Double dip or triple dip recession
 

Must be my perpetual pessimism clouding my brain, but the sliding home market prompted a, "Wonder if we'll get a triple dip recession?" Why worry, though. Is anyone going to change their behavior if we get a double dip? jurgen

I pretty much buy into what Larry Kudlow said in a recent editorial:

"Let me state for the record that I’m not a double-dipper. I’m just in the slowdown camp. And tepid growth could very well slow down the stream of corporate profits."

It's going to be a long time before we see a sustainable recovery. Very little has been either learned from or done about this recession. People are still living way beyond their means, savings rates are still dismal, government expenditures are still way beyond revenues, we still have virtually no manufacturing base in this country, retraining/retooling our work force is not happening nearly quickly, efficiently or cheaply enough, education is still abysmal, small businesses are still getting slaughtered and the housing situation is only getting worse (millions of foreclosures held in shadow inventory with more and more mounting daily, pricing still way out of whack with peoples' earnings and job prospects, etc.)

We'll eventually recover but it's going to be a long, hard, miserable slog. I'm not sure it'll be a "double dip" or even a "triple dip". Any sort of "dip" implies the presence of an initial climb, which I'm not certain really exists. I know economic metrics say it technically is happening but IMHO it is completely contrived, manufactured and has been conjured into existence by statistical manipulation to make things appear better and (hopefully) get the markets to ride on the wave of optimism thus created as a self-fulfilling prophecy. I sincerely doubt there's any real recovery at all. Common sense - you can't have a recovery (certainly not a sustainable one) with 20% of your population out of work. You just can't. This whole notion of a "jobless recovery" is a joke - it doesn't exist. It's made up just like Santa Claus or the Easter Bunny or an intelligent liberal. It's not real - and as I've pointed out elsewhere, the current "leadership" in this country doesn't care about unemployment, trade deficits, sustainability, domestic production or other fundamentals which really WOULD initiate a recovery - it is just fine with keeping things the way they are (or exacerbating them) in order to increase the role of and dependence upon government and therefore legitimize it.

Politics and self-interest uber alles, unfortunately - and this is the result. We will have a flat, wallowing "non-recovery" (maybe even slow steady declines) for the next few years. Eventually something will come along to really instill optimism in the markets, but it isn't happening right now - everyone's still sitting around waiting for it to come along. In the meantime things are going to be bogged down by high deficits, low production, low savings, high unemployment and an aging population with ever-increasing costs associated therewith.

2014-2015 at best for any sort of a "real" recovery - and that's assuming we get rid of the current bunch of idiot "leaders" we have and start repealing a lot of the big-dollar drag items (i.e. entitlement spending, like ObamaCare) they've created or promulgated.

on that note...driving to work yesterday, I heard a radio ad for a 3/1 ARM at 3.2% for "first time homebuyers." made me sick

Not so dumb from a bank perspective if you think about it.

If you're a banker sitting on a whole pile of foreclosed properties that are only sitting empty costing you money, why not try to create some demand for them, even if you know they'll be right back in foreclosure in a few months or years - you're hoping that maybe you've dumped some of your inventory by then and it won't be such a drag on your bottom line.

I actually would expect to see this more - banks are only going to be able to hold onto the kind of inventories they have for so long - they're costing them money in the form of taxes and upkeep and insurance even vacant. They definitely have a vested interest in trying to get SOMETHING of a return on them so long as they can make enough to offset the realization of losses on their books.

From a strictly financial perspective, this is not stupid at all. Sleazy, yes but not stupid.

Any additional dips in the recession will be class-specific.

Understand the financial reasoning...but yes you hit the nail on the head. "Sleazy" was the exact word that popped in my head when i heard it....

Porsche: I agree with most of your post. This economy will never grow if housing doesn't stabilize. The job growth in this country will grow slow too. Most of the manufacturing jobs lost over the last several years aren't coming back. Since 70% of the economy is driven by consumption and the amount of excess discretionary income is reduced, (decline in wealth: home values, job loss, frozen salaries, budget cuts) I see no chance of the type of recovery we have had in the past.

Outside of the government creating more public sector jobs, (I see less), there is little it can do do stimulate growth. Tax cuts, or job growth incentives, will do little if no one has the income to buy.

Reducing entitlements would significantly help but no one from either party is going to do that. If/when it happens, it going to hit all of us. It will further reduce our discretionary spending because we will need to save for retirement and health care allot more than anyone is doing now.

I have worked in manufacturing for over 35 years and I am saddened to see the manufacturing might of this country gone. Personally, I would like to see initiatives in alternative energy, wind, solar, etc and develop industry and business in this arena. I don't want to buy this type of processes or equipment abroad. My fear is that we will let this opportunity go because we couldn't/wouldn't try to be competitive.

That.

POP is right. We may very well be like Japan, and muddle along for a few years or 20...

This is the keystone / hitchpin to our current economic crisis -- people don't understand how to manage their finances because they simply don't care. People need to learn to be wise with their finances.

In terms of finances, I am not perfect, but lately, I have really focused on not over-spending. As posted here before, we are re-doing our kitchen and house this summer. It is a huge renovation that will run above $50k. But we have been planning on doing this project for a couple of years, so we have been saving and limiting our spending. Because of being mindful of our finances and the upcoming kitchen project, we were able to plan out a decend middle-of-the-range kitchen with a couple of more expensive upgrades like a farmhouse sink, matching panels on the fridge and dishwasher, and an instant hot / cold filtered water dispenser.

And at this point, it looks like we won't need to take on a home equity loan for this project. The appliances were bought on a new credit card that has 0% interest for the first year, and the ~$5000.00 spent on appliances will be easily paid off within that year. So except for that $5k, the rest of the kitchen will be paid off upon its completion.

I am very proud of the fact that in the current economic downturn, I am able to pull off such a project by managing our finances instead of just taking out a loan and paying it off for the next 10 years. Mrs. Z-man and I earn a decent income, but we're not rich -- we're firmly middle class. But it doesn't take a huge salary to learn to manage finances -- everyone needs to learn to NOT live beyond their means.

So this means that I won't be taking my 944 to the track this summer. And we probably won't be taking a vacation either. And Mrs. Z-man, who is a teacher will have to take on a part time job this summer (first time since she's been teaching). But these short term sacrifices will enable us to not be burdened by a huge amount of debt. And by the fall, we'll be able to return to our normal spending habits. That's a small price to pay for financial soundess, IMHO.


I adhere to that thinking as well -- everyone was hoping for a "V" shaped recession - where a quick downturn is followed by a quick upturn. I think we're in a "U" shaped recession, where we wil be at the bottom of the "U" for some time. (Hopefully, it's not an "L" shaped recession where the upturn is not even on the horizon!)

But there have been some leading economic indicators showing a slight upturn. The car industry is a little bit better than last year, but not as good as prior to the RE collapse a couple of years ago. But car sales are up, and there is no artifical 'bailout' or 'cash for clunkers' program driving the numbers. Folks are buying new cars again. Not sure how the retail industry is going -- there are a lot of cars in parking lots (Kohl's especially in my area) -- but are those people just browsing or shopping? Are the cars in those lots since some stores have closed and those lots are simply filled with cars that would typically be at the other stores' now empty lots?

I think the recovery will be harder to guage. I think the recovery will be dependant upon how individuals change their spending habits and go back to old school thinking abut finances: live within your means, save for a rainy day, and invest wisely. <-- a more conservative approach than what's been going on for the past couple of decades...

Just my $0.42,
-Z-man.

Until people take responsibility for their actions and live accordingly, I do not see good things in the future.

The only way anyone will ever take responsibility for their actions is if they ever get to feel the pain of failure. In this society, that never happens. Not personally, not locally, and not nationally.

I just came in from lunch. On the radio they were interviewing folks in line for the new Apple iPhone 4 -- the interviewer was questioning a guy why he was purchasing a new iPhone when the one in his hand (iPhone 3?) was perfectly fine.

He said, "I want a new one -- I've always gotten a new one."

A new iPhone costs $300.00. By his own admittance, it was completely unnecessary for this individual to purchase it.

But that is the attitude prevailent amongst consumers today. And our economic future rests on the shoulders of these individuals. Scary.

-Z-man.

We have a bad mix... deflation is here, and yet people carry so much debt. They don't get that future dollars may be much harder to come by. --too much thinking that inflation (higher wages, more home equity) are always just around the corner.

2011 will be tough financially.

Z, did you see on our local news, In NYC, some idiot paid a guy $1400 to buy his place in line for a new iphone?

GOSH..I don't even need to say it anymore...POP takes the very words outa my mouth.

Wow - I did not see that -- I guess the old saying is true: "A fool and his money are soon parted."

To the sheeple of the USA: wake up the smell the $6.50 latte! Stop wasting your money -- this economic downturn is real - don't ignore it!

-Z-man.

If you take the long historical view this Recession/Depression is a SYSTEMIC FAILURE..It was a long time coming, and showed that not only the financial/industrial/consumer structure but governmental structures were unsustainable and were bound to crack sooner or later. You might call this the new normal and if the current policies are promulgated worse lies ahead. The domino's will continue to fall.

Once GW Bush said we were in "crisis" mode the system cracked, as people were now told that the system which they had thought of being a Rock of Gibraltar had turned to rubble they started to wake up, look around, grow concerned and a lack of confidence ensued.

Many Americans are still under the illusion that America will eventually return to prosperity, return to the normal that they are accustomed to. what the government and Federal Reserve has done is prop up the sick man so that it can stagger on. This was the only viable option that was available for the alternative was to let the patient die. The hope was and is that the patient would return to health, however on the other side of this systemic failure is a far more austere America with greatly reduced expectations This will be a return to reality for America that has been long in coming.

Parf