8 Really scary predictions about the economy

#1
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WA_Vol

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#1
Please read, if give me your evaluation:

8 really, really scary predictions - Nouriel Roubini (1) - FORTUNE

Nouriel Roubini
Things are going to be awful for everyday people. U.S. GDP growth is going to be negative through the end of 2009. And the recovery in 2010 and 2011, if there is one, is going to be so weak - with a growth rate of 1% to 1.5% - that it's going to feel like a recession. I see the unemployment rate peaking at around 9% by 2010. The value of homes has already fallen 25%. In my view, home prices are going to fall by another 15% before bottoming out in 2010.
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Bill Gross
As 2008 nears its conclusion, we as an investor nation have been forced to face a new reality. Wall Street and Main Street are fearful that a recession may be replaced by a near depression.
The outcome essentially depends on the ability of the Obama administration to rejuvenate capitalism's "animal spirits" by substituting the benevolent fist of government for the now invisible hand of Adam Smith. Federal spending and guarantees in the trillions of dollars will be required to fill the gap created by the deleveraging of private balance sheets.
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Robert Shiller
We don't currently have anywhere near the level of unemployment that we had in the 1930s, but otherwise there are many similarities between today's environment and the Great Depression, with things happening today that we haven't seen since then. First of all, there's the magnitude of the stock market's move up and down. The real (inflation-corrected) value of the S&P 500 nearly tripled from 1995 to 2000, and by November 2008 was down nearly 60% from its 2000 peak. The only other comparable event was the one in the 1920s where real stock prices more than tripled from 1924 to 1929 and then fell 80% from 1929 to 1932. Second, we've had the biggest housing bust since the Depression. Third, we've seen 0% interest rates. We've actually seen briefly negative short-term interest rates. That hasn't happened since 1941. There was a period from 1938 to 1941 when we were bouncing around at zero and sometimes negative, but that hasn't happened since.
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Jim Rogers
In my view, U.S. stocks are still not attractive. Historically, you buy stocks when they're yielding 6% and selling at eight times earnings. You sell them when they're at 22 times earnings and yielding 2%. Right now U.S. stocks are down a lot, but they're still very expensive by that historical valuation method. The U.S. market is yielding 3% today. For stocks to go to a 6% yield without big dividend increases, the Dow will need to go below 4000. I'm not saying it will fall that far, but it could very well happen. And if it gets that low and I'm still solvent, I hope I'm smart enough to buy a lot. The key in times like these is to stay solvent so you can load up when opportunity comes.
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#2
#2
me thinks when the consensus is that the world is going to end that that probably is a good sign for the stock market and the economy.
 
#4
#4
These guys have a good track record of predicting the market/economy. Read their bio's.
 
#5
#5
oklavol said:
These guys have a good track record of predicting the market/economy. Read their bio's.
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I don't find those bios particularly compelling. I understand those are bright people, but many of those folks are right just like a broken clock is.
 
#6
#6
A scarier proposition is the fact that the Chinese government is very interested in becoming an investor in the US economy and real estate realms.
 
#7
#7
Here's a general rambling from me......

Ok, you can say what you want that it is NOT a depression but do you know the only difference between those two words? People that say recession have jobs - people that say depression do not.

Just to put things into a bit of perspective for everyone - I have two degrees from Tusculum College here in Greeneville. Anyone that knows anything about TC knows its a prestigious college and it also costs out the hind end to go there. This business degree I got in May was supposed to really help me out. Unfortunately, I got it about a year too late it seems. I keep track of everything I apply for and have applied for close to 150 jobs now since May of this year and still haven't found anything full time and stable. I work contract work through a Finance company here in town with no benefits and part time hours - and also work at the radio station. Radio pay is, and never will be, good either. I have friends in banking and finance that tell me to keep plugging at it. The bank I deal with locally has probably about 20 tellers total in their Greeneville branches. They have SIX tellers with Masters Degrees right now - MASTERS DEGREES. The finance company I work for posted an ad a few months ago for a job in the JC paper and online. In two days they had over 200 applications for that job. A lady with a Masters degree wound up getting it - pays about $9/hour to start.

Not trying to be whiny but this is just a bad time in this region, period. Thankfully gas is down for now but it won't stay like this too awfully long. We needed retail stimulation around this holiday season and that's why we got this break on gas prices.

I'm someone that, 4 years ago, attended more than 30 races in a year (my biggest hobby besides golf). This year I went to 7 races. I'm sure there are countless others out there with the same types of story I have to tell. I just can't justify plugging much money into my favorite hobby when I need to buy groceries. All of these job cuts in this region will be magnified even more next year I'm afraid.

I've got a friend that has worked at a factory here since he was 16 - and we are 28 now - and he's in danger of losing his job too right now. That's with 12 years of service for him. We all see how much NASCAR is cutting back on their spending and laying people off left and right. Fox announced yesterday that the MLB games next season won't have a pregame show so they can trim jobs at Fox. Look at all the newspaper ads for jobs and you won't find many at all anymore unless its highly specialized or in nursing. I was going to even go to one of the temp staffing places to try to wiggle into full time somewhere by going that route a couple of months ago. I have a friend that works at one and called him and he said not to even bother coming down unless I wanted to be a maid because that's all they were hiring at the moment. Their "pool of applicants" was so large they had quit taking new apps because they couldn't fill from what they had.

I'm not trying to be a gloom and doom person but I honestly don't think some people realize how bad it is. If you got a job be thankful for it right now and hold onto it. I didn't magically think I'd get one because of my degrees but with 10 years of banking experience, 8 years in broadcasting, and 4 years of clerical/office work I kind of thought I'd land something myself. The above article is right in line IMO. I think its going to get worse next year before it gets better. I pray to God I find some full time job in the next few months - I've been looking since last spring.
 
#8
#8
i'm sure things suck down, but your story is no different from those in late 2002 after the dotcom bubble burst. maybe it's worse now than then, but there isn't a real valid argument that we are anywhere approaching great depression levels. your region might be getting hit harder than the rest of the country. strangely i don't have a single friend who is unemployed right now. I imagine that will change though.
 
#9
#9
Oh I really am not trying to say I have it so much worse than others its just pretty frustrating right now. Try to keep things in perspective - at least for now I still have a house and food on the table. Maybe I'm going overboard on the depression talk but East Tennessee right now is just in a major funk. I'd move if I could but family sickness in my immediate family keeps me close to home for now. If things don't change though I wouldn't mind relocating myself eventually to Concord, NC or somewhere around Panama City, FL.
 
#10
#10
DownNDirty said:
Oh I really am not trying to say I have it so much worse than others its just pretty frustrating right now. Try to keep things in perspective - at least for now I still have a house and food on the table. Maybe I'm going overboard on the depression talk but East Tennessee right now is just in a major funk. I'd move if I could but family sickness in my immediate family keeps me close to home for now. If things don't change though I wouldn't mind relocating myself eventually to Concord, NC or somewhere around Panama City, FL.
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I would have to think that if things are bad in east TN they would be much worse in Panama City.
 
#11
#11
Easier to find a job in a big city, but rent/housing is a more expensive. It's hard to find a decet job in a small town, unless your a teacher, doctor, pharmacist, work for the bank, etc.

The problem is all the manufacturing jobs, got shut down and moved to China and Mexico for cheap labor. Everything is cheap at Walmart, but when unemployement is double digits was it really worth it?
 
#12
#12
oklavol said:
Easier to find a job in a big city, but rent/housing is a more expensive. It's hard to find a decet job in a small town, unless your a teacher, doctor, pharmacist, work for the bank, etc.

The problem is all the manufacturing jobs, got shut down and moved to China and Mexico for cheap labor. Everything is cheap at Walmart, but when unemployement is double digits was it really worth it?
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i wouldn't worry about it. once hussein is sworn in, we'll be wearing orange vests rebuilding our horrible roads and fallen bridges, all of america will be working on roads and bridges.
 
#13
#13
joevol320 said:
i wouldn't worry about it. once hussein is sworn in, we'll be wearing orange vests rebuilding our horrible roads and fallen bridges, all of america will be working on roads and bridges.
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Is FDR still your favorite President?
 
#16
#16
joevol320 said:
i wouldn't worry about it. once hussein is sworn in, we'll be wearing orange vests rebuilding our horrible roads and fallen bridges, all of america will be working on roads and bridges.
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Somebody needs to give joey a hug.
 
#17
#17
rjd970 said:
Somebody needs to give joey a hug.
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i don't need a hug, it's true. we'll be working with our picks and axes like the seven dwarves, fixing bridges and roads to nowhere, i'm excited about it. i'll be getting paid 20-25 dollars to wave a flag. maybe a car will hit me and i'll get lawvol to sue them.
 
#18
#18
joevol320 said:
i it will be much worse. liberalism has evolved badly since then.
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I was making a reference more to what FDR had to face on a global level. Getting things straightened out within your own borders is hard enough without having to contend with a world war... and I think people are getting back into that "glass box" mindset.
 
#19
#19
joevol320 said:
i wouldn't worry about it. once hussein is sworn in, we'll be wearing orange vests rebuilding our horrible roads and fallen bridges, all of america will be working on roads and bridges.
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I'll honk and wave at you when I drive by in my big friggin SUV. :p
 
#20
#20
joevol320 said:
i don't need a hug, it's true. we'll be working with our picks and axes like the seven dwarves, fixing bridges and roads to nowhere, i'm excited about it. i'll be getting paid 20-25 dollars to wave a flag. maybe a car will hit me and i'll get lawvol to sue them.
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Yeah, but your forgetting the fact we will all have free healthcare coverage and lifetime salary benefits once all the roads are built or if we get laid off.
 
#21
#21
"Government's view of the economy could be
summed up in a few short phrases: If it moves,
tax it. If it keeps moving, regulate it. And
if it stops moving, subsidize it."
Ronald Reagan

In 1913 Congressman Charles A. Lindberg Sr. father of the famous aviator, told Congress:

" This act establishes the most gigantic trust on earth ...When the President signs this act the invisible government by the money power, proven to exist by the Money Trust investigation, will be legalized. . . .

The new law will create inflation whenever the trusts want inflation. ."

Later Congressman Wright Patman, Chairman of the House Banking Committee, maintains:

"In the United States today we have in effect two governments ... We have the duly constituted Government ... Then we have an independent, uncontrolled and uncoordinated government in the Federal Reserve System, operating the money powers which are reserved to Congress by the Constitution."

Congressman Louis McFadden, Chairman of the House Banking and Currency Committee, commented:

"It [the Depression] was not accidental. It was a carefully contrived occurrence ... The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all."

Congressman B. Carroll Reece, Chairman of the House Special Committee to Investigate Tax-Exempt Foundations:

"As the egalitarianism of Marxism is attractive to many, socialism could have attracted many followers in America, anyway. But there is no doubt that it could not possibly have affected us so widely and so deeply as it has, had it not been heavily financed."
 
#24
#24
oklavol said:
These guys weren't predicting $200/oil, they were predicting housing bubble, credit crisis, etc. But I see your point. Let's hope they are.
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Hope they are wrong but the signs are not promising. I've seen orders drop substantially at my company, just an observation from my little corner of the world.
 
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