Where is the US economy headed?

As we begin 2008, I believe the US bubble economy is unusually susceptible to stock market weakness. Consumer confidence has waned right along with home prices, yet I'll suggest that equities market resiliency worked to support the general view that US economic fundamentals remained sound. Prolonging the equities market bubble also played a role in cushioning the Credit market crisis. Faltering stock prices will now batter fragile consumer and debt market sentiment, creating a spiral of market weakness begetting and reinforcing economic weakness. Moreover, I expect negative sentiment to be reinforced by what will soon be a steady stream of headline-grabbing job cuts, especially in the financial and retail sectors. I would argue that, in the case of both the stock market and corporate America, last year's disregard for the true ramifications of the bursting credit bubble will make for a more problematic 2008 in the markets and otherwise.

Consumer spirits are certainly not being heartened by headlines of US$100 crude oil. And while the bloated consumer sector of the economy will initially suffer the brunt of recessionary headwinds, other dimensions of economic activity (ie energy, alternative energy, agriculture, metal and mining, and exports in general) will be governed by powerful inflationary dynamics. Wall Street is keen to ridicule the Fed's (or at least a faction at the Fed Open Market Committee) attention to inflation risk. The reality of the situation is that global inflationary pressures have become the most robust in decades. In 2008, economies with weak currencies, huge trade deficits and large imported energy requirements will face outsized inflationary risks.
http://www.atimes.com/atimes/Global_Economy/JA08Dj03.html

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Rama, The last paragraph of your article is what I've been saying all along. As the equity in home values plummet, the consumer has nowhere to go for more money; they've depleted every avenue the consumer has for more credit.

Not only will 2008 be a volitile year for the stock market, many more workers are going to lose their jobs and their homes. This spiral cannot be controlled by the feds no matter how much they play with the interest rates.

1,000 point swings in the DOW will be a common occurance this year, and more than likely the next few years.

I'm surprised to hear some financial pundits still claiming that the market will recover by next summer. I'm not sure where their heads are, but I think it's in a very dark place.

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C I
Repeat saying it very often so that some will notice the seriousness.
Thank you

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STARBUCKS has announced that it will "restructure" , meaning it will be closing unprofitable outlets .
personally i can't see why i should pay $3 - 4 or even 5 for a cup of coffee . i did have a starbucks coffee at the toronto airport two years ago - and it was the first and the last one !
at our favourite restaurant we still get our coffee - and it is good coffee ! - FREE when we order our lunch !
i think well pay them a visit again and give starbucks the cold shoulder .
hbg

Quote:

As the froth goes flat, starbucks' main man retakes control

BARRIE MCKENNA

January 8, 2008

WASHINGTON -- From grande to venti, and now, back down to grande again - this time, with a little less froth.

After blanketing North America with its homey latte emporiums and inventing a new language for ordering a cup of coffee, Starbucks Corp. retrenched yesterday, bringing back the executive who took the chain global, along with a plan for slower, more profitable growth.

Starbucks chairman Howard Schultz ousted Jim Donald and installed himself as chief executive officer as the company tacitly acknowledged that maybe its expansion went too far.

The Seattle-based coffee chain is battling stiff new competition and a slumping stock price. Now, the company plans to close ailing stores, cut back on planned new U.S. stores, and increasingly look for growth in less-developed overseas markets.

full article :
STARBUCKS

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Dow is going down today some.

Countrywide financial in big trouble.

Realtor's assn. predicts house prices fall for the rest of '08.

Not a bunch of positive news in the new year out of the economy...

Cycloptichorn

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Select a humble Reisdent or President.
Ask him to think about xyz non-entity voter's problems.
The Economy will revive.
But allow not this gimmicks or show business in the name of democracy

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PAT ROBERTSON TELLS IT THE WAY IT IS !
---------------------------------------------------
don't say you haven't been warned ! pat robertson has been given the bad news : THERE WILL BE A RECESSION IN 2008 and he is ready to share the news with you !
hbg

Quote:

Robertson: God says chaos coming
Story Highlights
Religious broadcaster reveals what God told him about 2008

Pat Robertson says more chaos, violence this year

Also says U.S. will suffer a recession, oil to reach $150 per barrel

Predicts "intensification of miracles around the world"

NORFOLK, Virginia (AP) -- Religious broadcaster Pat Robertson said Wednesday that 2008 will be a year of violence worldwide and a recession in the United States, followed by a major stock-market crash by 2010.

Praying about events in the coming year and sharing what he believes God has told him is an annual tradition for Robertson, founder of the Christian Broadcasting Network.

"The Lord was saying that there's going to be violence and chaos in the world," Robertson said on his "700 Club" news-and-talk show.

"We've just begun to see what's going to happen, and the nations are going to be convulsed with violence," he said, citing as an example unrest in Pakistan after the death of former Prime Minister Benazir Bhutto.

Evangelism will increase because more people are going to be seeking God as the chaos develops, he said.

"We will see the presence of angels and we will see an intensification of miracles around the world, which I think is going to be a wonderful thing," he said.

He also predicted that there will be a recession, oil will reach $150 a barrel and the U.S. dollar will continue to fall. He added that there will be a major stock-market crash in 2009 or 2010.

Robertson's past predictions have included presidential politics; in 2004 he said God told him President Bush would be re-elected in a blowout.

He declined Wednesday to say who will win the 2008 race.

"I'll just keep that to myself and look with horror at what may be happening," he said with a laugh.

Robertson also noted that one especially horrible prediction he made last year -- that a terrorist act, possibly involving a nuclear weapon, would result in a mass killing in the United States -- did not come to pass.

"All I can think is that somehow the people of God prayed and God in his mercy spared us," Robertson said.

***isn't he lucky that he can still laugh ?

source :
PAT ROBERTSON

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We created our own terrorist; it's us. Americans kept listening to Bush's "progress" reports, and what we have now is because a) he doesn't rely on polls about what Americans want, and b) he wants the rich to continue increasing their assets while the middle class continues to lose their health insurance, their jobs, and their homes.

Those who still believes our attack on Iraq was the right thing to do, and that the fundamentals of our economy is still strong, please raise your hands.

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c.i. :

wouldn''t you like to have pat robertson as your investment adviser ?
he'll always be able to provide you with information before anyone else becomes aware of it .
you could do a killing in the market ! Shocked

hbg

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Quote:

Robertson: God says chaos coming

Robertson also noted that one especially horrible prediction he made last year -- that a terrorist act, possibly involving a nuclear weapon, would result in a mass killing in the United States -- did not come to pass.

"All I can think is that somehow the people of God prayed and God in his mercy spared us," Robertson said.

I love the infallibility of god. He can never be wrong. What a gig!

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It's amusing to watch these religious fanatics who can cover their arse by giving god all the credit for disasters and not letting something happen - because they prayed.

Just amazing.

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The fact is this.
USA is slowly and stedily reaching the last place among the decent countries.
I mean
Over consumption, relying on arrogance and allowing all the social injustice to the citizens.

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That's what happens when you have a ignorant, religious fanatic, "king" running your country.

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C I
I am a globalist.
I wish and hope that China, India and Brazil join together to realize the unfulfilled AMERICAN DREAM

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NH Voters Agree: Fix The Economy

Submitted by Bill Scher on January 9, 2008 - 2:44pm.

Republicans, Democrats and independents in New Hampshire all agree: the economy isn't working for them.

The exit poll of voters in the Dem primary, 44% of whom were independents, spoke loud and clear.

86% said the economy was "not so good" or "poor." 97% are "very" or "somewhat worried" about the economy in the near future. And only 14% said they are "getting ahead financially.

Economic anxiety was prevalent among voters in the Republican exit poll, 37% of whom were independents.

Half of respondents said the economy was "not so good" or "poor." 80% are worried about the future, and only 22% say they are getting ahead.

In turn, the candidate perhaps most associated with corporate CEO-friendly conservatism, Mitt Romney (the candidate with the most experience laying off workers), Once again fared poorly among Republican voters who earn less than $100,000.

While Huckabee's economic populist rhetoric served him better in Iowa than in NH, where voters were more concerned about his theocratic tendencies, he still did relatively well among lower-income voters.

And primary winner McCain took a populist shot at Romney in the last debate: "All I can say is that I also had experience in leadership, not in management. I led the largest squadron in the United States Navy, not for profit, but for patriotism." McCain's was strongest with middle-class voters.

Debate is brewing on Capitol Hill about how to quickly implement an economic stimulus to cushion against a looming recession.

Will we have a progressive stimulus that puts dollars in the hands of who actually needs it, and invests in our future? Or will we make another excuse for reckless tax cuts so CEOs can just pad their checking accounts?

The widespread economic concerns, combined with the past failure of Bush's earlier tax cuts, should send a signal to presidential candidates. Those interested in leading might consider weighing in sooner rather than later.
http://commonsense.ourfuture.org/nh_voters_agree_fix_economy?tx=3

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Rama, Congress is considering a tax rebate of $200 to $300, but that's not going to help our economy; it only adds a small amount of money in consumer's hands that will be spent on the higher fuel and food costs.

Both parties are also talking about a tax cut, but more of the same will do nothing unless they tax the rich at much higher rates, and cut the rates for the middle class.

Why congress worries about increasing the income tax for the wealthy is the mystery of the century; they're the only ones showing huge increases in income while the middle class can't even keep up with the inflation rate.

There is no chance that our government will help our economy in distress; they will make it much worse. Watch and see.

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C I
I wish all the best for the next President.
But I also pity for the successor of Bush.
Because of the huge problems.

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The soothsayers have slaughtered the ox and are examining the gloppy entrails for signs: rising unemployment, a falling dollar, weak consumer spending, the credit crisis, a swooning stock market. Could there be something wrong here? Could we actually be approaching a, God forbid, recession?

To which the only sane response is: Who cares? According to a CNN poll, 57 percent of Americans thought we were already in a recession a month ago. Economists may complain that this is only because the public is ignorant of the technical--or at least the newspapers' standard--definition of a recession, which specifies that there must be at least two consecutive quarters of negative growth in the GDP. But most of the public employs the more colloquial definition of a recession, which is hard times. If hard times have already fallen on a majority of Americans, then "recession" doesn't seem to be a very useful term any more.

Apocalypse aside, the mantra of growth has deceived us for far too long. What it translates into is: Don't worry about the relative size of your slice, just concentrate on growing the pie! Now, with a recession threatening even more suffering for those who are already struggling, may be the perfect time to get out the pie-cutter again. Too bad that the one leading Democratic candidate who promises to do so now appears to be on the ropes.
http://www.thenation.com/doc/20080121/ehrenreich

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ramafuchs writes :

Quote:

Could we actually be approaching a, God forbid, recession?

goldman sachs predicts there will be a recession "light" .

listening to CNBC this morning there were some suggestions that the housing slump that had been predicted to end in the second quarter 2008 only two weeks ago , will likely not end before 2009 or perhaps 2010 .

apparently some banks are begining to sell off mortgages with a steep discount - of as much as 20 % .
it showed one fellow who looks at "abandoned properties" , checks to figure out much it would cost to bring them up to standard and approaches the banks holding the mortgage with a lowball bid .
some banks are eager to strike a deal , any deal , but others are hanging tough .
the opinion of some commentators was that the banks will have no choice but to unload the abondoned properties quickly or they'll be left with even less .
hbg

Quote:

The biggest investment bank on Wall Street has a grim prediction about 2008: a recession is definitely on the way.

Goldman Sachs on Wednesday said it believes the housing slump and recent credit market turmoil will spill over into the broader economy this year. And, by the time it's all over, economists believe the Federal Reserve will cut interest rates to 2.50 percent from its current 4.25 percent.

There is a silver lining to the dire prediction, however, since Goldman projects the economy will recover as soon as 2009, making this downturn somewhat "recession-light."

full article :
A "SLIGHT" RECESSION ?

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Where is the US economy headed?

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