So when are gas prices going to sky rocket again??

SPAM CODE: UK AIR   (is it trying to suggest something to us)

After the recovery, siouxcity.

I'm hoping middlepath is right, but I fear he/she is too optimistic.

Krugman's column this morning:

http://krugman.blogs.nytime...

I expect the Dow and stock prices to remain permanently corrected at the present level. 

We no longer have faith in the illusion of imaginary money created by debt, and no bailout, however massive, will add a cent to stock values in the long run, because it will be decades before trust in the stock market begins to rebuild.

As painful as it is, it is healthy step back toward reality, and few yards closer to nature.

Maybe not too optimistic. Krugman estimated a comeback in late 09.

Double digit unemployment ... hm. disconcerting indeed. But We've been there before.

It looks like the finance based economy of the nineties must now look again at industry and real American work productivity  to measure economic vitality.

--virgil

But, at the same time, let's not forget the massive govt. deficit resulting from a war, which ought not to have been,  funded by that finance based economy the securities of which are/have been bought up by interest(s) ....

Wow!  Is it possible (we) are got by the hip?

Not to sound paranoid, just following the logic of my thinking aloud on this.

--virgil

But, at the same time, let's not forget the massive govt. deficit resulting from a war,

Which may make another first--a war that *STARTS*, rather than ends, a Depression.  Someone should have warned Shrub not to cut taxes during a war.  Oh, wait--they did.

good point.

However, on another optimistic note,

Americans must now play nice with the rest of the world...less unilateralism, please. It tends to belie American democracy  as dominated by a corporation culture of maximizing ( never mind protecting assets) profits.

--virgil

Krugman estimated a comeback in late 09

Krugman put a big condition on the comeback:

if Congress goes along, which may be a problem given all the bad analysis and disinformation out there.

I'm not anticipating the minority party will do the right thing if it means Obama and the Democrats will look good in the process.

I'd be surprised if the minority party allows any economic stimulus package of substance to pass Congress.

I'm not anticipating the minority party will do the right thing if it means Obama and the Democrats will look good in the process.

I think they'll try to stand in the way, but I also think there are enough swing votes (Snowe et al) to make things happen.  I'm more afraid of the Democratic "leadership" in the Senate capitulating without having to.

A bigger problem is timing.  Public works projects take time to start up, and we should be starting them now.

I think the Republican edge is so slight, it will be difficult to get them to filibuster all but the most partisan bills.

Economic aid is going to be very popular, and I am sure even a few Republicans will defect to support the final package.  The Republicans can threaten to turn against their own kind--the bullying process used to keep party members in line, but as you know that does not always work, especially if an issue is popular in someone's home district. 

Republican families are hurting too, and if they perceive a benefit from a Democratically backed package, they will likely support it.  Extreme partisanship is only for those hardcore few members of congress, blogs, and Greater Kern County.  :-D

MP

I think the Republican edge is so slight, it will be difficult to get them to filibuster all but the most partisan bills.

For what it's worth, the Republicans reportedly have more to lose in 2010 than the Democrats do, in the Senate at least.

have more to lose in 2010 than the Democrats do

2010 Senate Map May Not Be Much Better for the GOP

http://www.rollcall.com/iss...

Hope your right MP, but Krugman's assessment of a turnaround in late '09 notwithstanding, a turnaround in the next few months seems unlikely to many economic analysts.

Even if there is a turnaround in the next few or several months, questions which must be considered include the degree of depth of the slide from which the economy will begin recovery, what speed the recovery will progress and how long will it take?

Suppose the economy rapidly reaches bottom in '09, how many years could it take to fully recover?

Don't look to the markets for signs.

The stock markets are not the prime indicator of economic health.

Recent market activity reflects a major correction from artificially super inflated values which soared far, far, above true value of many, if not most shares.

We may have already approached the so called "bottom" of the slide of major indexes to present levels.

Or not.

It must be considered that the markets are driven by trade of large volume speculators and institutional investors whose only interest is to make money from either the sale or short sale of securities.

These super traders make money whether the actual economy is healthy or sick.

Meanwhile, business bankruptcies and unemployment can reach unprecedented levels and the super traders will still be picking at the carcasses of whatever is left.

Today, congress is mulling the idea of bailing out the the American auto industry to prevent the loss of possibly millions of jobs should the big three automakers bankrupt. 

A look at the hearings reveals the complexity of the issue.

Senators are wondering whether Chapter 11 restructuring might be best rather than bridge loans to get them by for a while.

They are looking at the probability that the industry will need further cash infusions some believe will reach a presently estimated amount of 125B.

All three have based future future revenue projections on the sales of around 11 million vehicles per year.

However, they are unable to finance sales and leasing of vehicles through their own financial subsidiaries.

Admittedly, they will also need tens, perhaps hundreds of billions in TARP funds to finance not only consumer purchases but finance dealer inventory.

To that end, they are asking that their financing arms - GMAC, etc -  be designated banking and financial services status in order to qualify for TARP money.

If the industry ends up receiving federal funding through TARP, FDIC or any other government program, such a bailout doesn't ensure economic health for the rest of the companies who will soon also be seeking financial help that they cannot get from the buckling private financial sector.

A huge remaining bugaboo in the financial industry which has not yet been adequately addressed is the industry's massive Credit Default Swap and staggering trillions of rapidly growing bad credit card debt.

The biggest question of all, however, is whether the country can finance the needs of all these entities while the shroud of bankruptcy looms over the country itself and whose monetary resources are finite.

Should investment in American bonds by China and other foreign countries facing their own financial insolvency dry up, we could be facing an unprecedented and even unimaginable depth of national and global depression from which the entire world will need to recover.

If or when domestic and international currency values adjust to appropriately fractious amounts, and the global economic playing field achieves true parity, only then will we begin the real turnaround.

Meanwhile, without effective changes in the domestic and global economic structure we will continue to experience severe economic instability and volatility with the downslides overwhelming the upsides.

Recovery in the next year?

Given the historical way in which we conduct the nation's business, that's a big stretch.

Saberhagen,

This is an excellent point which you have made:  "Should investment in American bonds by China and other foreign countries facing their own financial insolvency dry up, we could be facing an unprecedented and even unimaginable depth of national and global depression from which the entire world will need to recover."

I hope that does not happen, but if it does, it may persuade us as a nation of the absurdity of accepting credit from countries that are not all so friendly to us in the first place.  And of living beyond our means as a country...

Still, economics is largely based on perception, so no matter what happens, the feelings of consumers matter most.  If we put cash in their hands, and they feel comfortable spending it, then the economy will grow, no matter the global situation.  The question with that then, is the worth of the cash we put in their hands!

MP

I hope that does not happen, but if it does, it may persuade us as a nation of the absurdity of accepting credit from countries that are not all so friendly to us in the first place.

One could say the same thing about certain banks...

 Our present situation is the result of massive debt, both in the private sector and government.

Debt has to be liquidated, and only real capitol can liquidate debt.

Real capitol can only be created by the production of tangible goods, and we’ve already destroyed most of our industrial base.

In terms of constant dollars, this recession will last the better part of a decade.

Long term, peak oil, and peak resources in general guarantee that a full recovery (based on the concept of material goods), will never be possible.

However, it’s not the end of the world, but the end of blind consumerism.

Geometric growth is never sustainable in the long run.

The best hope is for an orderly transition to a sustainable and smaller overall economy.