Recession on the Way


	Recession on the Way

sam.reckoner

11-15-2007 9:33 AM

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tags:

housing, real estate, economy, finance

1 Comment |

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11-15-2007 9:48 AM

sam.reckoner

continuing to lower interest rates will merely debase the currency and ultimately cause severe stagflation.

The FED (or any other central bank) has limited power here. This is a global credit bubble.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://www.clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/87516a59-aaee-4feb-a0c7-9530b224b431/D8A8FC71-182E-4A7A-984A-0C478DD0604A/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.ft.com/cms/s/0/81875b02-92e2-11dc-ad39-0000779fd2ac,dwp_uuid=8759f210-97f3-11da-816b-0000779e2340,print=yes.html?nclick_check=1" href="http://www.ft.com/cms/s/0/81875b02-92e2-11dc-ad39-0000779fd2ac,dwp_uuid=8759f210-97f3-11da-816b-0000779e2340,print=yes.html?nclick_check=1" style="font-size: 11px;">www.ft.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/81875b02-92e2-11dc-ad39-0000779fd2ac,dwp_uuid=8759f210-97f3-11da-816b-0000779e2340,print=yes.html?nclick_check=1"><P>The US consumer is on the precipice of experiencing the first recessionary phase since 1991 – the last time we had the combination of punishingly high energy prices, weakening employment, real estate deflation and tightening credit conditions.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/81875b02-92e2-11dc-ad39-0000779fd2ac,dwp_uuid=8759f210-97f3-11da-816b-0000779e2340,print=yes.html?nclick_check=1"><P>More easing by the Federal Reserve is likely. Much more. We would not be surprised to see Fed funds go as low as 2 per cent. </P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/81875b02-92e2-11dc-ad39-0000779fd2ac,dwp_uuid=8759f210-97f3-11da-816b-0000779e2340,print=yes.html?nclick_check=1"><P>The 35 per cent of consumer spending that is cyclical or discretionary will be especially vulnerable. Ironically, this is the part of the equity market that has the most ambitious consensus earnings growth forecast for 2008.</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.ft.com/cms/s/0/81875b02-92e2-11dc-ad39-0000779fd2ac,dwp_uuid=8759f210-97f3-11da-816b-0000779e2340,print=yes.html?nclick_check=1"><P>The story we expect to emerge is the lagged effect the housing market and reduced credit availability will have on consumer spending. Slower employment growth and rising unemployment will also hit real incomes  <SPAN>and confidence. </SPAN></P></blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/D8A8FC71-182E-4A7A-984A-0C478DD0604A/blog/" title="blog or email this clip"><img src="http://content8.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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