Tuesday, October 30, 2007

Stop the Presses - Recession Ahead

Typically I am an optimist. However, over the past 3 months, I have become increasingly anxious about a major recession/depression. I have come to believe that record oil prices and the bursting of the housing bubble are the prelude to something bigger.

On the other hand, I have been confounded by the rise in the stock market as of late. Unfortunately, the much needed corrections that have occurred over the last year have been short lived.

Yesterday, my fears became much more real and localized. My uncle, who has been living in Sacramento for over 18 years, is a printer. I consider printing to be the local equivalent to cardboard boxes. Its a leading indicator of how the economy is doing. When times are good, menus, brochures, mailings etc. are being printed. He was even laid off in the early '90s, so my theory holds up pretty well. He was asked not to come into work on Monday because they didn't have any new jobs lined up. He has been at this company for over 6.5 years and can't really remember another time when this has occurred.

I am not normally one to prognosticate on things like this. But I think this Goldilocks economy is going to take a turn for the worse.

11 comments:

Gwynster said...

I think the moves in the market are linked to the falling USD. That said, the moves in the Dow and Nas make no sense. Now that the major CC companies are going warning, it's going to get downright interesting.

Buying Time said...

Yup, exporting based on the cheap USD is the only glimmer of hope. I'm just not sure it will be enough to keep us afloat.

I am rather interested to see what Bernanke decides to do tomorrow. I am starting to think staying put is the best way to go.

Gwynster said...

I also think he should stay put. At this point, until people come to grips with the housing losses, he's pushing on a string. he can't save those folks without MASSIVE cuts and it kill the banks if he does. Only thing left in his pocket is to inflate our way out and hope we can make it up in exports.

Well that was depressing, I think I'll go listen to The Wall to cheer up >; )

Patient Renter said...

buying time said:

"I am rather interested to see what Bernanke decides to do tomorrow. I am starting to think staying put is the best way to go."

gwynster said:

"I also think he should stay put. "

patient renter says:

Agreed. I'd undo the last cut if I could.

Which is exactly why ben will not stay put.

Sippn said...

Yea, the indicator I saw was an IT recruiter who was only getting temp placements for the past couple of months.

Don't really know if printing is a great indicator anymore - look at the permanent shrinkage in local publications. I'm younger than the average Bee reader, but still can't read the 6 point type.

E-Spam is the new junk mail. Much of my stuff is printed off shore.

Regarding the PhED, I'm not sure either what they'll do but they need to look at consumer confidence. The drop in the dollar value is creating offshore demand for stuff here.

Buying Time said...

The WSJ has an article on how the Fed is in a pickle since a rate cut has been already priced into the markets. (All of which I find a little ridiculous...if the Fed makes a move based on those expectations, I will be sorely dissapointed...as its putting the cart before the horse.)

Gwynster said...

Yep the markets assumed and want to force his hand. I'd be pleasently surprised if BB showed them the backside of that same hand.

smf said...

The interesting part is that as far as I can tell, the whole world has been involved in a huge asset bubble, including oil and gold.

So the result of the whole house of cards coming down are unpredictable, this has never happened before.

Sippn said...

SMF - it always is a house of cards and a big game of chicken.

Where are they going to put their money?

Money has to grow and/or be protected from inflation, thats why it gets invested.

Yes there may be too much money out there looking for a place to go.

Patient Renter said...

"The WSJ has an article on how the Fed is in a pickle since a rate cut has been already priced into the markets. (All of which I find a little ridiculous...if the Fed makes a move based on those expectations, I will be sorely dissapointed"

Yep, well, Ben lacks juevos. And as long as he continues to let Wall Street have its way, they'll continue to "price in" anticipated rate moves. Feedback loop?

Buying Time said...

I was pretty disapointed...but was expecting it nonetheless. And I am almost willing to put money on a GDP downward revision next month.