Recession?

It's too late; we've been a recession many months ago; most families could not continue to live their lifestyles of a couple of years ago because food and fuel costs have increased to the point most could not keep up with those higher costs.

As family members lost their jobs and homes, many also lost their health insurance. That's a biggie for most families.

You can listen to our government about "not being in a recession," but I see it different.

Expect to see that the final two quarters of 2008 were in a recession.

Some pundits are already talking about a "depression."

If the governments through central banks can not pump in enough liquidity to unfreeze the credit markets, then we will have a depression. A substantial Recession is for sure now. What has everyone shaking in their boots is that thus far every bit of liquidity pumped in by governments ($trillions) has gone straight to the vaults, banks and shadow banks have not been willing to let the money work in the markets because they think for their individual survival they must hoard cash. So long as banks and shadow banks continue with this practice no amount of money pumped in (and this is now mostly taxpayer money pumped it) will make any difference. This is the reason governments have in the last two weeks turned on a dime and are now moving to nationalize the banks. The thing is that doing this drives home how much of a crisis situation this is, and scares everyone even more. There may be absolutely nothing we can do now to prevent a depression, nobody will know for awhile.

The underlining problem is a lack of confidence in the global financial system and in governments, and the trio of bush, McCain and Obama have all been less than reassuring so no one figures a fix for the underlining problems is on the way. If America fails to fix the problem that America created (lax systems with lots of fraud, which was forced onto the rest of the world over the last decades) then the global community is going to have to come together and create a new financial system to replace the one that does not work, which will take years. The next president must undertake reform of FDR proportions, but thus far neither Obama nor McCain indicate that they understand, or have any ideas.

That's what I said; main street still hasn't seen any benefit from the "bailout."

and you are right, I just put a little meat on them bones

For me, this meaning has taken on added depth.

You know the really odd thing is that this same thing has happened many times in the past and it will happen many times again, in virtually the same way in the future.

JTT, I agree, but do you know why other than "history repeats itself?"

I do, 1929 was caused by margin calls on stock loans that could not be met, 2008 was caused by margin calls on Credit Default Swaps that can not be met. Both failures were caused by unregulated leverage, that greed pushed to unattainable levels until the inevitable collapse took place. Unwinding the leverage leads to forced selling, these sellers must sell and at any price they get, which drives down the value of everything...it is the driver of the dynamics of collapse (see the law of supply and demand).


http://www.time.com/time/business/article/0,8599,1723152,00.html

the largest market was a completely unregulated one. The brilliant Phil Gramm was in the pocket of wall street, he pushed through the law that allowed the break down of firewalls between financial institutions that where put in place as a result of the last depression (1998). And he is the one who slipped a provision onto law without notice or debate that the feds could not regulate credit default swaps (2002).

it must be said that the Guru Greenspan was adamantly opposed to regulation of all derivatives, to include CDS's. Phil Gramm was not a lone ranger, he was carrying water for others. It is the breakdown of democratic principles as evidenced in the process that created the toxic financial instruments that now threaten the global economy and the continuation of free market capitalism. The lack of confidence in America and our financial system is well earned. The cries that the current rush to sell out is irrational and a panic lacks any credibility.

.America loses as much or more global authority and credibility with our failure to supervise the financial markets as we did with our invading Iraq on shaky legal grounds and then topped that contempt for civil behaviour with our failure to supervise the conquered territory.

Bush should be proud. He's done more in eight years than ten presidents put together. He's next in line with Hitler and Mao.

http://www.nytimes.com/reuters/business/business-us-financial-smallbusiness.html

Congress and Paulson still doesn't understand how to handle this crisis. More delays only increases more pain on main street; but they have no knowledge about the average joe of America. Look what the employees of AIG did when they learned they were being rescued by the $85 billion bailout. They went on a junket that cost over $400,000. No common sense, no sense; the whole gang of them.

I don't think anyone knows what to do, we are driving blind. Every time the markets get into trouble central banks pump in liquidity, but this devalues risk. This encourages risky behaviour in the future by saving institutions now from the down side of risk. It has been argued that if the governments are successful this time the price will be another market failure in the not too distant future, and that each succeeding market failure that happens will get more costly, until finally the situation can't be saved. Those who argue this position argue that we are paying the price for saving the markets from their greed last time, the all we are doing at the end of the day is picking the future taxpayers pocket. we are back to the point that bankruptcy is part of the life cycle of corporations, that failure of markets is a natural part of the life cycle of markets, that getting in the way of the natural cycle harms the well being of market capitalism. In other words, if we can't take the pain of failing markets then we should not be playing market capitalism. Market capitalism= gambling, abet with good odds for the smart player.

This makes sense to me.

I don't believe that: most small businesses were self-sustaining before the credit freeze. Without credit, consumers cannot buy those high ticket items that helps keep the factories and transportation system working. Without credit, even those with good credit cannot buy cars. It's now getting to a point of no return, and that is scary. After they close more factories, it takes much longer to get them back to working again.

nobody disputes the importance of credit and credit markets. The question is what is the consequence of deciding that credit markets can't be allowed to fail, even when based upon the conduct of those playing they should? Bailing out the market can't assumed the be the right move. Bailing out the markets at the cost of several trillion dollars and maybe a lot more without certainty that the cure will work certainly can't be assumed to be the right move.

The bail out is politically expedient, but that does not make it right.

Oh, I totally agree; the bailout of banks and finance companies is wrong. However, these are times when the government must step in to provide the liquidity in the markets to try and deflect the total collapse of our economy.
Without credit, capitalism will die.

Unfortunately the banks are the instruments of control of the financial markets by the government. The Republicans removed every oversight of the banks and firewalls i.e. the separation of banks, brokerage, insurance and mortgage firms, that were a self checking mechanism. The mergers of broad sectors of the economy also created a situation where all the egges are in fewer baskets not to mention cornering the market e.g. the mass media where a false image or illlusion is created to control the masses. The robber barons have thru stealth taken over the controls of industry and government. The saving grace is that they are so short sighted that their greed threatens to bring down the whole system and the resulting near panic will, I hope, help people see thru their deception and throw those rascals out. Whatever changes should be done thru Congressional acts or bills. Letting it change as a regulation is a bad idea as a future Republican president could willy nilly take it out or not enforce it. The EPA under George W. Bush is a good example of that.

The answer to reviving the economy would be to follow FDR's solution to create jobs to improve or upgrade infrastructure which has over the years been neglected very badly.