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Thread: double dip recession

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    Featured Member gingerstripper's Avatar
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    Default double dip recession

    so we're technically out of a recession....but what they think is we're heading for a double dip recession because europe and china....not really sure whats going on but i was doing a little researching and it sounds kinda scary. Hopefully people will still be spending money and going out. hopefully it doesnt hit the u.s.

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    Default Re: double dip recession

    ^^^ as to whether the USA ever technically got out of the recession is debatable ... see

    ^^^ as to the USA heading for a double dip, technical indicators were showing this in mid-march ... see


    For the moment at least, PIIG problems in Europe are having the greatest effect on the US economy via a weakening of the Euro exchange rate or a strengthening of the US dollar exchange rate. While this has caused the US dollar denominated prices for world commodities like gasoline, food, raw materials, etc. to drop a bit, that's only good news for US domestic consumers who 'buy things' with US dollars they earn. But for better or worse, the majority of recent profits for US corporations have NOT been earned on domestic sales, but instead on foreign country sales. Thus a strengthening of the US dollar means lower profits if the exported products from those US companies is being sold in Indian rupees or Brazilian reals or Euros. Stock share prices of major US exporters like Caterpillar and John Deere have dropped significantly in recent days.

    Also agreed that China's formerly booming economy has recently begun to slow down tremendously ... mostly due to a cutback in Chinese gov't 'stimulus' spending, as well as significantly increased Chinese labor costs. China had been a major 'profit center' for certain US companies, notably GM, GE, etc. Still, in the grand scheme of things, seeing China's and India's economic growth rate drop from the 8% ballpark to the 3% ballpark still leaves these countries growing significantly faster than the recent < 2% US economic growth rate.

    The real unanswered question in regard to a coming US double dip recession, from a superficial standpoint at least, revolves around whether or not the US FED will ( again ) embark on a QE3 program of massive 'money printing' ... which would offset the rising US dollar exchange rate, which would raise US stock and commodity prices, which would restore the relative competitiveness of US exporting companies etc. Some pundits are of the opinion that the FED is avoiding this because the consequences of earlier QE efforts in regard to higher US prices for food, energy, raw materials etc. have already caused negative economic impact on many US consumers and small ( non-exporting ) businesses. The FED may not have a choice in this, however, if the Euro continues it's downward slide.

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    Featured Member gingerstripper's Avatar
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    Default Re: double dip recession

    Thank you!

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    Default Re: double dip recession

    The latest unemployment numbers have come out and claims are up for the first time in five (5) weeks. Economic growth for the last quarter was revised DOWN to 1.9 %.

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    Default Re: double dip recession

    We never came out of recession. Corporations are still being bailed out, Unemployment is still high but they tinker with the numbers to make it look less , the housing market has not recovered enough to even see an average increase in housing values, and oil/gold is still high.

    Greece's exit will push other troubled EU nations out as well.Once the EU collapses we will have another recession into a depression. We are so connected with Europe economically. Investor confidence is what keeps markets from crashing. If Europe can fall so can the USA. It will cause a dynamo effect that will spread to the US and possibly cause some states here to fail. Once that happens no amount of Fed intervention will hide the truth.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: double dip recession

    ^^^ What worries me is how much PIIGS debt our banks are holding. We can all survive Greece leaving the EU and defaulting. The world survived Argentina. Weathering a Spanish or Italian collapse ? Much more serious.

    Other than printing Euros like crazy , what else can be done ? For how long can all these hollowed out banks be propped up before they collapse ? Might it not be time for an FDR-like "Bank Holiday" in Europe ? Go in and save those that can be saved and let the rest collapse ?

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    Default Re: double dip recession

    Quote Originally Posted by Eric Stoner View Post
    ^^^ What worries me is how much PIIGS debt our banks are holding. We can all survive Greece leaving the EU and defaulting. The world survived Argentina. Weathering a Spanish or Italian collapse ? Much more serious.
    Lol.... Don't be silly..... The Wizards of Wall Street have hedged their bets with derivatives......
    The country has been looted.

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    Default Re: double dip recession

    Quote Originally Posted by mikef View Post
    Lol.... Don't be silly..... The Wizards of Wall Street have hedged their bets with derivatives......
    That may be but somebody has to be healthy enough to take the other side of the bet and pay off on it, if necessary.

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    Default Re: double dip recession

    Lol..... I was just kidding.... They will say they are hedged..... But in the end, the Masters of the Universe will need another bailout.
    The country has been looted.

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    Featured Member gingerstripper's Avatar
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    Default Re: double dip recession

    oh man..shits scary. eh why did i have to read this. lmao

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    Default Re: double dip recession

    Quote Originally Posted by Eric Stoner View Post
    ^^^ What worries me is how much PIIGS debt our banks are holding. We can all survive Greece leaving the EU and defaulting. The world survived Argentina. Weathering a Spanish or Italian collapse ? Much more serious.

    Other than printing Euros like crazy , what else can be done ? For how long can all these hollowed out banks be propped up before they collapse ? Might it not be time for an FDR-like "Bank Holiday" in Europe ? Go in and save those that can be saved and let the rest collapse ?
    What I think they should do is hit the issue head on instead of dragging it out. Create plans of actions for each European country based on its own issues. Seizing some banks, merging others, and creating budgets/tax plans that speaks to the debt problem instead of austerity to appease the imf. Then have a planned break up of the EU. By doing it in a more systematic and planned fashion it is a bit more predictable. More importantly it gives the impression of predictability. Which would keep the public and investors more calm. Allowing it to collapse like a volcano is what will cause the most damage.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: double dip recession

    Ultimately, the best 'answer' I have seen is stated very succinctly by our 'old friend' Karl Denninger at ... ( paraphrasing ) "governments cannot continue to spend more money than they are able to take in via current year tax revenues !"


    (snip)"the limits of debt-leverage, which inherently is a naked short on the currency and thus debases purchasing power, have been reached.

    For a while -- sometimes for a good long while -- this strategy appears to work. Consumers lose purchasing power but they "make it up" by borrowing more money, buying ever-more-levered homes, for example. This masks the bad effects of what has been done -- for a while.

    But all these acts do is build more and more leverage into the system and take a greater percentage of the total economic population (of companies, of individuals, of governments) from stable, surplus-consuming entities (that is, entities who produce something, consume some part of it on necessities, then consume the rest on discretionary items) and shift them into debt peonage where only through ever-greater borrowing do they manage to avoid economic disaster.

    In short you shift the population from a thriving consumer-based economy to one where everyone is using a cash advance on a new credit card to roll over the old one that has hit its spending limit!

    Eventually you run out of the ability to roll over these debts and you also run out of people who are both able and willing to borrow more money. The last bastion of this is when the government starts doing the same thing.

    That's where we are now, and you know the end of the line has been reached when the borrowing rate for the government starts to rise precipitously.

    There is no way out of this box through borrowing more money.

    There is only bankruptcy for the over-levered and a return to spending within one's means, both for the people and the government.


    Nothing else will work. There is no avoidance path for the pain that must be accepted. There is no means to continue the debt-financed spending.

    It must end or disaster will ensue.

    The flaw in all of these arguments about a "rescue" is that all are simply an attempt to find a way to not adjust behavior -- that is, to not stop the excessive spending pattern that led to the problem in the first place.

    In short this is nothing more than a desperate attempt to scrounge in the carpet for just one more hit of crack to avoid the oncoming and very unpleasant withdrawal.

    There is no means to do so that will work.

    The reason is simple -- indefinite compound growth is always mathematically impossible, and yet even when you are within the last "doubling time" before disaster strikes you only see that half of the available resource has been consumed. Nonetheless you are literally, at that point, just one step away from disaster.

    Spain, and the rest of Europe, need a payments clearing system.

    Europe, and Spain, (and the United States) do not need the specific banks they have today.

    That is, what's important is that you can clear a payment -- not the name on the door. And the deflationary impact of defaulting all of the bad debt will be good, not bad, as it will cause over-levered asset prices to collapse, making them affordable again.

    Yes, those overlevered banks will blow up. So what? The next day a bright-eyed entrepreneur will open a new bank. This time the government can enforce "One Dollar of Capital" and by doing so prohibit the debt ponzi from being reinflated at the common man's expense. Banks will have to obtain actual capital from either shareholders or bondholders to back all unsecured credit positions, one to one.

    Oh sure, those who have a vested interest in overlevered prices of "assets" don't want to hear this. They don't want it to happen either, because despite all appearances they are not really rich -- most of them have someone else debts, and if they don't pay their alleged "asset" is shown to be worthless. Since most of them have borrowed heavily against these alleged "assets" when this occurs they're rendered bankrupt as well.

    But that a bunch of rich and powerful people will be financially destroyed doesn't change what the right path forward is for Europe.

    Or for the United States.

    The common United States consumer has lost nearly 30% of his purchasing power in the last four years due to the manipulations of the government and Federal Reserve. Most Europeans are in similar if not worse financial condition. Sure, some have done better and some have actually increased purchasing power (such as the big bank traders and CEOs) but most Americans and Europeans have lost. They have had their wealth and purchasing power stolen by government and given to these big banks. It's theft -- legalized, but theft nonetheless, and that purchasing power has then been replaced (lest the people starve!) with EBT cards and other handouts.

    This cannot continue, as the government doesn't have the money either, nor can government continue to borrow indefinitely on commercially-reasonable terms to obtain ever-more to hand out, as each such new iteration of this scheme is in fact a negative-sum game. That is it costs more than the economy benefits.(snip)

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    Default Re: double dip recession

    and a picture is always worth 1000 words ...





    Isn't it simply amazing how history tends to repeat itself !

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    Default Re: double dip recession

    and the latest 'prognostications' from LEAP/2020 ... from


    (snip)"the US financial media have given us a remake of the “green shoots” story from the beginning of 2010 and the “recovery” (14) from the beginning of 2011 in order to paint a picture of an America “exiting the crisis”. However, the United States at this beginning of 2012 really resembles a depressing scene painted by Edward Hopper (15) and not a glowing 60s chromo in the style of Andy Warhol. Just as in 2010 and 2011, the spring will for that matter be the moment of the return to the real world.

    In this context all the more dangerous, as all the players are lulled by a dangerous illusion of a “return to normal”, in particular of the “restarting of the US economic engine” (16), LEAP/E2020 considers it necessary to alert its readers to the fact that summer 2012 will see the shattering of this illusion. In fact, we anticipate that summer 2012 will see the crystallization of five devastating shocks which are at the heart of the current process of world geopolitical swing. The black clouds which have been accumulating since the beginning of the crisis around economic and financial issues have now been joined by the dark clouds of geopolitical confrontation.

    Therefore, in LEAP/E2020’s view, five devastating storms will mark the summer of 2012 and thus accelerate the process of world geopolitical swing:

    . US relapse into recession against the background of European stagnation and BRICS slowdown
    . dead end for the central banks and interest rate increases
    . storm on the foreign exchange and Western sovereign debt markets
    . Iran, the war « too far »
    . new crash in the markets and financial institutions. (snip)

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