Replies to post #24168 on Zeev's Turnips Patch-No Politics (ZEEV)

[mlsoft]

"How long do you think the second dip will take? In the past it has rarely taken more than three quarters."
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Zeev...

I am thinking we are in a different ballgame here, and the rules we are used to will not apply. That thinking may be wrong, but it has saved me a lot of money over the past couple of years (and made me some). I believe the recession will last well into 2003 and perhaps beyond, although we may see a few up quarters here and there along the way. Our problems leading us into this recession are not the normal patterns - the consumer is still strong (so far), auto and home sales are both still very high. Those factors alone tell me this is not a "normal" recession and makes me take a second look at it.

A "normal" recession begins with slowing demand, with weak auto and home sales which in turn eventually lead to rising unemployment and an overall slowdown in the economy. After a while, the consumer pays off a few bills and pent-up consumer demand for a new car or home, or new appliances starts to lift the economy out of the recession. This part of the recession is just now beginning, not ending, and all the 0% financing has sated the consumer demand for new cars for a long time, probably at least a couple of years, maybe longer, during which auto sales will be slow.

The consumer is not just in debt, he is head over heels in debt and his house has been financing the spending spree. Unless they start 0% financing on houses, that has got to end and that source of money to spend will no longer be there. State and local taxes are rising to offset revenue losses, taking a bigger bite out of the consumer pocket, and unemployment (as well as under-employment) are on the rise. I think the consumer is done, here, and will not be able to lift us out of recession - and he indeed could take us into a deeper one than most are expecting.

Globalization was wonderful when things were good, but it will work against us as we go into recession. The rest of the world is now dependent on the US consumer to lift their economies up by buying all their exports (especially true of Japan) and that is not going to happen. The result will be a global recession, in my opinion, and I see little if any way to avoid it. Frankly, I am just praying it does not feed upon itself and that we do not get hit with a "rogue wave" type event that could make things a lot worse.

Just my opinion, though, and worth every penny you paid for it.

mlsoft

[jayhawk 5]

My personal opinion is that the bubble was created by the telecommunication infrastructure expansion/buildout. When this came to an end, a significant economic stimulus was removed. In comparison to past bubbles, created by other infrastructure creation and expansion, (electrification, telephone, automobile/highway,) this expansion occurred in a relatively short period of time.
I have not fully studied the collapse after other infrastructure buildouts, however, I believe that those comparisons will yield valuable insights into what we can expect.