Newsweek: Recovery? What Recovery?

[steven johnson]

I'm a bit skeptical of the 'sunshine and blue sky' being sold by the Obama economic team.

Don't tell me that the economy is getting better, or has even hit rock bottom. My faith in an imminent recovery deserted me on May 5, when one of our customers, Salyer American Foods, based in Monterey, Calif., suddenly fell into receivership. There had been little to no indication that the company was so close to financial ruin. As it turns out, the company's lenders say Salyer owes them over $34 million, a debt equal to almost half its sales. A company attorney told local media that tight credit markets and the economic recession had pushed Salyer over the edge. If the receiver doesn't find some way to revive the company's fortunes, our bag manufacturing company stands to lose nearly $1.5 million in revenue, about 2 percent of our $60 million in sales.

On the same day my customer fell into receivership, Fed chairman Ben Bernanke told a congressional committee that he believed the economy was in the process of bottoming out and "would turn up later this year." He's not alone in his optimism. Over the past two weeks or so, it has become a cottage industry among economists and the media to spot the first "green shoots" of a recovery. Certainly shoots there may be. The stock market has rebounded smartly over the past two months, as has consumer confidence. Pending home sales have ticked up, while unemployment claims are easing. And many economists insist a manufacturing revival is in the wings because inventories have fallen so low that restocking must begin soon.

But I haven't found many small-business owners ready to jump on the recovery bandwagon, and for good reason. We're still experiencing the "bottoming out" phase and worry that another bottom remains below this one. Call us pessimists, but we're not sure the green shoots aren't just weeds.

Who can blame us? Take the experience of a friend of mine, who runs a $6 million company that provides promotional material to businesses. His sales are down 20 percent compared with last year. Over dinner last week, he said he certainly wasn't shedding customers at the same pace he had been in the fall, but customers were still defecting. "I can't see any reason why they'd come back soon," he said. So he's getting ready for a second round of layoffs and plans to end spending on marketing until things look more promising.

Recovery? What Recovery?

[msongs]

1. corporations that own congress are experiencing a bottoming out maybe? nt

[w4rma]

2. And then they'll buy up everyone else at rock bottom prices. (nt)

[Zynx]

3. Historically, whenever Newsweek runs a cover about the economy, do the opposite

of what it suggests.

[emulatorloo]

6. Ain't that the truth n/t

[steven johnson]

9. Fortunately, Zynx, we have Nostrasamus who has predicted everything

Century 8 – Quatrain 28

Old French :

“Les simulachres d'or & d'argent enflez,
Qu'apres le rapt lac au feu furent iettez
Au descouuert estaincts tous & troublez.
Au marbre escripts, perscripts interiettez"

English:

"The copies of gold & silver inflated,
which after the theft were thrown into the lake
at the discovery that all is exhausted & dissipated by debt.
All scripts and bonds will be wiped out"

This quatrain seems clearly to describe a huge economic crisis leading to a brutal end of the monetary system.

My own interpretation of the quatrain:

When values (paper-gold?) representing the precious metals have become so numerous, a huge scam (treachery?) affecting worldwide economies will be discovered, the banknotes and securities devalued and being good just to be burned.

All (people) will be disturbed and shocked by the news that affects both equities and currencies that both will be thrown out.

Don’t you think it’s amazingly accurate describing the actual financial crisis?

http://www.godlikeproductions.com/forum1/message653522/pg1

[kestrel91316]

4. Well, here on the front lines, I just had my best week in MANY MANY MANY months.

I know, it's only one week. But the trend has been upward the past 2 months. People are bringing kitties in for routine checkups and recommended lab work again, instead of just when they are dying.

[Yupster]

5. I think the recovery will be fast and sharp

There is incredible pent up demand out there.

In the stock market, there are many stocks that have solid steady earnings which are down 40 % probably due to last year's panic. Once panic ends they can pop right back to where they always should have been. Also there's record amounts of money sitting in cd's and money market accounts which will feed the rally once it's started -- and it may have already started.

In the car industry there are many people who are deferring buying a badly needed new car. Once things get better all those people will start buying and there will be some very good months.Since Chrystler and GM are so hobbled, that looks really good for Ford.

[ixion]

7. All talk of recovery is foolish until at least these two things happen:

1) Financial institutions MUST WRITE DOWN the REAL VALUE of their assets; and,

2) Option ARM loans must cycle through their reset.

There will be no recovery before these two things take place.

[TheWatcher]

8. There is no doubt we have the Biggest Bull market in History well underway right now.

A Bull Market of delusion.

And it's getting beyond frightening.

America has lost it's mind.

[Warpy]

10. It's not going to get any better until a very hard lesson sinks in

to those thick skulls at the very top: all the bailout money in the world is going to save a company that doesn't have any customers.

Until and unless they stop offshoring and manage to start a jobs program here that puts people back to work at jobs that allow them to pay their debt while supporting themselves, don't expect this economy to do anything but worsen.

"Green shoots of recovery," my pasty white arse.

What they did is kill the goose that laid their golden eggs by the relentless attack against working people over the last 30 years.

[wuvuj]

11. Two opinions...

http://www.frontlinethoughts.com/printarticle.asp?id=mwo050809

Profits in the first quarter, with nearly 90% of companies reporting, are down over 50% from last year and are 18% less than estimates. Yes, inventories are down, but so is final demand from consumers and businesses. There is a reason that GM and Chrysler are shutting down for two months this summer. That will percolate throughout the economy.

As the realization that the economy is not due for a robust recovery sinks in, I think the chances for another serious bear market test of the stock market lows will become increasingly high. As David Rosenberg said in his final memo from Merrill Lynch (and good luck to him in his new position, where I hope we all still get to read his very solid analysis!), if a few weeks ago someone had said you could sell all your stocks 40% higher, most of you would have hit that bid.

Now that price has in fact been bid. Do you want to gamble on a renewed bull run in the face of a continually shrinking economy? I suggest you give it some serious thought, or at least put in some very real stop-loss protection.


http://www.moneyandmarkets.com/all-eyes-are-on-us-stocks-and-the-greenback-33648


There have been three other recessions in the past fifty years that share the two key features of this recession:

1. Global synchronization — In globally-synchronized recessions there is an absence of global trade, a typical crutch for ailing economies to lean on. This time around is a doozie … a whopping 65 percent of world economies are in a recession, and global trade has taken a header.

2. Financial crisis — In recessions associated with a financial crisis, the recoveries are slower because households are in saving mode, so demand is weak. According to the Bureau of Economic Analysis, the personal savings rate in the U.S. is now more than 4 percent, the highest this decade — and it’s likely headed higher.

In this type of recession, the decline tends to be the steepest, the length of recession tends to be the longest, and the recovery tends to be the slowest compared to other historical recessions. You can see this in the following chart …

Highly Sychronized Recessions.

With the present crisis, we should expect a contraction in GDP of nearly 5 percent, 2 years of recession and 3½ years of sluggish recovery until levels of pre-recession output return. So based on the IMF’s study of 122 historical recessions, advanced economies should expect 5+ years of weak economic activity.

[Cary]

12. As these things go you should be skeptical.

That's how it works. It will be long over by the time you have more confidence. In the meantime Obama's "sunshine and blue sky," or, more accurately, moral suasion, is part of the prescription.

It's not going to do anyone any good for the government to spread tales of doom and gloom. Why do the Republicans' job for them?

[JohnWxy]

13. IT will take quite a while to dig out of this Republican Dystopia of Deregulation.

http://www.reuters.com/article/newsOne/idUSTRE5443G620090505


BErnanke also said:

"An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall."

~~
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Bernanke said that even when recovery takes hold, it is likely to be tepid and unemployment may not peak until 2010, although it would likely not climb into double digits.

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NOtice the words "when the recovery takes hold". - meaning we aren't in a recovery yet. That's not being deceptive or saying our economy is healthy already.


jUst saying it looks like we are beginning to bottom out is hardly saying tomorrow we will leave the Destruction of the Republican Deregulation Dystopia behind us. It will take quite a while to repair the damage done by deregulation and an economy built on credit rather than rising real incomes for most of the people. You can't have a healthy economy based on rising wealth just for the wealthiest in the nation.

I hardly think Bernanke, or Pres. Obama, or Geitner, or Summers, have tried to fool anybody. They have been communicating pretty accurately where we are. Polls show almost nobody expects the damage wrought by the Cheney-Rove administration to be repaired by this Thursday. In part, that's because this administration has been telling it like it is. A few weeks ago they were accused of talking down the economy. NOw, when they mention that some of the signs are - less bad - you are trying to sell the idea that they are trying to decieve us - Bullshit.


WE KNOW ABOUT DECEPTION, WE JUST LIVED THROOUGH EIGHT YEARS OF IT. THAT'S WHY WE'RE IN THE MESS WERE IN NOW. IT'S OBAMA'S AND THE DEMOCRATS' JOB NOW TO CLEAN UP THIS F--CKING REPUBLICAN MESS.

I AM PULLING FOR THEM TO SUCCEED. BUT I KNOW IT WON'T BE DONE OVERNIGHT.