Thread: Are we heading for a recession?

Is the present wobble on the world martkets a temporary blip or are we in for hard times?

Article from the Independent today:

Greenspan clarification exacerbates 'correction'

By Stephen Foley and Jane Padgham

Published: 02 March 2007



Shares took another sharp dive yesterday, their third in a row, amid revived fears of a recession in the US and concern that the stock market "correction" is far from over.
The FTSE 100 ended a further 55.5 points in the red at 6,116.0, taking to 319 points the cumulative loss since the panic selling across global markets began in China early on Tuesday.
Traders were told to dump risky stocks, and financial companies bore the brunt of the selling as investors fled for perceived safer equities.
Analysts said the trigger for the latest rout was more doom-mongering from the former Federal Reserve chief Alan Greenspan. "By the end of the year, there is the possibility, but not the probability, of the US moving into recession," Mr Greenspan reportedly said during a speech in Tokyo, apparently attempting to clarify remarks earlier this week that recession could not be ruled out.
David Buik of the spread-betting firm Cantor Index said the comments instantly turned a 40-point gain in the Dow future into an 88-point loss. "This is beginning to look like a bloodbath," Mr Buik said. "With the greatest respect in the world, we listened to [Mr Greenspan's] philosophical gems and pearls of wisdom for 18 years, frequently bowing with respect at his shrine. Though he's probably earning $100,000 (£51,000) for speaking, he ought to show more respect to his successor at the Fed. Ben Bernanke is now the man at the helm of the US economy and confusion from yesterday's hero is unhelpful in the extreme."
On Wednesday, Mr Bernanke had sought to soothe investor jitters, saying he expects the economy to pick up later this year. However, the rebound on Wall Street that night had been less substantial than many had hoped, undermining confidence.
An early-morning report by the employment consultants Challenger Gray & Christmas yesterday said planned lay-offs in the US rose by a third in February as weakness in the housing market and car industry seemed to spread into other sectors. At the same time, several US mortgage lenders issued downbeat statements, suggesting that increasing numbers of American homeowners are straining to keep up payments.
That prompted a plunge of 200 points on the Dow Jones Industrial Average of US blue-chips, but an upbeat manufacturing survey later in the day led to a bounce and by the close the index was off just 34.3 points.
Meanwhile, the yen surged to its highest against the dollar this year as traders unwound positions in the so-called "carry trade" - borrowing in yen to buy higher-yielding and often high-risk assets elsewhere. The Japanese currency, which recently hit 21-year lows on its trade weighted index, touched 116.97 against the dollar, its highest for 11 weeks, and also gained versus sterling and the euro. "People are still shaky," said Christian Dupont, a senior currency trader at Société Générale. "People are moving out of riskier assets. Carry trade is the first to suffer."
Japan's top financial diplomat Hiroshi Watanabe said he was closely monitoring yen carry-trades and the impact from their possible reversal.
Albert Edwards, global strategist at Dresdner Kleinwort, described the week's turmoil as the start of "the Great Unwind". Investors - many using borrowed funds - have been pursuing high-risk assets in the hope of high returns and in the expectation of sustained global economic expansion, he said, but many are now starting to think twice.
"Risk appetite has been very high, and, when it reaches extremes such as these, the danger is it snaps back the other way," said Mr Edwards. "The equity market is long overdue a 10 per cent correction, which is the order of magnitude of blow-off that is thought to be normal and healthy. Our view is that it could possibly go beyond that, as the US has a near miss on a recession."
The Chinese stock market, whose sudden 9 per cent collapse on Tuesday has been fingered as the trigger for the turmoil, was back in the red yesterday, too. It lost all the ground it had recovered on Wednesday. There have been fears among local investors that the Chinese government will dampen speculative trading and cool economic growth by introducing stricter stock ownership controls and raising local interest rates.

I really really hope not. Have no idea whether it will come to recession though.

You'll know when the next recession hits because it will be when Google dies out.

I think it is more than just rife speculation. It is already known (Time 1993) that jobs today aren't for the long haul. New workers are expected to be more fluid and disposable. Most of the jobs are contractual base and have performance indicators.

On top of that, globalization has shifted most jobs due to intense competition. As costs decrease and the point of parity in innovation constantly increases, most markets are bubbles waiting to burst. I foresee the future markets where only MNCs may be able to actually afford to do business in some countries (based on what commodities, of course). Capital goods are the next big thing.

Originally Posted by Jet

You'll know when the next recession hits because it will be when Google dies out.

Google will never die out- it is simply too good! That stock incredibly inflated though!

We are at a point where we need to borrow 2.7 billion a day, trade deficits are at a record high, we are dependent on a global economy. While true one of these things alone will not kill us, the combination of all will. We do not manifacture anymore and the jobs that are created are jobs to sell "made in China" junk. We need to get back to basics with alot of issues in this country and we should start with the economy.....My opinion anyway.

Originally Posted by michaelr

We are at a point where we need to borrow 2.7 billion a day, trade deficits are at a record high, we are dependent on a global economy. While true one of these things alone will not kill us, the combination of all will. We do not manifacture anymore and the jobs that are created are jobs to sell "made in China" junk. We need to get back to basics with alot of issues in this country and we should start with the economy.....My opinion anyway.

To make money now you have to invent something extraordinary, innovate.. Human labor is cheap. You have to build something that everybody wants and can't be easily reproduced.

Originally Posted by Zaragrunudgeyon

To make money now you have to invent something extraordinary, innovate.. Human labor is cheap. You have to build something that everybody wants and can't be easily reproduced.

You know that you are advicating robotics don't you?

I believe the big money is in distribution. People have focused on cutting the cost of manufacturing. Distribution is still costly so thats where you make a killing...........SSG

I somehow think that recession will happen soon. How soon, that I can't predict