (unless the U.S., which I regard as a society in disintegration with respect to human capital). Also, we don't owe much, if anything, externally to foreigners.

    Just some food for thought.

    Ed

    December 7, 2008 at 8:17 pm |
  24. bradley

    i would like to help out with this job loss with an idea to help put people back to good jobs at the same time save the world problem. I know that this can be done and it can be done fast now instead of 2 to 5 years from now. We have it everything we need to change the out come of today all we have to do is use it. Start in each state and work with them to change the way we deal with garbage. it can put people back into new better jobs at the same time give us energy and another form of fuel. What better thingto do is help millions of people at the same time save the world.

    December 7, 2008 at 8:21 pm |
  25. Luz Diaz

    Not an expert on this matter ....but when we stop to think that this
    issue concerns the well-being of so many people, this is what I
    humbly suggest: There are many ways in which trade among nations
    help each other. Considering this point, it is a possibility that European nations and USA plus other nations on our hemisphere could deal in a good-faith way interchanging the most of important
    things in our life: Let us mention: Sell in a reciprocal way at special
    price those things that are priority – deal in a more conservative
    way, maybe charging less but making things more affordable –
    both ways.

    December 7, 2008 at 8:46 pm |
  26. Dennis Crosby

    In 1975 a book came out – The Vision – by David Wilkerson. Afterward he wrote a book "Racing toward Judgment" that gave strong support to "The Vision".
    I saw David Wilkerson in 1974 before the book came out. I read both books twice. I've been reading the news since.
    What we're seeing – he wrote about.

    There are some awfully perceptive people who have warned us this was coming, but none so thoroughly or so long ago. Nor are the whys explained.

    You can say anything you want about it, but you should read these books with an open mind. It doesn't negate expert observations about what's happening, but it should make us aware of our current situation in human history.

    Don't deny what's obvious just because it's not what you expected...

    December 7, 2008 at 8:50 pm |
  27. Dennis Crosby

    From the Netherlands.
    To answer the question in the Title: No.
    Europe won't do enough if it doesn't work together.
    It won't do the right thing if it points the finger at everyone else.
    Our culture has led to this. With so many economies dependent on selling to consumer nations, is it any wonder that consumer nations develop problems with debt? And then to blame the debtors for not being able to keep driving these consumer oriented economies!
    Everyone wants the maximum return on their investment, but blame the risk takers for pursuing that goal!
    Those bad, bad brokers did what we wanted them too and look where it got us!
    Our problems are in our culture and our culture is built on the individuals that make up our culture – us!
    We jettisoned our heritage and went for a tailspin. The ride was wild and the crash is ugly.
    Who do we blame? Anybody else.

    December 7, 2008 at 9:02 pm |
  28. Suus (Amsterdam, the Netherlands)

    Yes, we've done enough to recover Europe. The measures have to work out the next few months. We hop that Obama will lead the USA to where it once was, before he creditcrunch.

    December 7, 2008 at 9:49 pm |
  29. Suus (Amsterdam, the Netherlands)

    Yes, we’ve done enough to recover Europe. The measures have to work out the next few months. We hope that Obama will lead the USA to where it once was, before the creditcrunch.

    December 7, 2008 at 9:51 pm |
  30. Michael R

    Writing from Munich, Germany:

    IMHO – gvnmts should do only one sort of thing:

    go back to their primary and sole purposes – safety of nation, of state and of individuals.

    Therefore -shrink their volume, stop burglary on pockets (in Germany we have to work on average till July 27 for tax and related fed and state ransoms) .

    Reality is – the "State" is a big ínefficient money-flow machine – tax from left pocket, a few bonuses into right pocket. Even if only 3% sticks, that keeps enroled and harvesting thousands of state officials, presidents of just-name-it control organisations, big brothers and the like.

    Example: Germany just passed another "recession-stimulus-package" to waist (spray) $ 39 B, money that has to be borrowed and paid back with interest. B.t.w. – interest to the same foul banking system that was just doped with a $ 450 B injection. Instead, same or better effect on consumer spending right now before XMAS could be had by simply slashing the added value tax (19% on all products, to be paid by the end consumer) by a mere 1%.

    Think about going back to the 2 years ago old rate 16% – Much larger stimulus to go and use the money now – i.e inject into the GOOD circuit "economy" rather than the BAD circuit "fund the octopus gvnmnt and all its brethren".

    All serious economists one way or another agree – gvnmnts can do next to nothing to positively steer the economy, but they can do a lot to make it disfunct, to make people find it no longer attractive to work, to control everybody even in the bathroom.

    My wish for Xmas – all gvnmts stay out of economy, pay back your debts (shame on you, we have to present securities to borrow, you simply print new money from vaccumm = national debts = the true reason for permanent devaluation of our wealth = inflation,. Go, mind your own business (army, police, watch-dogs on socially agreed standards) and leave us as free citicens. Right now we and even the more our children are your slaves.

    December 8, 2008 at 1:35 am |
  31. Rogere

    Connecticut, US.

    Nothing is being done to soften the recession?? The media is putting us in a depression with their continuos negative reporting. Fact, Many americans still have cash flow. Fact, the media is intimidating the economics of our country. Fact , even when we had a good market there were still job losses and lay-offs for restructuring! The media needs a new perspective on our economic concerns or stop broadcasting all this negative information. The next step to a recession is depression and the media is defenitely depressing enough for that the many americans and investors that still have businesses and careers won't spend it. Tell the media to stop the depressing news and the Americans as always will spend and invest capitol, that"s what they like to do, even if they don't have it! And that will support our banking industry again!! Do we need a war for the media to concentrate on because they are defenitely causing this recession/depression attitude for everyone to stop borrowing, investing and spending the cash flow that many working companies and Americans still have. The media needs to cease their reportings and opinions on finances and leave Americans alone to decipher wether they want to spend, invest etc. If we want to see what the market is doing we know where to find the info. Your reportings are so depressing you will cause a depression! Fact is most Americans still have employment and many don't invest but you the media is scaring them to not even spend or invest!! And because you report doom & gloom about some financial groups in trouble all institutions are being scared to continue with business and reducing their expenses even if they haven't felt any connecting impact. YOU THE MEDIA has caused this recession and reporting this depressing negative reporting will cause a depression!!!! Get off it all of you!! Stop giving your media opinions and let the Americans live in confidence and they will spend if you don't intimidate them any longer. Stop & quiet up and see it will recover Americans like to spend but you are inhibiting them with fear! Drop the subject and it will recover better and quicker than with your involvement. Don't be concerned with trying to create or justify your own position as the media but realize you are the biggest contributing factor to our economic situation today, yesterday ,and tomorrow!! Stop now as your business won't fail as there is much more to intimidate the population with that doesn't have an ecomic impact and watch how fast this repairs itself with or without bailout. Again get the opinionated media out of reporting economics all together, stop intimidating and scaring the corporations, small businesses and general population and they will continue to conduct financial business to correct this concerned economy. Or keep depressing us and we will be not spend and this spiralling downfall will continue! Get real with how much influence you the media really has in this World!!

    December 8, 2008 at 2:00 am |
  32. Sam in Spain

    Charles,

    I have read all the blogs so far and I have to disagree that the media is to blame. All that the media is doing is reporting the situation and the opinions of the so call "guru's" who speak for themselves any in fact they can only "guess" what the solutions are and hope they are right.

    If those who write do a proper analysis, they will surely realise that it was the GREED of MONEY, EGO's and bad management and control both by Governments and CEO's of companies and the irresponsibility of individuals who created the problems.

    What person in their right mind would want to take out a Mortgage where they were given a no deposit 125% loan on a property without either the bank or mortgage broker doing a fact find on their situation?
    That is what caused the subprime mortgage mess. Who to blame??

    Firstly, the person who took out the mortgage, Secondly, the person (bank) who approved the mortgage, Thirdly, the Government who did not have proper rules of lending and allowed the banks to run riot.

    Remember Enron? they learnt nothing from that , just as they learnt nothing from the oil crisis in the 70's

    We lived in Florida for 2 years and of course we had bank arrangements. After about 6 months, my wife received an invitation to take a credit card. I was absolutely astounded to see the amount of credit that they were offering ($100,000), consulting me on the matter I told her to "file it" in the rubbish basket.
    Everybody in the US operates on Credit and like so in the UK. That is why so many people get themselves into trouble, most have no self control and forget that they still have to pay their debts.

    Unfortunately, they don't listen or use common sense, now they will have to learn the hard way as will the bad businesses and governments.

    December 8, 2008 at 12:37 pm |
  33. Peter Kramer

    ANY RECOVERY WILL CAUSE OIL PRICES TO GO BACK UP.
    Hence, until we solve the energy crisis, any recovery will be limited. Any effort to solve the energy crisis will take years. Hence, any recovery will take years.

    December 8, 2008 at 3:10 pm |
  34. earle,florida

    Whether it's Europe, or any nation thru-out the entire worlds,"once vibrant" economies. There's just no cushion to absorb this global financial shock. China's dead in the water, Japan,Signapore,Korea,none! South America is mired in Mexico's,Venezuala's oil crisis,and Russia's shut-down. The recession in Europe(the world as a whole) is lacking the one cure,that being the slow painful passing of "Time".

    December 8, 2008 at 10:47 pm |
  35. Joey

    I think Europe is trying to do all it can relative to its capacity. It also looks like Germany is the most level headed in this crisis, by resisting the "lets spend ourselves out of the mess" attitude.
    What got the entire world into this mess was Americas irresponsible capitalistic ways of leaveing it up as if there was no tommorrow. It was over spending & being slaves to material wealth that was never enough.
    Today insted, America is taking the lead again of doing anything & everything just to "buy/spend ones self out of this mess".
    We will just be creating ourselves another mess in the long term again!
    I think we are just locking ourselves up in a vicious cycle of greed. At a certain point this crisis is not just about Finances & the Economy but there are also Moral issues relative to our attitudes.
    I think the world is so fearfull to make the cards fall where they must & to start from scratch proportionaly & sustainably to the present world realities.
    Normally the right thing to do is the hardest thing to do. It seems however that the world wants to continue its high leaveing w/o understanding the underlying problems of this crisis.
    The normal economic cycle of ups & downs is now turning to a "vicious" cycle that sooner or later there will not be enough money to make things right.

    December 9, 2008 at 3:40 am |
  36. DENNIS

    I don't think that Europe is doing enough to fight off a recession! They are talking a good game.

    December 9, 2008 at 6:23 am |
  37. Manolo - Chile

    I think comparing the European situation with that of the US is comparing Apples and Oranges. The problems are very different and the actions to be taken would need to be different, it logically follows. The US government is first of all broke, second the housing industry in the US is in the doldrums, third the auto industry in the US is broke and about to go under, lastly the finance industry in the US created this mess and has had to restructure, and be bailed out to survive. In Europe most of this is not the case, granted they have their own financial problems and not just stemmed from the sub-prime crisis, but from the creation of the European Union itself. They were hit by the financial crisis but reacted promptly and smartly to attack the problem, the auto industry in Europe is by no means thriving, but definitely much more competitive than that of the US and clearly not going under, housing in Europe is hit but nothing compared to what the US is going through. Given the differences European Central Banks I believe are reacting in accordance with the need for action, no more no less. The European Union has had, has today, and will continue to have economic problems until they go from a conglomerate of countries to a true systemic union, and to be sure none of the issues facing the EU are near in scale to those that the US has today, the whole of the US economic backbone (except energy) needs to be made anew. So the answer to the question from my point of view is rather simple, YES they are doing enough, and to be sure, if they needed to do more, they would, I'm certain of it.

    The US government on the other hand needs to send out extremely strong and clear messages that it will help the economy cope with the recession and that the economic centers that today are wrecked will come back again renewed and strong. Different realities. different approaches.

    December 9, 2008 at 6:15 pm |
  38. Aleksandar

    No, because live welfare or prosperity but felicity in order sequence.

    December 9, 2008 at 7:40 pm |
  39. ben

    How is it that so called brilliant minds in this institutions have all failed at the same time. This is sadly a reflection of the many failures of the European Union.

    December 9, 2008 at 9:42 pm |
  40. P. Dinnerman

    I have a degree in Economics and Business.
    I am not a genius, but I think a big part of the problem is the Treaty of Maastricht.
    The objectives of Maastricht are obsessed about fighting inflation, the single nations' deficits and the stability of the Euro. The treaty basically ignores growth and jobs. Growth is also necessary for fighting deficits in the first place. And you can not have good growth with high unemployment and job insecurity. Any sound economist will tell you that. Study Keynes.
    Who cares now about the Euro and inflation? Or even deficits.
    Furthermore, obsession about the Euro and price stabilty has side effects on growth. If you freeze prices, you could put a lid on growth and therefore employment, which are desperately needed now. It's a trade-off on which most economists agree.
    I believe the Maastricht Treaty should be revised and made more flexible, to consider growth and jobs. No surprise that countries like Denmark and Sweeden rejected the Euro.
    Any comments?

    December 9, 2008 at 10:27 pm |
  41. Haegar

    Germany here. On a consumer level, there is not the slightest sign of any crises at all. Shopping malls are crowded and people are really buying like there is no tomorrow. However, as a management consultant, I see things from within the industry. Auto makers and their suppliers shut down or are shutting down soon their plants sending the staff home for several weeks. Only two months ago, there was no sign of any crises at all. Whb the haste? I cannot explain it.

    To me it seems as if US problems would be directly translated to countries like Germany through global media. It leads to hysterical reactions even though there may be no rational reason for any budget cuts in most businesses. This leads to a fatal downward spiral and may in fact have horrible consequences if we don't stop complaining and go to work instead.

    Still, Germany's government has approved a 480 bn. EUR rescue package for German banks in the recent weeks. The size of this bailout should be seen relative to the size of its economy. It is as if the US government released 2 trillion EUR or 2,5 trillion US$ bailout package. Is it enough? Giving money away to big corporations will never result in "thank you, that's enough" (surprised?). Will it actually help us? I don't think so.

    Here is why. If you think that the military-industrial-complex is a big problem in the US because it creates an unhealthy proximity of government and corporations, then you have a better chance to understand the European dilemma. EU economy is already half-socialistic. There are very few successful start-ups, and receiving founding has traditionally been a very tough task, especially if compared to the VC culture in the USA. From what I see, the ration state vs. free economy has already left the optimum relation behind. If we push the balance further towards the state-owned model (dependency on public funding etc.), then we might destroy the last remaining economic liberty that has been spared until now.

    It even may also be valid for the USA as well – who knows. To me, Obama speaks like a German social democrat, and the results are likely to be similar.

    December 10, 2008 at 12:19 am |
  42. Juraj

    I am not an expert on this but I think the US way of borrowing money which is spreading all over the world is just sick – its visible here in Slovakia – banks will lend you money for anything. They try to "educate" the public that living from loans is OK – but of course it's not. If you want to purchase a house you must borrow but if you are buying groceries on loan which you expect to pay in 2,3 months (like in US) there is something very wrong.

    It's the same as with companies – there is a limit to the amount which a bank will lend to a company if it does not want to be in trouble by the slightest negative trend in the economy. This should be the same with lending to people, but apparently the US do not think so. Many renowned economists and business people in the US have been constantly pointing this out as well.

    I think you cannot fight a recession just by pouring more money in – that will make it even worse mid-term as you are increasing indebtedness and that's exactly the reason of this recession in the first place.

    So if governments are giving money to companies (and people) which are run by people who do not plan for the future but live from quarter to quarter (as per earnings reports) this is just a recipe for disaster.

    So im my view there is no shortcut to end this recession quickly and the money-pouring effort of politicians is just off-the-track. (as usual).
    :-)

    December 10, 2008 at 8:43 am |
  43. Granville Stout

    Spot on Rogere, Connecticut, the media in the UK are also driving everyone into a depression. Turn on the TV, hear “in this hard times” : “in these credit crunch times”; “well we all need to save now”. I’m sorry but the people saying that we need to cut back are the ones least affected by “these times”. The only people who need to cut back are those who lose their job, those who will never lose their job (Government employees which includes teachers, fire service, police, doctor, council employees etc. etc) are being brainwashed into cutting back their spending by the media which then of course results in real job losses. One BBC program even featured a topic on how to forage in the hedgerows for food! Do me a favour.

    December 10, 2008 at 9:49 am |
  44. Uma in Liverpool, UK

    This is very slightly off-topic...

    I am finding it rather morally.... indigestible, that shareholders benefit every time corporations slash employment, and put hundreds, or thousands of ordinary folk out of work. (And possibly out of home, and possibly on social welfare... which defeats the purpose of trying to help 'consumers'.)

    How can persons of conscience participate in a scheme whereby they grow richer, through the impoverishment of others?

    I realise the Markets are broken, and this is probably not how it is supposed to work. It is how it works now.

    Of the myriad things that baffle me about why anyone would allow capitalism to go around with no brakes... this is beyond the usual gambling with other people's money. This is worse than the usual greed. This surpasses the traditional union-busting.

    This is more like theft - specifically: stealing from people who are worse off than oneself. How is it different from knocking down old ladies and taking the money out of their bags?

    What am I meant to conclude? :-(

    I wish I didn't know anyone who invested any money in the Stock Markets. It's distressing me. It seems like a sort of profiteering schadenfreude, and that bothers me as much as the news from Zimbabwe and Darfur!

    We are supposedly 'civilised', yet people and corporations profit from putting thousands of people out of work? What's wrong with society? How can we tolerate this?

    :-( Is it any wonder the corporate CEOs think they are owed bonuses, even in the present financial climate? Every Sony stockholder was just rewarded for the thousands of people Sony just unemployed... and doesn't think about it twice.

    I guess I have to stay with my original position: 'capitalism is toxic'. It poisons everyone who gets involved in it.

    December 10, 2008 at 10:59 am |
  45. Nam(South Korea)

    Yes, because I'm believe Europe’s governments and central banks.

    December 10, 2008 at 3:14 pm |
  46. Olileanya OGBONNA

    I believe they are doing enough.
    I mean NOTHING.
    thats actually all you need to fight recession.
    Recession is like a problem in an ecosystem
    it just balances itself.
    there is a natural cycle

    BOOM-RECESSION-BOOM and so goes the world.

    December 10, 2008 at 7:45 pm |
  47. Marty R

    European governments are actually doing too much, and especially the UK government.

    This recession is so deep, will be so long, that governments simply don't have the resources to have any significant effect. The recession/depression has bee caused by too much consumption permitted by too much borrowing on the perceived security of overblown assets. Government solution to this is, astonishingly, to increase consumption funded by ever-increasing borrowing whilst trying artificially to support the asset values acting as security.

    If you wanted to cure an alcoholic, would you offer them free whisky ? Governments are playing the part of headless chickens . They have no idea of what to do, so they take the advice of someone who wrote a book 70 years ago about a quite different set of circumstances.

    Heaven help us all, the lunatics are running the asylum.

    December 10, 2008 at 7:50 pm |
  48. Constantin

    Well here in Romania , Bucharest ,UE the crisiss did not come and form what i so on the news the economy of Romania is rising !!! So NO CRISISS HERE IN ROMANIA – UE !

    December 10, 2008 at 8:05 pm |
  49. Dr. Muhammad Sadiq

    Lets face it, West will not be able to compete with China(with centrally controlled capitalism)and even India ( with multiparty democratic capitalism similar to that of west) because of their edge in manpower cost under free world trade order. The growing trade deficit especially that of USA is a clear proof that manufacturing under the present system is less costly in high population and low manpower cost areas. The injection of more money in the economies of West will not solve any recession related problems. As a matter of fact it will create a new crisis related to currencies of west. It is quite likely that if nothing is done to reverse the free world trade order, the currencies of trade surplus economies like China, India and Japan will appreciate rapidly and the currencies of trade deficit countries will devalue rapidly. Ultimately the living standards of West will decline considerably giving rise to political turmoils.
    The solution of the problem lies in bringing the industry and with it the jobs back to the west. The markets of the West are big enough to justify any large scale production. This will help not only maintain production of high quality products in the West but would also help in maintaining relatively higher living standards for its people.

    December 11, 2008 at 12:52 pm |
  50. Smriti Lakhotia, SG Analytics

    I think whatever the European governments do, the effect will be lower than the efforts put mainly because the recovery of Eurozone is highly dependent on a strong US recovery. Just like Europe slowed down after the fall in US, it will be pulled along with the US recovery.

    December 11, 2008 at 1:46 pm |
  51. heldengalerie

    Greed the lowest point of the human physique. It is a destroyer of people, and economies. What ever happened to the teachings of John Nash? He wins the Noble Prize for Economics but no one seems to follow his wisdom. He taught not to be greedy but to share to let all parties get something. He taught the win, win, win, win situation. I would like to know the schools these CEOs went to that taught them to guide a business an economy and the world into such a crisis. I would like to know why we live in a whats in it for me society. The way out of this mess is for people to start helping each other. Rise to the challenge it is time like these that separate the great minds of wisdom from the minds of greed.

    Christopher St. John
    Founder, Helden Galerie
    The Art of Compassion.

    December 11, 2008 at 7:41 pm |
  52. Wade Arnold

    Why are we giving billions to same managers of banks and car makers that were to stupid to manage it properly or too stupid to produce energy saving vehicles like the Toyota Prius in the first place? Toyota Prius sales are in back log ! Lets use bank standard procedure to qualify banks and/or firms and their management "are you credit worthy ?" not if you are the people who got us into this situation !

    December 12, 2008 at 6:52 am |
  53. Wade Arnold

    I am a retiree and last year I brought a yacht. Unfortunately I was too stupid to notice a hole in the hull. Does this qualify me for a government bailout ?

    December 12, 2008 at 8:14 am |
  54. Dr. Muhammad Sadiq

    I would like to make some comments on the bail out plans in different countries as under:
    Dolling out money to sectors under distress can have completely opposite impacts; a) positive if the money has come from the same or other sectors within the country in the form of taxes or trade surpluses; b) negative if the money has to be borrowed from outside the country or it has to be printed or it has to be collected by increasing taxes on your own industries and people.

    I would also like to endorse the view point of Mr. Lars Hogland " West is living beyond their means with budget deficits and negative trade balances". This situation cannot continue for long.

    December 14, 2008 at 2:06 pm |
  55. Tony Campbell

    The 8 republicans that voted against the auto bailout let them pay the bills of the 2.5 millions of people that well be losing there jobs if the auto companys (chrysler and General Motors) doesnt get this bailout

    December 14, 2008 at 8:43 pm |
  56. Dan Thailand

    When oil was $147/barrel the oil producing countries would not increase production. Now it is at $40/barrel and they are crying for a cut. Drill here, drill everywhere, drill now and allow the oil producing countries to get back to what they do best....herd goats.

    December 18, 2008 at 4:43 am |

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