Wise words from a wise man...

Discussion in 'Economics' started by annaland, Apr 25, 2008.

  1. http://biz.yahoo.com/cnbc/080425/24311464.html

    Nobel Winner Stiglitz: US Facing Long Recession
    Friday April 25, 12:16 pm ET

    The U.S. economy is already in recession -- and may echo the 1930s, Nobel Laureate Joseph Stiglitz said Friday.

    "The big question is: how will the government respond?" said Stiglitz, in an interview with CNBC. Stiglitz, a Columbia University professor and 2001 winner of the Nobel prize, detailed his bleak outlook for the American economy.

    "This is going to be one of the worst economic downturns since the Great Depression," said Stiglitz.

    He explained that main cause of the current situation is historically unique -- and thus is befuddling those charged with creating solutions.

    Other downturns were primarily caused by excesses in inventories or inflation; but this slowdown is due to the condition of "badly impaired" banks and financial entities, which are unwilling and/or unable to lend capital -- stymieing the very borrowers who usually drive the country back to vitality, Stiglitz said. And the Federal Reserve may have used up its ammunition -- and the faith investors and planners have put in it.

    "[The Fed] will be between a rock and hard place. And we're not over-worrying about credit. But [simultaneously], we need to start worrying about the real sector," he said.

    And if inflation wasn't the prime recession cause, it's still a menace. The professor points to the two-pronged danger of high oil prices joined by climbing food prices, harming businesses and scaring consumers.

    "Oil is particularly bad," as it means that more U.S. dollars "will be going abroad," he said.

    The housing downturn is an even worse economic factor than casual observers realized, Stiglitz said. He explained that during the real estate boom, Americans were able to withdraw billions of dollars from their home equity.

    "[But] with housing prices coming down, it's going to be difficult to do that anymore," he said -- drying up a spending source. And within that problem, still another complication: people typically spent the money they drew off their home equity on consumption, rather than investment -- garnering no return on the spending.

    "The savings rate as we go into the recession is zero. Which means [savings] will go up, " he said -- decreasing consumer spending and weakening retail further.

    What about the government stimulus package?

    "The Bush Administration's response is too little, too late -- and very badly designed," he declared. The amount ostensibly being infused into the economy by tax rebate checks will be a "drop in the bucket" compared to the money being held back and siphoned out by the factors he mentioned.

    "If you really wanted to stimulate the economy, increase unemployment insurance," he suggested.

    "The president is telling people to go out and get jobs -- and there are no jobs for them," he said. </i>
  2. Eddiefl


    Here is another wise saying:

    Those that cant do, teach.

    You get 11 Ecnomists in a room, you get 22 opinions and plenty of free flowing Scotch.

  3. Scotch rocks!
    Went to the Johnnie Walker Blue Label party a few weeks back..

    I'm more of a bourbon man, but what can ya do?
  4. The US is now firmly in the grips of stagflation with no immediate prospect of climbing out.
    Of the two architects, one is a spent redundant being, now well into his 80's and the other is just trying to patch his way through to November when his creation becomes the next guy's problem.
    One of the big problems in this brave new age being hoisted upon the US public is the much unaddressed problem of under employment...... not unemployment, but under employment.
    It does not surface directly in the governments farcical figures but rather finds it's natural home within debt and downsizing.
    This I feel will have an even greater negative effect than an increase in the savings rate because it offers nothing in return for a decrease in consumer activity. At least, saving money offers the Saver something in return.

  5. TGregg


    You ever try Maker's Mark? Not too expensive, but very tasty. If you haven't tried it, you owe it to yourself to pick up a bottle.
  6. Eddiefl


    I want one of these positions, where i get paid nicely and make these large outlandish, huge macro-calls. After a career's worth, I am sure I will call some correctly.

    And the ones one I call wrong, there is no negative consequences for me, i will just say, ,,,"ohh yea, as we all know, the markets are very efficient, filled with erratic non-probable results, difficult to grasp on the thoery of chaos factors, balda, blada, blada,, etc...

    Now, if a true fund manager, trader, investor, Buffet, Soros, PTJ, Simons, says what that article said, then that is something to pay attention to.

  7. Eddiefl


    Oh yea, Makers Mark,, Know it and love it. Very smooth. They have the Maker's cigars too, kinda gimmicky, but not bad at all.

    Try the single-barrel Jack Daniles, not bad at all, not what you would expect.

  8. Banks unwilling or unable to lend? Where?

    <IMG SRC=http://research.stlouisfed.org/fred2/fredgraphfile/?height=378&width=630&bgcolor=%23B3CDE7&txtcolor=%23000000&recession_bars=On&s[1][id]=REALLN&s[1][transformation]=pch&s[1][scale]=Left&s[1][line_color]=%230000FF&s[1][range]=Custom&s[1][cosd]=2001-01-01&s[1][coed]=2008-03-01&s[1][revision_date]=&s[1][vintage_date]=2008-04-25>

    <IMG SRC=http://research.stlouisfed.org/fred2/fredgraphfile/?height=378&width=630&bgcolor=%23B3CDE7&txtcolor=%23000000&recession_bars=On&s[1][id]=CONSUMER&s[1][transformation]=pch&s[1][scale]=Left&s[1][line_color]=%230000FF&s[1][range]=Custom&s[1][cosd]=2001-01-01&s[1][coed]=2008-03-01&s[1][revision_date]=&s[1][vintage_date]=2008-04-25>

    It's not that bad in the real world.
  9. Good post.
  10. TGregg


    I tried some kinda special Jack, I think it was single barrel. Somebody bought it for my Brother In Law's retirement. We were pretty dissapointed, none of us cared for it. But I've always preferred Beam over Jack anyway.
    #10     Apr 25, 2008