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The coming economic doldrums leave as much potential as they disaster in their wake. From my perspective all I do is buy the stock of my own company on a share purchase plan, and dump what is left of my bank account into the market at the end of the month.

The high rollers can have strategies and action plans, I can't afford them and don't really understand them. The stocks I purchase produce dividends that I use to reinvest. That is the sum total of my planning, it isn't much but since I work for a living its really all I choose to do. I have a pension plan that will sustain me when I retire so the investments are merely icing on the cake.

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No recession yet folks.....2nd Quarter preliminary reults are in at +1.9% growth in GDP. But don't fret...there is still hope for an "official" recession based on the late 2007 contraction. Meanwhile, back in Canada, things are beginning to slip as well.

Ummm, you do realize that 2007 Q4 was revised down from +0.6% to -0.2%?

2008 Q1 was revised down to 0.9% from 1.0%.

More revisions to come (especially for Q1 and Q2 2008).

As stated earlier - looking at quarterly GDP to determine if a recession has already started is foolish given that it shows a complete ignorance of how "official" recessions are called recessions.

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Ummm, you do realize that 2007 Q4 was revised down from +0.6% to -0.2%?

What part of "late 2007 contraction" did you not understand?

2008 Q1 was revised down to 0.9% from 1.0%.

More revisions to come (especially for Q1 and Q2 2008).

That's OK..it's still positive growth. Your voodoo math won't work here.

As stated earlier - looking at quarterly GDP to determine if a recession has already started is foolish given that it shows a complete ignorance of how "official" recessions are called recessions.

Maybe, but it's still not a recession until the Fat Lady sings long after the fact.

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The thing about recessions is , that it hits the average citizen first. It really hits the poor first and pretty dramatically. So the numbers the eggheads put out always lag behind what the real deal is. Or they only look at certain numbers to present their case.

Most of the time it is picking and choosing data to support a view.

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The thing about recessions is , that it hits the average citizen first. It really hits the poor first and pretty dramatically. So the numbers the eggheads put out always lag behind what the real deal is. Or they only look at certain numbers to present their case.

Most of the time it is picking and choosing data to support a view.

Of course the numbers lag.

First you have the event happen.

Then you start gathering the data.

Then you compile the data.

Then you analyze the data.

Etc.

Of course it takes time to get this right.

Which is why when the GDP data is going one way (down) and unemployment data is going the other way (up) it is normally a good bet that we are in a recession.

Most people recognize this fact including the eggheads.

It is the Wall Street cheerleaders with their permanent marker grins who don't dare speak the "R" word.

And it is the political types like BC2004 above who don't want to admit to reality because if enough people ignore it long enough then maybe they won't vote for a Democrat. It's the "stupid economy."

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It is the Wall Street cheerleaders with their permanent marker grins who don't dare speak the "R" word.

And it is the political types like BC2004 above who don't want to admit to reality because if enough people ignore it long enough then maybe they won't vote for a Democrat.

There has been no determination of a recession in the United States (yet), not even by your favorite eggheads. You're gonna have to wait just like the rest of us.

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There has been no determination of a recession in the United States (yet), not even by your favorite eggheads. You're gonna have to wait just like the rest of us.

This is about the reality that the US is currently in a recession and it will be declared later.

Of course it will is declared later - it has to be declared after the fact because that is reality of statistical measurement.

The point, however, is that many people can see the writing on the wall even before the official designation.

I guess some of us can think for ourselves while others have to be told "officially."

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....The point, however, is that many people can see the writing on the wall even before the official designation.

I guess some of us can think for ourselves while others have to be told "officially."

So what? These enlightened folk are in no better position than anybody else except for the "I told you so" booby prize.

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So what? These enlightened folk are in no better position than anybody else except for the "I told you so" booby prize.

Well, at least those people are not deluding themselves This also puts them in a better position to ride the resession out, because they saw the warning signs and they took action before the government did. Saved some money for those emergencies, stocked up on essentials, cut back on other spending.

The blind will be blindsighted and can't see the warning signs, and therfore cannot prepare for the recession because it will be too late by then.

If you are not prepared, then you are screwed. Simple as that.

There has been no determination of a recession in the United States (yet), not even by your favorite eggheads. You're gonna have to wait just like the rest of us.

Resessions start long before they are actually declared. So, don't be a fool and wait for the government to take action.

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Well, at least those people are not deluding themselves This also puts them in a better position to ride the resession out, because they saw the warning signs and they took action before the government did. Saved some money for those emergencies, stocked up on essentials, cut back on other spending.

Only a fool would wait for pointy headed soothsayers to announce an official recession, or guesses leading up to such a determination. Both macro and microeconomics are much more dynamic than that, and people who properly manage their finances are usually in a good position no matter what. The exercise to find the official bottom of the troft is largely academic and political.

The blind will be blindsighted and can't see the warning signs, and therfore cannot prepare for the recession because it will be too late by then.

The blind will always be blind...doesn't matter either way. Prudent folks don't wait for eggheads to tell us how to manage financial risks and opportunities.

If you are not prepared, then you are screwed. Simple as that.

Yea....we'll have to sacrifice V8 engines and riding lawnmowers...we're really screwed.

Resessions start long before they are actually declared. So, don't be a fool and wait for the government to take action.

It doesn't matter to me either way.....there is money to be made even while the weak hands cry the blues!

Edited by bush_cheney2004
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BC

There has been no determination of a recession in the United States (yet), not even by your favorite eggheads. You're gonna have to wait just like the rest of us.
Only a fool would wait for pointy headed soothsayers to announce an official recession, or guesses leading up to such a determination.

http://www.usatoday.com/money/industries/b...n-program_N.htm

Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before. Although these numbers are still very small compared with primary credit, "What that tells you is that there's an increasing number of banks that the Fed is classifying as 'unsound' or inadequately capitalized," Low said.

http://www.foxnews.com/wires/2008Jul24/0,4...tCrisis,00.html

In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. Chairman Ben Bernanke said the Fed is considering extending those loan privileges _ which currently are supposed to last only through mid-September _ into next year.

If banks are worried, you should be too.

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Why? That's the difference between you and I....a victim's mentality. I am on the happy side of the debt curve.....the banks pay me.

So when the bank is in trouble, do you really think you are going to get at that money?

Freddie Mac (5th largest banking firm in the US) was denying all clients access to their money. Many of them on your side of the debt curve. And some of them probably got paid by the bank. When the bank is in trouble, do you think you are going to get paid? It is not a victim's mentality, it is a realist's mentality.

It is obvious Freddie Mac did not have enough money in the bank to cover all the withdrawls that would have happened. This is why Fractional Resereve Banking does not work. It is not stable.

Since you don't have enough money to cover Item A, you need a loan, so you go to the bank. The bank will loan you the money (at interest), but the bank may not have the actuall cash to cover it. So they borrow from the Federal Reserve(at interest) to make up for it. So when you borrow from the Federal Reserve. ... are they lending out more money than they can account for in their coffers? Of course they are. This is why the Feds borrow from the World Bank????(at interest) and the IMF. Or you can sell your debt to foreign countries. But when they all ask for that money back, you can be in a run off situation just like Freddie Mac.

But all your money is insured in case this happens. And who pays for that?

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So when the bank is in trouble, do you really think you are going to get at that money?

My bank is not in trouble....and most banks are still profitable. The sky is not falling.

Freddie Mac (5th largest banking firm in the US) was denying all clients access to their money. Many of them on your side of the debt curve. And some of them probably got paid by the bank. When the bank is in trouble, do you think you are going to get paid? It is not a victim's mentality, it is a realist's mentality.

See above.....

It is obvious Freddie Mac did not have enough money in the bank to cover all the withdrawls that would have happened. This is why Fractional Resereve Banking does not work. It is not stable.

Yea, we should just scrap the whole thing and go back to trading goats.

Since you don't have enough money to cover Item A, you need a loan, so you go to the bank. The bank will loan you the money (at interest), but the bank may not have the actuall cash to cover it. So they borrow from the Federal Reserve(at interest) to make up for it. So when you borrow from the Federal Reserve. ... are they lending out more money than they can account for in their coffers? Of course they are. This is why the Feds borrow from the World Bank????(at interest) and the IMF. Or you can sell your debt to foreign countries. But when they all ask for that money back, you can be in a run off situation just like Freddie Mac.

What does any of this have to do with my big fat portfolio? Should I panic now..or later?

But all your money is insured in case this happens. And who pays for that?

Ah, so you admit ain't nuthin' happened yet. I don't care who pays, just like the 80's S&L crisis.

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QUOTE

But all your money is insured in case this happens. And who pays for that?

----

Ah, so you admit ain't nuthin' happened yet. I don't care who pays, just like the 80's S&L crisis.

AH aint claimed nuthin. I asked a question, which you failed to answer.

Since you don't care ... pay up.

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Nope, it proves that you are paying for it.

You still don't get it, do you? I paid more in US federal and state taxes last year than most people earn annually. I have been "paying" for a very, very long time, and I don't mind a bit, because I am getting the gravy too.

It is better to be rich and healthy than sick and poor.

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Lets get back to bad statistics.

Part of the reason that the reality of a recession is felt long before it is measured is because of absurd statistical models.

Just as many are critical of poor inflation measurements (including a former voting member of the Fed as linked to a long time ago) there are also many who are critical of the way unemployment is measured (which I have also linked to in the past).

The latest numbers provide yet another example of the absurdity of the "birth/death" model that the BLS uses.

The birth/death model is not adjusting for population births/deaths. Rather it is a method used to estimate the amount of employment being created or going into decline ("being destroyed" does not seem appropriate) by the creation of new businesses and closure of existing businesses.

It is a statistical method that is appalling whether coming out of a recession (where the model fails miserably to capture the new jobs being created - the "jobless" recovery in 2002-2004 looked much worse than it really was and the revisions didn't start to show this until years later) or being in a recession.

This link gives some examples based on the July numbers.

His conclusion is one that is very relevant to this thread:

So next year when we get the data revisions I expect tens of thousands of phantom jobs from the model to disappear, and in retrospect we will all be wondering why the recession didn't seem more obvious.

His conclusion is wrong in that it is not "all" of us who will be left wondering why the recession didn't seem more obvious - it has been obvious for some time with just the start date in doubt.

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  • 3 weeks later...

The latest inflation numbers are interesting.

I have already pointed out and linked to the problems with CPI as a way to measure inflation.

Interesting that the PPI hit a level not seen since 1981: PPI July 2008

Year-over-year gains were 9.8% headline -- the highest reading since 1981, while the 3.5% core (why do we still mention this?) was the most since '91. I cannot figure out why there was a big jump in car and truck prices.

Bottom line: These were scorching hot price increases. And, as Michael Donnelly astutely notes, PPI did not adopt the whacky ideas (hedonics, substitutions, weightings, OER) that the CPI did adopted over the years -- especially, the Boskin Commission's junk recomendations. That's largely because PPI is not as politically important, nor does it move any government payouts.

Sadly, this is not the only statistic that takes us back to some bad old days:

Vehicle sales are also pretty bad.

And while home inventory has gone down it still is as bad as back in the early '80's.

But before we get too excited, remember that while inflation may be high now it likely isn't going to last for reasons that are interesting, to say the least.

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  • 2 weeks later...
US economic growth during Q2 was better than expected....3.3 percent. Any hopes for that Great Depression or even a serious recession are fading fast. Meanwhile, Germany is tanking in Europe, and Canada is feeling the burn.

http://biz.yahoo.com/ap/080828/economy.html

Canada is only feeling the burn because you slowed down. Oh, and outside of Ontario, we're not really feeling any burn at all.

Edited by Smallc
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Canada is only feeling the burn because you slowed down. Oh, and outside of Ontario, we're not really feeling any burn at all.

That's OK by me...watching Ontariario squirm is a pleasant change from all the earlier pronouncements of US economic death. The sky is falling someplace else now.

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I did answer your question....the same as the S&L crisis. Just put in on the US taxpayer's tab.

Sorry, I forgot you are on the outside looking in.

Funny thing about that S&L, one of the Bush boys was involved in that and I heard on one of the talk shows back then, that the US taxpayer would have to pick up the tap except TEXAS!!

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