Wash. Post: This Recession, It's Just Beginning

[marmar]

This Recession, It's Just Beginning

By Steven Pearlstein
Friday, June 27, 2008; Page D01



So much for that second-half rebound.

Truth be told, that was always more of a wish than a serious forecast, happy talk from the Fed and Wall Street desperate to get things back to normal.

It ain't gonna happen. Not this summer. Not this fall. Not even next winter.

This thing's going down, fast and hard. Corporate bankruptcies, bond defaults, bank failures, hedge fund meltdowns and 6 percent unemployment. We're caught in one of those vicious, downward spirals that, once it gets going, is very hard to pull out of.

Only this will be a different kind of recession -- a recession with an overlay of inflation. That combo puts the Federal Reserve in a Catch-22 -- whatever it does to solve one problem only makes the other worse. Emerging from a two-day meeting this week, Fed officials signaled that further recession-fighting rate cuts are unlikely and that their next move will be to raise rates to contain inflationary expectations.

Since last June, we've seen a fairly consistent pattern to the economic mood swings. Every three months or so, there's a round of bad news about housing, followed by warnings of more bank write-offs and then a string of disappointing corporate earnings reports. Eventually, things stabilize and there are hints that the worst may be behind us. Stocks regain some of their lost ground, bonds fall and then -- bam -- the whole cycle starts again.

It was only in November that the Dow had recovered from the panicked summer sell-off and hit a record, just above 14,000. By March, it had fallen below 12,000. By May, it climbed above 13,000. Now it's heading for a new floor at 11,000. Officially, that's bear market territory. We'll be lucky if that's the floor. .....(more)

The complete piece is at: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/26/AR2008062604030.html

[Sinistrous]

1. "Recession", my ass.

We are heading into a bone-crushing DEPRESSION that will make 1929 &ff look like a walk in the park.

[Kweli4Real]

2. I keep asking ...

But no one seems to answer: What is the fix? How can the nation survive the impending economic disaster?

[Sinistrous]

4. I believe we have passed the event horizon for the upcoming depression.

I have been strongly influenced by this post here on DU. The author of the article quoted makes some suggestions for remedies and preventive measures, but I do not see them having much chance of being implemented.

[Demeter]

3. Considering It Started in 2001, Thanks for Noticing!

"Just Starting" HUH!