To those who don’t believe we are in a recession…lets discuss?

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I form non bias opinion on answers. I will provide evidence on why we are in a recession. If you don’t agree then that is you’re own decision and it is respected by me. However I will challenge you to see what parts of this info is not seen in the market…and why it cannot be defined as a recession.

The public was addressed by the secretary of state three weeks ago with the state of our economy. It was concluded there was a sign of recession on way. However, many believe this started in November as did the subrime lending create decrease in mortgage lending. I am one of those people. I don’t believe that subrime lending was the only cause. So since subrime lending fiasco started two consecutive periods ago….this indeed has led to a economic fall. GDP is important…and I have seen it fall also…but it has not reached two consecutive periods…but it will, no doubt. (that is my own opinion) Note that the GDP-growth (real seasonally adjusted annual rate) for the last quarter of 2007 was 0.6[31] as revised on February 28, 2008. It was 2.2 for all of 2007.

Nouriel Roubini has outlined a harsh 12-step scenario.[32]

U.S. home prices will fall between 20% and 30% from their peak. NYTimes chart ALSO TODAY IT WAS ANNOUNCED THEY HAVE FALLEN 60%
Losses to the financial system from the subprime disaster, as high as $ 300 billion, are now spreading to near-prime and prime mortgages.
The recession will lead to a sharp increase in defaults on other forms of unsecured consumer debt.
Monoline insurance companies will take losses on their insurance of residential mortgage-backed securities, collateralized debt obligations and other asset-backed securities products, which are much higher than the $ 10 billion-to-$ 15 billion rescue package that regulators are trying to arrange.
The commercial real estate loan market will soon enter into a meltdown similar to the subprime one.
Some large regional or even national banks that are very exposed to mortgages, residential and commercial, may go bankrupt. Bear Stearns Companies, Inc. collapsed on March 16, 2008, and was bought out by JP Morgan Chase.
Banks’ losses will grow as a result of hundreds of billions of dollars of leveraged loans on their balance sheets at values well below par, currently about 90 cents on the dollar.
Once a severe recession starts, a massive wave of corporate defaults will take place. Typically U.S. corporate default rates are about 3.8% (1971-2007); in 2006 and 2007 this figure was a rather low 0.6%. And in a typical U.S. recession such default rates surge above 10%.
The “shadow banking system” (as defined by Pimco, it is composed by non-bank financial institutions that borrow short and in liquid forms and lend or invest long in more illiquid assets), will soon get into serious trouble.
Stock markets in the U.S. and overseas will start pricing in a severe U.S. recession and a sharp global economic slowdown.
The credit crunch that is affecting most credit markets and credit derivative markets will lead to a drying up of liquidity in several financial markets, including otherwise very liquid derivatives markets.
A vicious cycle of losses, capital reduction, credit contraction, forced liquidation of assets at below fundamental prices will ensue, leading to further credit contraction
Any questions?
John…man are you serious…”labeling”?

C’mon…now. GDP is gonna say the same thing I pulled off wikipedia. So what are you getting at? You have to come out with something more than characterizing my question as labeling. No offense…i mean you are the only one that answered in 30 minutes. So its looking like people aren’t conflicting with a recession being here. Thats good.
Good answer though.
Piatchi..thats a great analogy…lol. Bear Sterns was baught by JP Morgan and Chase when it had substancial losses…but hey it DID survive the depression. Just take a look at any site it will give more info. Thanks for answer.

  1. Reply
    John M
    May 1, 2011 at 1:22 am

    Why are you so concerned about the label “recession”? The ramifications of conditions that may or may not technically be called a recession by concensus are still serious and worth watching. Action may be indicated before, during or after any such consensus labeling of the time we are in recession itself. So lets not dwell too much on a simplistic measure, and focus on the things we can and should do to avert the negative consequences

    from wiki:
    In the US, the judgment of the business-cycle dating committee of the National Bureau of Economic Research regarding the exact dating of recessions is generally accepted. The NBER has a more general framework for judging recessions:

    A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.[1]

  2. Reply
    May 1, 2011 at 1:29 am

    It is very much a matter of definition. A common one is two consecutive quarters of economic contraction. However, there are recessions and recessions; the present unemployment rate is lower than it had been in many previous boom times. Housing price changes differ radically by region; in some areas (e.g. Detroit) they have tanked; in others (Seattle) they remain firm. Will we see some more contraction? Probably. Will it have severe effects? I doubt it — unless Congress does some really stupid things, such as increase taxes or tariffs. See any history of the Depression for particulars.

  3. Reply
    Piatchi Likek
    May 1, 2011 at 1:58 am

    According to the NBER’s guidelines for what a recession is, it certainly would point to the fact that we’re in a recession. It doesn’t take a weatherman to tell me that it is raining outside when my roof leaks.

    Lets face it— companies net profits have fallen, the housing market is a complete mess, consumer confidence has dropped significantly (although not a dramatic drop in the timeline of the suspected recessionary period)

    You mentioned Bear Stearns already, but I’d like to add that Bear Stearns survived the Great Depression. It seems rather ironic that it would fall apart in a non-recessionary period.

    Are we in a recession? I say yes, and some people may disagree, but I do know my roof is leaking.

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