The economy - false or real optimism?
Two financial luminaries' views on the credit crisis:
Buffett says credit crisis ebbs for Wall Street firms
James Dimon, JP Morgan, says no near end to financial crisis
And on the economy:
From Forbes Rich Karlgaard (admittedly their tech blogger)
Consensus? There is none.
Buffett says credit crisis ebbs for Wall Street firms
James Dimon, JP Morgan, says no near end to financial crisis
And on the economy:
From Forbes Rich Karlgaard (admittedly their tech blogger)
Points from the gloomy RGE Monitor Dr. Roubini's CNBC Europe interview:Only a month ago, such sages as George Soros and Alan Greenspan were shouting from bullhorns that the 2008 global financial mess was the worst since World War II.
Only a month ago, the only argument among nearly all journalists, pundits and leftwing politicians was whether the U.S. economy would stop at a recession or tumble all the way down the tubes to a 1930s-style depression.
Very few challenged the recession presumption. Now, if your definition of a recession is the traditional one of two consecutive quarters of negative growth, then those very few contrarians are correct. There is no possibility now--zero, nada, zip--that the U.S. will suffer two consecutive quarters of negative growth in 2008.
- The US is already in a recession, to last 12-18 months
- Fed will pause rate cuts over the next couple of months, but the economic contraction will force Fed to cut more later in the year
- Contraction of consumption will continue to decrease, affecting the economy
- Markets seem decoupled based on continued robust Asian
market, but when Americans stop buying Asian goods, Asian markets will
also be effected.
- Financial sector will continue to be hit in stages from continuing crises to be caused by future writedowns in other credit markets - alt-A, commercial real estate, credit cards, etc.
To Dr. Roubini's points, the data was released this week showing that we are not in fact in a recession... merely a VERY slow growth period... about 0.6% GDP growth, if my memory serves. The expectation was about 1% lower than that.
We can only wait to see what the future holds.
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Roubini explains that if buildup of inventory of unsold goods are excluded, the final sales of domestic product would adjust the GNP # -0.2%. If that buildup of inventory also included the unsold homes, the GNP should be adjusted even further downward another 1%... again, economist-speak.
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