Double Dip Recession?

[edyzmedieval]

http://money.usnews.com/money/person...on-the-horizon


http://www.telegraph.co.uk/finance/c...al-choice.html


http://www.telegraph.co.uk/finance/f...-declines.html

With back-to-back rounds of dismal GDP figures and a seemingly endless parade of other disappointing economic reports, the prospect of a double-dip recession is gaining traction among economists and financial experts.


The economy has barely grown in 2011, according to recent government figures, registering a meager 1.3 percent gain in gross domestic product in the second quarter, revised downward from initial estimates of almost 2 percent. That figure comes on the heels of revised first quarter readings that clocked in at a stunningly low 0.4 percent, prompting many experts to doubt whether the promising recovery that began in 2009 is now on its last legs.

Former US Treasury Secretary Larry Summers said there is now a one-third chance of a full-blown recession next year in the US. Nobel leaureate Paul Krugman said obscurantists had run amok. "What we're witnessing here is a catastrophe on multiple levels. We are doing a terrible thing. We are repeating all the mistakes of the 1930s, doing our best shot at recreating the Great Depression," he said.


Fear that a synchronized squeeze in half the global economy may go horribly wrong has seeped into market psychology, explaining why the $2.4 trillion (£1.5 trillion) debt deal agreed in Washington has failed to spark a relief rally. Wall Street is a step ahead, bracing for cuts in an economy that has already slipped to stall speed.

So we're on the way back to 2008, but on the bad way back. The Eurozone is a disaster now, Italy most likely to default, Greece half defaulting, turns out France now is the next target. German economy is now cooling down. The US just barely passed a debt bill that nearly brought it to collapse.


With all of these bad news, it looks that we are heading towards a double dip recession. All reports from the US have been weaker than expected, and it looks as if the US will grow by 1% this year.


Gold will probably end up 2000$ by the end of the year - http://www.telegraph.co.uk/finance/p...-year-end.html


Thoughts on this? Full blown recession coming up or is it just a soft patch?

[Adrian II]

Thoughts on this? Full blown recession coming up or is it just a soft patch?

Looks like the real McCoy. The West has lived far beyond its standard, now we have to pay off our debt. In order to do this we're cutting budgets in the midst of a tenuous recovery when we should be priming the pump.

Greece is just ahead of us. It is being forced to eat its own economy -> negative growth -> more debt.

AII

[Furunculus]

if europe takes too long deciding to become an economic and transfer union, then italy and spain will require a bailout, and even if they get it it will still lead to a double-dip around the world from the damaging indecision.

the peoples of germany and the netherlands, etc, need to decide over this summer whether they are willing to enter a permanent transfer union as the 'givers' in this new relationship, so that when parliaments return from summer recess they can legitimately enact the legislation necessary to save the euro.

chances of that happening is zero, so more dithering will ensue which will result in bailouts for italy and spain along with the double-dip, and then, maybe, the full integration necessarry to stop this stupidity happening again, and again, and again!

[Adrian II]

if europe takes too long deciding to become an economic and transfer union

It already is, even if Wolfgang Schäuble refuses to call it that. It is also a special trade zone where one country depends on others for most of its experts. The same applies to the West as a whole, including the US.

The real reason why markets are jittery is the basics are lacking everywhere.

If you insist on going by the cra's, you should ask why they have now threatened just about every western country with a downgrade. If Moody's downgrade the US to AA status one of these days because US economic growth has ground to a complete halt, which it has, all eyes will be on the US again. If Moody's sticks to its word that the UK would lose its triple A status if growth stays beneath Osborne's prediction of 1.7 %, which it does since British 2nd quarter growth is zilch, London may be next. It's a circus.

I wish some leader would break the conspiracy of impotence and plead for a Greek debt restructuring, which should have happened over a year ago. In necessary they can opt out of the eurozone for while and take the Argentinian route. Argentine gave its creditors the finger and is doing very well these days with a 8% growth rate.

AII

[Papewaio]

So the only thing that might save the world is if China develops a larger middle class...

[Adrian II]

So the only thing that might save the world is if China develops a larger middle class...

I guess it's already pretty large. It seems as if the days of cheap Chinese labour will soon be over.

But before that we all have to face the crunch. Italy and Spain seem uniquely wobbly these day because the bond market is dull, everybody is waiting for the implementation of the euro rescue plan. So if someone walks into the trading room saying "I've got a couple of Spanish bonds here that I'd like to lose fast", the whole floor is up in arms: "There goes Spain!"

From the Frankfurter Allgemeine to Le Monde to The Telegraph the sentiment seems to be the same: this problem is much deeper and wider.

[...] it is difficult not to be unnerved by what is going on in the markets. We all know at heart that the debt burden of the developed world is unsustainable. By convention, the political classes and the markets take August off, and leave others to have a crisis. But this financial crisis is beginning to look ominous, as if a corrective spasm is approaching.

AII

[Furunculus]

It already is, even if Wolfgang Schäuble refuses to call it that. It is also a special trade zone where one country depends on others for most of its experts. The same applies to the West as a whole, including the US.
AII

it will be when national parliaments vote in favour of it in september...........

09.05 Olli Rehn, the EU Monetary Affairs Commissioner, has said the eurozone's yet-to-be approved €440bn European Financial Stability Facility (EFSF) bail-out fund needs to be credible and respected by markets to be effective:

Quote To be effective the EFSF needs to be credible and respected by the markets. And therefore we need to be continuously assessing it, once up and running, in its objective form with these goals in mind.

Rehn wasn't specific about numbers, though Willem Buiter, Citigroup's chief economist calculates that the EFSF needs €2 trillion to deal with the latest crisis.

Rehn will speak to reporters today in Brussels just before lunchtime on the eurozone. More from Brussels correspondent Bruno Waterfield then

[rory_20_uk]

The real reason why markets are jittery is the basics are lacking everywhere.

In a nutshell. The UK is a service based, consumer led economy. Apparently there is nothing wrong with this. as it is basically saying "we make nothing and exist by spending money" I am rather surprised with how sanguine the powers that be are about this.

Although markets are supposed to be about the allocation of wealth effectively, it increasingly is a massive game of chicken - try and do what everyone else is going to do slightly before they do, whatever that is. In the dotcom bubble one trader stated that for one company's share price to be valid, their market capitalisation would have had to be basically 100% of the world in a couple of years, as it made nothing and was loosing money hand over fist. An unpopular view that cost him his job.

The market seems set up for short term panics - no view to 1, 5 or 10 years. This would be fine if Markets had not been finding the West's baby boomer generation from a comfortable cradle to a comfortable grave on IOUs.

[Strike For The South]

So you're telling me spending trillions of dollars when you're in the red is a bad thing?

Predatory lending practices are bad thing?

Brinkmanship is a bad thing?

Do you have a study?