[News] Recession in 2008, Depression in 2009

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US has averted new depression, recovery next year: Fed Chairman Bernanke
Posted: 16 March 2009 0729 hrs

WASHINGTON - In his first television interview, Federal Reserve chairman Ben Bernanke predicted that America's worst recession in decades likely will end this year, and that the economic recovery would gather steam next year.

In the "60 Minutes" interview broadcast by CBS late Sunday, which the network said was the first by a sitting Fed chairman in 20 years, Bernanke said the "green shoots" of economic revival were already evident.

Predicting that no more big banks will fail, Bernanke also called on Washington's squabbling politicians to show the will needed for recovery as he spelled out just how close the world came to financial meltdown last autumn.

The US central bank chief, whose decision to sit down last Wednesday for the rare interview underscored the gravity of the crisis, said much depends on fixing the crisis-hit US banking system.

"We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year," Bernanke said.

"We'll see recovery beginning next year. And it will pick up steam over time," he said.

Asked if the United States had avoided a repeat of the 1930s Great Depression, Bernanke said: "I think we've averted that risk.

"I think we've gotten past that and now the problem is to get the thing working properly again."

Bernanke called for tougher regulatory reform to address systemic risks posed by an institution that becomes too big to fail, blasting the "unconscionable bets" taken by giant insurer American International Group.

"It makes me angry. I slammed the phone more than a few times on discussing AIG," he said, as the bailed-out insurance group was embroiled in a new political row over hefty bonuses planned for some of its top executives.

The government is now forcing AIG to jettison subsidiaries and use the profits to pay it back -- a model that Bernanke said also would apply to the major banks that have received taxpayer aid.

The banks now are being subjected to a "stress test" by Treasury Secretary Timothy Geithner and his team to ensure they have enough money put aside to ward off new crises, the Fed chairman noted.

"They are not going to fail," he said.

"But what we can do, should it be necessary, is try to wind it down in a safe way," Bernanke added, explaining efforts to augment banks' capital ratios and dispose of toxic assets with government help.

Government bailout money for the banking industry so far worth 700 billion dollars has proven politically toxic, especially given corporate perks and bonuses still being handed out by rescued lenders.

But in remarks that could rile critics of President Barack Obama's economic revival plans, Bernanke said "the biggest risk is that we don't have the political will.

"There's a danger, he said, that "we don't have the commitment to solve this problem, and that we let it just continue. In which case, we can't count on recovery," he said.

The political will for action had to be fomented by Bernanke and Geithner's predecessor Henry Paulson last September, in an urgent intervention with lawmakers on Capitol Hill.

Commenting for the first time on his actions back then, as global financial markets reeled, Bernanke said: "I felt we were pretty close to a global financial meltdown."

"It was very close," he said, arguing that without emergency powers given to the Treasury Department and Fed, "we could have had a much, much worse outcome."

CBS interviewer Scott Pelley said that when he approached the Fed for an interview a year ago, Bernanke's representative laughed and said the publicity-shy chairman "never" does interviews.

"Well, it's an extraordinary time," Bernanke told Pelley.

"This is a chance for me, I think, to talk to America directly." - CNA/vm

via : http://www.singsupplies.com/showthread.php?t=21619

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[youtube]G77Vkuk6dRM[/youtube]
http://www.youtube.com/watch?v=G77Vkuk6dRM

Participating in TALF - Interview with Wilbur Ross (Taking Stock)

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Surprise Good Housing Start Numbers, Surprising low Inflation, Higher Consumer Numbers

And a massive 6 day rally on the stock markets. We are calling this the end of the bottom.  For here on its up, up and away

Congrats to America, the #1 Country in the world.

And may they lead us all out of the current global malaise.......

http://www.ft.com/cms/s/0/15eb2de2-13d8-11de-9e32-0000779fd2ac.html

Federal Reserve plan stuns investors

By Krishna Guha in Washington

Published: March 18 2009 18:17 | Last updated: March 18 2009 23:40

The Federal Reserve on Wednesday stunned investors by announcing plans to buy $300bn of US government debt, triggering a plunge in bond yields and the dollar.

In a further display of aggression, the US central bank also said it was more than doubling its purchases of securities issued by housing giants Fannie Mae and Freddie Mac to $1,450bn. It said it now expected to keep interest rates near zero for an “extended period” of time.
EDITOR’S CHOICE
Opinion: The quest for a global solution is misguided - Mar-18
Treasury bonds gyrate on Fed’s shock move - Mar-19
Short View: Fed’s shock and awe - Mar-18
Fed boosts mortgage and Treasury markets - Mar-18
Fed move leads to flip-flop charge - Mar-18
US stocks spike on Fed plan - Mar-18

The yield on 10-year US Treasuries plummeted 50 basis points to 2.50 per cent, while private borrowing rates fell by roughly half as much. Equities bounced with big gains in troubled banks such as Citigroup and Bank of America. But the dollar fell 3.2 per cent against the euro and 2.3 per cent against the yen.

    Interactive feature
    Quantitative

    Quantitative easing explained

Goldman Sachs said the Fed was throwing the “kitchen sink” at the problem. The plan to buy Treasuries caught investors off guard. “It appears that they wanted to give the market a jolt,” said Peter Hooper, an economist at Deutsche Bank.

The last time the central bank attempted to bring down yields on long-term securities through direct intervention came during the ill-fated Operation Twist in the 1960s. Recent comments by Ben Bernanke, Federal Reserve chairman, and William Dudley, New York Fed president, did not suggest that Treasury purchases were imminent.

But the deterioration in the US outlook, problems rolling out the US financial rescue plan and the Bank of England’s success in buying UK government gilts seem to have persuaded the Fed to act.

Alan Ruskin, a strategist at RBS, said it was a “flip-flop” that “could be cast as a sign of desperation” but “confirmed that Bernanke will do whatever it takes to get some hold of the problem”.

The Fed said it would concentrate on Treasuries with maturities of two to 10 years. It said its objective was to “improve conditions in private credit markets” – not to help the government finance its mounting deficits. The Bank of Japan said it was stepping up its purchases of Japanese government debt by about a third to Y1,800bn a month.

Wednesday’s Fed announcement will increase the size of its balance sheet by another $1,150bn to about $3,000bn even before the roll-out of a $1,000bn scheme to finance credit markets. Once this scheme is fully implemented, its balance sheet could approach $4,000bn – nearly a third the size of the US economy.

A swollen Fed balance sheet runs the risk that the US central bank may find it difficult to manage down the money supply when the economy turns, raising the possibility of inflation.

Gold surged in response to the Fed’s announcement, rocketing from a session low of $884.10 a troy ounce to a high of $942.90, a jump of 6.6 per cent.

via : http://www.singsupplies.com/showthread.php?t=21767

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[youtube]TfXhILMwqsI[/youtube]
http://www.youtube.com/watch?v=TfXhILMwqsI

The world economy is expected to shrink this year for the first time in 60 years.
The International Monetary Fund also warns that Britain's budget deficit is by far the highest among the major economies.

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so, what does that means?

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hear on the radio regarding a comment made by Paul Krugman about something in 2 months.

"stabilising"

and then "recovery"? that's what i thought i heard.

for real? just because storage level is going down, people should just go and produce to keep the stocks up?
would there be the demand (actual/real) to consume after that?

keep hearing the buzz words - "China".

why would they wan goods from outside? when they are already producing for pretty much the whole outside?

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ok, found the article by the man.
http://www.reuters.com/article/idUSLP39747
World economy stabilising says Krugman
Mon May 25, 2009 7:54am ED

ABU DHABI, May 25 (Reuters) - The world economy has avoided "utter catastrophe" and industrialised countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.

"I will not be surprised to see world trade stabilise, world industrial production stabilise and start to grow two months from now," Krugman told a seminar.

"I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

The Princeton professor and New York Times columnist has said he fears a decade-long slump like that experienced by Japan in the 1990s.

He has criticised the U.S. administration's bailout plan to persuade investors to help rid banks of up to $1 trillion in toxic assets as amounting to subsidised purchases of bad assets.

Speaking in UAE, the world's third-largest oil exporter, Krugman said Japan's solution of export-led growth would not work because the downturn has been global.

"In some sense we may be past the worst but there is a big difference between stabilising and actually making up the lost ground," he said.

"We have averted utter catastrophe, but how do we get real recovery?

"We can't all export our way to recovery. There's no other planet to trade with. So the road Japan took is not available to us all," Krugman said.

Global recovery could come about through more investment by major corporations, the emergence of a major technological innovation to match the IT revolution of the 1990s or government moves on climate change.

"Legislation that will establish a capping grade system for greenhouse gases' emissions is moving forward," he said, referring to the U.S. Congress.

"When the Europeans probably follow suit, and the Japanese, and negotiations begin with developing countries to work them into the system, that will provide enormous incentive for businesses to start investing and prepare for the new regime on emissions... But that's a hope, that's not a certainty." (Reporting by Andrew Hammond; editing by Thomas Atkins and Robert Woodward)

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By Shobhana Chandra

May 27 (Bloomberg) -- The U.S. recession will probably end in the third quarter, a survey of business economists showed, even as rising joblessness indicates the recovery will be weaker than previously estimated.

The world’s largest economy will begin to expand next quarter, according to 74 percent of economists in a National Association for Business Economics survey. Compared with NABE’s February poll, growth will be slower and unemployment will be higher in the second half of this year and through 2010.

Government stimulus spending and Federal Reserve efforts to thaw credit markets are helping pull the economy out of the worst slump in half a century, the survey said. While housing is stabilizing, the economists predicted consumer spending will be restrained by a deteriorating labor market as job losses continue for the rest of the year.

“There are emerging signs that the economy is stabilizing,” Chris Varvares, president of the group and of Macroeconomic Advisers LLC in St. Louis, said in a statement. Still, the recovery may be “considerably more moderate than those typically experienced following steep declines,” he said.

The economy will shrink at a 1.8 percent annual rate from April to June, and then grow at a 0.7 percent pace in the next three months, the survey showed. Growth will accelerate to a 1.8 percent rate by the final quarter.

Spending to Fall

Consumer spending, which accounts for about 70 percent of the economy, may fall 0.4 percent this year, compared with a 1.3 percent drop forecast in the prior poll. Purchases will increase 2.1 percent next year, less than estimated in February.

The NABE survey, based on the median forecast of a panel of 45 economists, was conducted from April 27 to May 11.

Nine of every 10 participants said the Fed’s new credit facilities improved borrowing conditions, and 55 percent said the programs also benefited markets that were not directly targeted. At the same time, nearly half the economists said credit was still hard to get.

Home sales may reach a bottom by mid-year, according to 72 percent of the panelists, and more than six in 10 predicted housing starts will hit a trough by that time. The survey showed home prices have further to fall, with 40 percent of the respondents forecasting the declines will continue into 2010 or later.

Payrolls will decrease by an estimated 4.5 million in 2009, pushing the unemployment rate to 9.8 percent by year-end, almost a percentage point higher than the previous estimate of 9 percent, the survey showed. Job gains next year will help reduce the jobless rate to 9.3 percent by the end of 2010.

The outlook for business investment this year also soured compared with the February survey, reflecting sharper pullbacks in spending on equipment, software and facilities, and a bigger reduction in inventories. Economists in the survey also predicted corporate profits will decline 16 percent this year.

The cost of living will fall and worker productivity will improve this year, the NABE report showed. With inflation in check and unemployment rising, Fed policy makers will keep the benchmark interest rate close to zero until the second quarter of next year, at which time a series of increases may push the rate to 1.25 percent by year-end.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

via : http://www.singsupplies.com/showthread.php?t=29293

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something heard on radio n reading.

things come in wave. first, second, n third (maybe) wave has probably hit or hitting.
and then the fourth n fifth waves come crashing. (that's also when curious people thinking it's safe... come back to look see..)

http://www.tulane.edu/~sanelson/geol204/tsunami.htm

Because the wavelengths and velocities of tsunami are so large, the period of such waves is also large, and larger than normal ocean waves.  Thus it may take several hours for successive crests to reach the shore.  (For  a tsunami with a wavelength of 200 km traveling at 750 km/hr, the wave period is about 16 minutes).  Thus people are not safe after the passage of the first large wave, but must wait several hours for all waves to pass. The first wave may not be the largest in the series of waves. For example, in several different recent tsunami the first, third, and fifth waves were the largest.

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July consumer credit falls a record $21.6 billion
Tue Sep 8, 2009 4:18pm EDT

WASHINGTON (Reuters) - Total U.S. consumer credit fell by a record $21.6 billion in July, Federal Reserve data showed on Tuesday, the latest hint household spending would be too weak to drive the economy's recovery from recession.

July consumer credit outstanding fell at a 10.4 percent annual rate to $2.47 trillion, steeper than analysts' expectations for a $4.0 billion drop. Total credit in June tumbled $15.5 billion rather than the $10.3 billion drop previously estimated by the U.S. central bank.

"It is one more important sign that consumers are not going to be contributing very much to the economy for the balance of this year and probably for a good part of next year. Consumers will be in the background," said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey.

With an unemployment rate of 9.7 percent, the highest in 26 years, and incomes falling, households have drastically cut back on spending. Consumer spending accounts for about two-thirds of U.S. economic activity.

While key reports suggest the economy is probably in the early stages of recovery from a recession that started in December 2007, continuing jobs destruction has raised fears that the healing process will be slow.

Consumer credit has now declined for six consecutive months, the first time this has happened since the period from June 1991 to December 1991, the Fed said.

"There is no way that this recovery can be sustained unless we see a pickup in household spending. The big question out there is will we see Americans spend again to keep this recovery alive," said Baumohl.

The recovery, which many economists believe is underway, will be largely driven by goods restocking, after inventories were slashed to record low levels, government spending and historic low interest rates.

Nonrevolving credit, which includes closed-end loans for big-ticket items like cars, boats, college education and holidays, plunged a record $15.4 billion, or at a 11.7 percent annual rate, to $1.6 trillion.

Revolving credit, made up of credit and charge cards, dropped $6.1 billion, or at 8.1 percent rate, to $905.6 billion, the data showed.

"Credit is still shrinking and that is going to have an impact on consumption. As such, this remains an important part of the recovery since without the smooth functioning of credit markets, the recovery may stall," said Charmaine Buskas, a senior economics strategist at TD Securities in Toronto.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

via : http://singsupplies.com/showthread.php?t=37568

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July's figure would be taken from June. it's Sept now, so the numbers are already outdated?

strange, thought i hear on radio that there's the cash for clunker item factored in also. (which i thought had only end recently.)

even with the addition of the cash for clunker... it failed to lift consumer spending. as you guys already know, the US guys are fantastic buyers of cars, driving long distance (more than 40kms each way) for their products etc.

another known fact is that consumer spending in the states takes up a huge chunk of their GDP. ie: 70%.

interesting how things are panning out.

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[youtube]TthYpmqw8V0[/youtube]
http://www.youtube.com/watch?v=TthYpmqw8V0

Federal Reserve Chairman Ben Bernanke said that the worst U.S. recession since the Great Depression was probably over, but a full recovery will take time.

[Ben Bernanke, Federal Reserve Chairman]:
"From a technical perspective, the recession is very likely over at this point. It's still going to feel like a very weak economy for some time."

U.S. unemployment has soared to 9.7 percent since the recession began in December 2007, and is forecast to rise to 10 percent in the months ahead.

In an address to the Brookings Institution, Bernanke warned economic headwinds will keep the economy from making a rapid recovery.

[Ben Bernanke, Federal Reserve Chairman]:
"The general view of most forecasters is that pace of growth in 2010 will be moderate, less than you might expect given the depth of the recession."

Bernanke says jobs will eventually come back, but at a slow pace.

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as with the buzz word from May 2009.

China.

what's happening over there now? wages are rising. (the automotive guys are going automation, etc)
ok, that would mean spending for big expensive machines.
now, how about those that stuff that cannot be automated?

things are starting to get more interesting now. 2010. not yet. 2011. yet. it's about time.

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as with Chinese doing some control in their pricing. how would that affect rest of the world (ROTW).

this lady sings, everyone happy.
this lady cries, everyone flood.
this lady sneeze, everyone else fall sick. just how badly.

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dun hear the big R ........ yet.

only the usual GTR, golf R, etc.