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Home Front Economy
The Worst Is Not Behind Us
2009-01-07
Nouriel Roubini

Beware of those who say we've hit the bottom.

It is useful, at this juncture, to stand back and survey the economic landscape—both as it is now, and as it has been in recent months. So here is a summary of many of the points that I have made for the last few months on the outlook for the U.S. and global economy, as well as for financial markets:

The U.S. will experience its most severe recession since World War II, much worse and longer and deeper than even the 1974-1975 and 1980-1982 recessions. The recession will continue until at least the end of 2009 for a cumulative gross domestic product drop of over 4%; the unemployment rate will likely reach 9%. The U.S. consumer is shopped-out, saving less and debt-burdened: This will be the worst consumer recession in decades.

The prospect of a short and shallow six- to eight-month V-shaped recession is out of the window; a U-shaped 18- to 24-month recession is now a certainty, and the probability of a worse, multi-year L-shaped recession (as in Japan in the 1990s) is still small but rising. Even if the economy were to exit a recession by the end of 2009, the recovery could be so weak because of the impairment of the financial system and the credit mechanism that it may feel like a recession even if the economy is technically out of the recession.
Posted by:Besoeker

#20  A little studying of the Great Depression and the governments actions during might be in order before comparing then and today.
Posted by: Mike N.   2009-01-07 21:06  

#19  Makes one wonder how the US-World is suppos toifhgt GLOBAL WARMING [Kyoto] in the face of such protractive econ truuublez-vouz.
Posted by: JosephMendiola   2009-01-07 20:37  

#18  I hate spell check or the lack thereof for those of us digitally challenged (meant as a double entendre)
Posted by: NoMoreBS   2009-01-07 19:31  

#17  Folks, let me tell you what the sagacity of the ages would tell you about what is coming....those who do not know history are doomed to repeat it!
Weimar Republic could replicated the entire printed money supply overnight and still fell victim to Zimbabwe style hyper-inflation.
Our mor odern approach, whisch isn't even to waste the paper to print it, is to create mythical value by pladging future debt to our children for eternity. As if someone actually believes that they will pay it or that it has any value. WAKE UP! People will soon feel the pinches of the massive amounts of notional money introduced into the banking system through enormous inflationary rates, and the realization will hit them that money actually has no value, and the US Government has no faith or credit worthy of comment.
We are about to destroy public confidence in basic institution of government, our de-based currency, and someof the people here think it will be a stimulus to employment? Its a suicide pact for the nation. We are making the exact same mistakes that prolonged the Great Depression, conflicting government policies, and unwillinginess to let the market process work the massive credit bubble out of the system. Maynard Keynes was discreditied a long time ago, and has returned-vampire like- with a vengence.
Stop government spending iinsanity, and keep Zero's hand off the throttle as much as you can.
Posted by: NoMoreBS   2009-01-07 19:30  

#16  This article is from November 13th and the caption above the articles title is 'Doctor Doom'. Even the publisher of the article is making fun of it.

Couldn't someone dig up a story about president Jackson and banks?
Posted by: Mike N.   2009-01-07 19:28  

#15  Big Trouble

A link to a good overview of what needs to happen.
Posted by: SR-71   2009-01-07 18:14  

#14  I'd say the other way, Mike. The just won't work are out of the numbers. There's lots of discouraged workers, want to work but haven't found something in so long they don't try, not in the numbers also. There's lots of folks without HS diploma and others educated more who don't have jobs but would like to. They don't for a lot of reasons, often related to their own behavior but also related to the fact that their standard of living would decline if they did the one thing that would get them a job, move.

Bottom line, unemployment, like inflation, is probably understated in the official figures.
Posted by: Nimble Spemble   2009-01-07 17:20  

#13  ...It's always been my understanding that the ACTUAL unemployment rate is around 4% lower than what the government tells us, because there's that many "just-won't-work" in the population - is that true?

Mike
Posted by: Mike Kozlowski   2009-01-07 16:41  

#12  Eh, we're all gonna be wiped out in 2012 anyway, right?

Fact is, no one really knows what's going to happen next, not Obama, not Roubini, not any so-called "expert".

The one thing I can say with confidence is that worst case gloom-and-doom scenarios sell books and magazines, so expect a bumper crop of them over the next year. Enjoy them for their twisted entertainment value, but if you follow them as gospel you are every bit as deluded as the people who thought the good times would never end and real estate would always double in five years.
Posted by: Cornsilk Blondie   2009-01-07 15:04  

#11  i predict that any unfavorable comparisons of Obama will be treated as racist an investigated by the FBI as a 'hate crime'
Posted by: Abu do you love   2009-01-07 13:34  

#10  I seem to call the Dhimmicrats complaining about the 'Bush deficits'. I guess I'll have a right to complain about the 'Obama deficits'. At least until I'm bound and gagged.
Posted by: Steve White   2009-01-07 11:46  

#9  Obama has just said that he expects to have trillion dollar deficits for years to come.

That's double the highest to date and he's going to keep it up. When does hyper-inflation kick in?

http://internetscofflaw.com/2009/01/07/obama-trillion-dollar-deficits-for-years-to-come/
Posted by: AlanC   2009-01-07 10:15  

#8  What makes this moron the expert on what is in store for us. The problem is that we've listened to too many experts ant look where it got us. End of 2009 my foot. Let me be the expert. I say it will be the end of 2010.
Posted by: Art   2009-01-07 09:46  

#7  Bear in mind that 9% unemployment now is roughly comparable to 18% back during the Depression, since now the 'official' workforce includes most of the women too. Also, the official unemployment rate only includes those who have lost jobs, but not those who are just entering the workforce and cannot find jobs in the first place.
Posted by: Glenmore   2009-01-07 09:12  

#6  The Amazing Kreskin was on Fox this morning. Kres says we'll see some relief in 2010 but will not get out this mess for another 4.5 years. Recommends banking with Simmons Beauty Rest. The Donald followed him via phone. Trump says the market should fix the market and that no one can pry money out of the banks. He points to the bailout as essentially a give-away.
Posted by: Besoeker   2009-01-07 08:49  

#5  When reflecting on unemployment, I expect the predictors to take in account that a lot of what we had seen before in post-WWII recessions are jobs that have now been shipped overseas with the work. Instead of being 'domestic', it is now 'global'. On one hand that will hide the comparative statistics when looking back at previous experiences. On the other hand, the drag that happens in getting those back to work and the overall economy back to forward domestically is also going to be less.
Posted by: Procopius2k   2009-01-07 08:41  

#4  The rest of the world, which was even more government regulated, socialist, and centrally planned than the U.S., will be even worse off.

Don't look for that to be reported in the MSM. Instead, in Orwellian fashion, they'll shill for more of that stuff here.
Posted by: no mo uro   2009-01-07 06:24  

#3  So, what happens to the rest of the World?
Posted by: g(r)omgoru   2009-01-07 05:02  

#2  What better way to dig your way out of a hole than to dig a deeper one?

That is an idea. Dig all the way until you reach Australia
Posted by: JFM   2009-01-07 02:12  

#1  Not to worry. Old Uncle Sam will whip out the old plastic.

What better way to dig your way out of a hole than to dig a deeper one? $450 billion annual deficit?

Pfft!

How about an even $1 trillion? With Barney Frank and Chris Dodd telling us what evil people capitalists are using the rules Congress made.

No problem...
Posted by: badanov   2009-01-07 00:10  

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