Global recession?!

[SIG220]

Recession is a good and necessary part of the economic cycle. Business should go on with as little Govt interference as possible.  The more the govt tries to bail us out of the recession the harder the economy will land when it hits rock bottom.  This is very simple economics.  The business world should be, and is for the most part, Darwinian. 

This is not your typical recession.   It is going to be far worse than anything the USA has experienced since WWII.

The government should have regulated these businesses more closely.

We are seeing more and more things take place that have not happened since the Great Depression.  These are all extremely bad signs.


_____________________________ ________________________

[Ripsnort]

Not only can they not fix it they shouldn't try. Bear was one of the major reasons for the mortgage hedge fund crisis. Corporate executives justify their exorbitant salaries by saying they create so much wealth for shareholders. And they want the government to stay out of their business by the way of regulations.

But when their stupid decisions force the company to go tits up, they go running to the Fed for support. The CEOs probably end up losing their job, but with multimillion dollar golden parachutes.

The market, especially the subprime mortgage crisis, needs a correction. You can't stop that. The more the federal government tries, the worse it's gonna be when it's all said and done with.

The flip side of this arguement is a repeat of 1929 if the Feds don't bail out the banks to a degree.
http://www.econreview.com/events/banks1929b.htm

[FrodeMk3]

This is not your typical recession.   It is going to be far worse than anything the USA has experienced since WWII.

The government should have regulated these businesses more closely.

We are seeing more and more things take place that have not happened since the Great Depression.  These are all extremely bad signs.


_____________________________ ________________________

I tend to agree with you. Bank/stock market deregulation took out some of those rules which were put in after having learned the lessons' of the Stock market crash of 1929, and the following Great Depression.

[SteveBailey]

This is not your typical recession.   It is going to be far worse than anything the USA has experienced since WWII.


_____________________________ ________________________

I've read the same articles. Personally I think we have been in a recession for a while now. I don't see your point though. Recession is good for the economic cycle.
If it's atypical in that it lasts longer it's only because the govt interefered and didn't let things take care of themselves.

[Thruster]

I mentioned in an earlier thread that the idea of bailing out firms like Bear-Stearns can be a slippery slope. It's not part of the Fed's original mandate. Whereas the Fed was created as a lender of last resort to help banks maintain minimum reserve requirements. And create liquidity for savings institutions in the event of a panic which had created 2 depressions in 50 years. The idea was to give banks a clearinghouse for the exchange of ready cash in the event of an unexpected demand. Within reason.

The system works. Every nation (to my knowledge) maintains a central bank and they all pretty much function the same way with regards to providing liquidity. The problem with this bailout is that the assistance is being provided in order to maintain an organization that flagrantly violated the principles it was founded upon. Bear-Stearns is an investment house. They portrayed themselves as a bastion of level headed, sober custodians of they're clients assets. When in reality they were nothing more than opportunists hiding behind the facade of august, responsible, and conscientious money managers. Nothing but prostitutes eager for some quick gravy and turning every trick in the book to get a taste.

They behaved like carnies, not bankers. They embarked (with our blessing) on a course of grossly irresponsible conduct fueled by the capitol entrusted to them by their clientèle. Abolishing themselves from accountability by virtue of a few paragraphs on their account applications.

And we let them do it. We stepped up to the plate and validated their conduct through our silence. Now it's hit the fan and everybody has an opinion. WTFG American consumer. We already know we can't trust people who have no incentive to behave responsibly, we already know we cannot rely on government oversight, we already know (or should) that there's no free ride but just like the willing victims of a pigeon drop, we're all mortified by what we eagerly took part in and now have to pay the price.

Bear-Stearns is not a bank, it's a brokerage. Granted they own a bank but that's not their fundamental business. They make money selling opportunity. That's it. The opportunity for whatever reason didn't pan out. That's it. The Fed is not supposed to be supporting operations that swung and missed. They are there to underwrite the normal, justifiable capitol needs of member banks that played by rules every other member has to follow. 

It's nothing but cronyism, pure and simple.

[SIG220]

I've read the same articles. Personally I think we have been in a recession for a while now. I don't see your point though. Recession is good for the economic cycle.
If it's atypical in that it lasts longer it's only because the govt interefered and didn't let things take care of themselves.

Tell that to all of the employees at Bear Stearns that are now unemployed.   Or to all of the stockholders of Bear Stearns stock.

Do you realize that the company was sold for only 1% of the value that their stock had just a couple of weeks ago?   Heck, the Bear Stearns headquarters building alone is said to be worth 3 and a half times the price of what JP Morgan Chase paid for the entire company.  All of those stockholders have seen their investment go almost completely down the drain.   How many Mutual Funds or Pension Plans had Bear Stearns stock as part of their portfolio??

For 99% of the value of a major US financial corporation to disappear in a couple of weeks is pretty frightening.   That sort of thing has not happened in recent recessions.

Most analysts that I have listened to say the current recession technically started in November last year.   If true, that would mean that we have been in a recession now for the past 4 months.


_____________________________ _______

[indy007]

Hey Indy, where did you get your info from, btw?

Robert Z. Lawrence is Albert L. Williams Professor of International Trade and Investment, a Senior Fellow at the Institute for International Economics, and a Research Associate at the National Bureau of Economic Research. He served as a member of the President's Council of Economic Advisers from 1998 to 2000. Lawrence has also been a Senior Fellow at the Brookings Institution. He has taught at Yale University, where he received his PhD in economics. His research focuses on trade policy. He is the author of Crimes and Punishments? Retaliation under the WTO; Regionalism, Multilateralism and Deeper Integration; Single World, Divided Nations?;andCan America Compete? He is coauthor of Has Globalization Gone Far Enough? The Costs of Fragmentation in OECD Markets (with Scott Bradford); A Prism on Globalization; Globaphobia: Confronting Fears About Open Trade; A Vision for the World Economy; and Saving Free Trade: A Pragmatic Approach. Lawrence has served on the advisory boards of the Congressional Budget Office, the Overseas Development Council, and the Presidential Commission on United States-Pacific Trade and Investment Policy.

[Maverick]

Tell that to all of the employees at Bear Stearns that are now unemployed.   Or to all of the stockholders of Bear Stearns stock.

Do you realize that the company was sold for only 1% of the value that their stock had just a couple of weeks ago?   Heck, the Bear Stearns headquarters building alone is said to be worth 3 and a half times the price of what JP Morgan Chase paid for the entire company.  All of those stockholders have seen their investment go almost completely down the drain.   How many Mutual Funds or Pension Plans had Bear Stearns stock as part of their portfolio??

For 99% of the value of a major US financial corporation to disappear in a couple of weeks is pretty frightening.   That sort of thing has not happened in recent recessions.

Most analysts that I have listened to say the current recession technically started in November last year.   If true, that would mean that we have been in a recession now for the past 4 months.

I'm not going to dispute your premise that we are in a recession as I tend to agree with you there. The severity is another issue and only history (after it's over) will be able to fully quantify it.

The issue I have is with the earlier portion of your post. Are you implying that the govt. has the responsibility to make sure a publicly held company (as in commercial operation non governmental in nature) does not go under? Does the govt. have the responsibility to insure commercial companies stocks like they do bank accounts?

[SteveBailey]

Tell that to all of the employees at Bear Stearns that are now unemployed.   Or to all of the stockholders of Bear Stearns stock.

Do you realize that the company was sold for only 1% of the value that their stock had just a couple of weeks ago?   Heck, the Bear Stearns headquarters building alone is said to be worth 3 and a half times the price of what JP Morgan Chase paid for the entire company.  All of those stockholders have seen their investment go almost completely down the drain.   How many Mutual Funds or Pension Plans had Bear Stearns stock as part of their portfolio??

For 99% of the value of a major US financial corporation to disappear in a couple of weeks is pretty frightening.   That sort of thing has not happened in recent recessions.

Most analysts that I have listened to say the current recession technically started in November last year.   If true, that would mean that we have been in a recession now for the past 4 months.

_____________________________ _______

Again, you make no point. Bear Stearns employs 0.0000461% of the US population.  Am I supposed to panic over that miniscule fraction of our populace losing their jobs? Bear Stearns failed because there were poor leaders at the helm. People who invested there took risks, they lost.  It's the way things work, the way it should work.
 I'm an average guy, unexceptional from just about anyone else on the street, yet I was smart enough to see this coming  and moved my money from stocks to gold and  wheat. Same thing with the housing market. Almost two years ago I stopped flipping houses because the end of the boom was looming. If a simple guy like me can figure this out, why am I supposed to worry about those who could not? If there were no risk in investing your money, everyone would be millionaires. I fail to see your point. 

We've been in a recession for four months.... ok.  I've already said something to the same effect.
Again, recession is a necessary and beneficial part of our economic cycle.  People like you who run  around screaming "the sky is falling" are panicking needlessly and doing nothing beneficial for anyone.  It's a recession, so what?  We needed one.

[Gunslinger]

Isn't a recession defined as "two concecutive quaters of negative growth"?  If so have we had that?

[myelo]

Tell that to all of the employees at Bear Stearns that are now unemployed.   Or to all of the stockholders of Bear Stearns stock.

OK. Hey, all you Bear employees, start updating your resumes. You'll probably need to start looking for another job soon. You know, like millions of other people each year who lose their job because their position is now done by a machine or someone overseas. Or because their industry is going through a down turn. Or because, as in your case, the company they worked for is run by idiots who drove the business into the ground.

And hey all you Bear stockholders. You win some, you lose some. Anytime you give your money to someone else, there's a chance you won't get it back. If you can't deal with that you shouldn't be in the market in the first place. Fortunately you can use your losses to offset capital gains and if not, at least you can still deduct up to $3000 against your other income. And if you were stupid enough to bet your entire retirement on one stock ... better start updating your resume.

[indy007]

yet I was smart enough to see this coming  and moved my money from stocks to gold and  wheat.

Dunno about wheat, but if you look at the numbers for gold, it's very bouncy. I believe it's only a 4% return over the last 50 years. You'd probably get better performance out of a mutual fund that has/had a small portion of Bear Stearns in its holdings, rather than abandoning it for a precious metal (tin scare anybody?). Just my 2 pennies.

[Curval]

The government should have regulated these businesses more closely.

Interesting.

I would have thought you were dead set against any form of government intervention. 

The real crimminals in this debacle in my opinion are the rating agencies who stamped the packaged up debt with a AAA rating so it could be easily sold.  The banks and mutual funds who bought the junk were just fish who snapped up the bait.

[Gixer]

I'm not quite sure how you deduce that.  We're more connected than ever considering a good chunk of our workforce has been outsourced to external workforces outside the U.S. If the companies outsourcing the work collapse, those jobs overseas go away, and affect their respective economies. Its a ripple effect.

Now, I understand how there is alot of countries that WISH their economy wasn't associated with the U.S., but fantasy differs from business reality.

Just what percentage of jobs in total outside of the U.S are from American companies? Would hate to guess, under 10%? For an example company I work for is U.S based. Totaly employees around 40,000 number outside of the U.S probably around 4,000 where is it going to hurt more if it collapses? Me, if they said I was fired I know I could walk into another job the same day.

U.S isn't the worlds number on economy anymore, it's Europe and I wouldn't think Asia was that far behind. So there are plenty of companies other economies outside U.S to keep the world ticking over.

I just don't believe in this sneeze, world gets a cough. Maybe in years past after the war but not now.


<S>...-Gixer

[Gixer]

Who will the Chinese sell their products to, if the USA stops buying them???


_____________________________ _____________________________ ____

Errrr, the rest of the world? China has trillions in surplus and plenty of markets I don't think they will be worried.


<S>...-Gixer