both the conference board's leading indicator and the OECD Leading indicator show rises

http://www.reuters.com/article/economicNews/idUSLA47168620090710

http://www.bloomberg.com/apps/news?pid=20601103&sid=aNHH_lMhARc4

Historically most recessions are caused by too much inventory, not by credit problems and unhealthy consumer finances.



If I'm late to the party, why do so many people disagree? I'm not saying I'm a visionary or even an expert on the economy... I just take the best data and most informed opinions I can find and try to make sense from them. The people who were right about this recession so far are the people who are saying there's still ways to go to fix the problems. That, and the fact that their opinions make perfect sense is what leads me to have this opinion.

 

NJ5 said: historically it has always been a lagging indicator Historically most recessions are caused by too much inventory, not by credit problems and unhealthy consumer finances. I mean frankly you are kind of late to the party on this one. If I'm late to the party, why do so many people disagree? I'm not saying I'm a visionary or even an expert on the economy... I just take the best data and most informed opinions I can find and try to make sense from them. The people who were right about this recession so far are the people who are saying there's still ways to go to fix the problems. That, and the fact that their opinions make perfect sense is what leads me to have this opinion.

Nobody is claiming there isn't a way to go to fix the problems, but that doesn't mean those problems would prevent an economy from starting to recover.  Do you honestly think ANY economy has no problems whatsoever even during GOOD economic times?  That's just not how economies work.  Even an economy that is booming can have major problems.  China's exports are dropping like a rock (dropped 21% last month), yet it is moving along like a freight train.

I really don't want to take the time to dig up quarterly graphs about unemployment in the Great Depression, so we will just agree to disagree on the first point.

On the second point, I don't think they disagree with the fact that there will be credit problems along the way, and that the amount of publicly and privately held debt is a problem.  They just don't think it is severe enough to prevent recovery from beginning.  I mean not all problems have to be fixed before an economy starts recovering, and certain areas can compensate for others.  I just think you are acting like you have discovered something that people didn't know about already.

Am I oversimplifying it when this makes me think that the quickest way out would be to... uh...

Well I can't be reading that right.

Is the quickest way just to default on the credit debt, kill a few corporations in the process, and free up the money flow?

Also, to shoot money lenders in the face?

Khuutra said: Am I oversimplifying it when this makes me think that the quickest way out would be to... uh... Well I can't be reading that right. Is the quickest way just to default on the credit debt, kill a few corporations in the process, and free up the money flow?

Yes, that's 100% correct.

Or, you could try and solve the problem of too much debt, with a solution of generating more debt like we are, and seeing where that gets you.

I mean look at it like personal finances. If I was a household that made $5,000 a month, suddenly found myself with $5,500 in expenses each month, the solution is not to take out a $5,000 loan (making my outgo each month $5,800), and use that money to pay the 800 a month I don't have.

Sure, that would work for 6 months, but then where will I be? Worse then when I started.

This is what the US has been doing for years. The reason we have been able to get away with it, is when it came time to pay the loan off, our GDP had grown enough to where we just take out another loan. So to use the above example, in 6 months the household might be making $5,300 a month, so they just go and get another $5,000 loan and keep going for another 6 months.

Well, we now as a nation make less money then we used too, but still think this is a good idea (and in reality, it never was). So again, to use the aboce example, 6 months goes buy, the loan dries up and they are back to having to come up with $5,800, but now they are bringing in $4,800 and can't get another loan.

Some people will claim that using the same logic for personal finances with respect to national economics is flawed, but these would be the same people who got us in this mess in the first place, so look at there track record, and judge for yourself if the words coming out of there mouth are worth anything.

No, but when the causes of a recession are getting worse rather than better (i.e. many more troubled debtors, millions of recently unemployed people who were living hand to mouth, more foreclosures, more states in deficit), one has to wonder why the recovery would be starting now or soon.



That doesn't make any sense. I haven't written a single post where I didn't reference other people's findings, analysis and predictions. If I had posted the OP without using any links and plagiarizing someone's analysis you would have a point. As it stands, you don't.

Maybe you're trying to poke an ad hominem attack, I don't really get the point because it's obviously untrue considering that I posted my sources.

Please justify that statement or drop it.

 

akuma587 said: @ HappySqurriel: So you are saying a slowing pace isn't significant at all. I agree that it can be given too much significance, but that doesn't mean it has no significance. If unemployment is increasing at 1% every month but then after a few months starts increasing by only .2%, are you saying that has no significance whatsoever in terms of when unemployment will start dropping? I mean these aren't really abstract, complicated models we are talking about here. Its just looking at rates of change on graphs. You will be hard-pressed to find periods of high unemployment where this phenomenon didn't happen even though you claim it has no significance. And I would love for you to show me some. And the rest of what you are talking about always happens when there is high unemployment. No one is claiming that unemployment numbers reflect the whole picture. But this isn't the first time we have had high employment numbers, so I don't really think you can claim nothing like what is happening now has happened before.

I was actually quite clear in what I said and yet you didn't understand ...

One of the first things I was taught in one of my first economics courses was that there were many statistics which you should not put too much weight into on their own, because quite often movement in them is contrary to what they're trying to measure. The primary example that was used was the unemployment rate because it only considers people who are unemployed and actively looking for a job; and when the job market is getting worse there is often a drop off in the number of people who are actively looking for a job (presenting as a drop in the unemployment rate), and if the job market is getting better more formerly discouraged workers will start looking for a job again (presenting s a rise in the unemployment rate).

Last month the job market was so awful that the unemployment rate only increased by 40% of its previous monthy values because 50% to 60% of the rise in unemployment was offset by people becomming discourage and giving up.

I don't see a 500,000+ person rise in unemployment in a month when everyone has hope in finding a job as being some how worse than a 500,000 person rise in unemployment when 300,000 people have given up hope of finding a job in a month.

 

NJ5 said: I mean not all problems have to be fixed before an economy starts recovering, and certain areas can compensate for others. No, but when the causes of a recession are getting worse rather than better (i.e. many more troubled debtors, millions of recently unemployed people who were living hand to mouth, more foreclosures, more states in deficit), one has to wonder why the recovery would be starting now or soon. I just think you are acting like you have discovered something that people didn't know about already. That doesn't make any sense. I haven't written a single post where I didn't reference other people's findings, analysis and predictions. If I had posted the OP without using any links and plagiarizing someone's analysis you would have a point. As it stands, you don't. Maybe you're trying to poke an ad hominem attack, I don't really get the point because it's obviously untrue considering that I posted my sources. Please justify that statement or drop it.

 

Just to support your point:

@TheRealMafoo:

But wouldn't that kill almost every bank in the country? I mean, unless everyone in the country all agrees to declare bankruptcy all at once and we just start fesh...

Khuutra said: Am I oversimplifying it when this makes me think that the quickest way out would be to... uh... Well I can't be reading that right. Is the quickest way just to default on the credit debt, kill a few corporations in the process, and free up the money flow? Also, to shoot money lenders in the face?

Yeah. The longer we allow the current practices go on, the bigger the hole will be (and taxpayers will have to bear an enormous amount of interest on the debt governments take in the process).

For all the talk about regulating banks, check out this recent article, which IMO amounts to new banking fraud happening right under everyone's nose:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeTzfvEedKpQ

Basically banks are starting to repackage toxic mortgage debt into AAA rated financial products. AAA is the highest rating.

Banks, ratings agencies, pension funds which buy those financial products are all complicit in continuing to hide bad debt under the carpet (when they don't shift it to the government).