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Recession Coming No Matter What
Old 09-30-2008, 11:45 AM   #1
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Recession Coming No Matter What

Look how many high paying jobs in banking and brokerage and finance and real estate have already disappeared.

The cranes ares still up, and the workers are still moving around, but they have been unplugged from the wall.

Many of these jobs are never coming back. How many banking functions will be consolidated? How many brokerage and investment jobs will be consolidated, or just abandoned altogether? How many Wall Street lawyers are no longer doing M&A, and how many diamonds and rubies will they no longer be buying from Harry Winston?

Could be more will be drinking well scotch instead of single malt.

Should be interesting.
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Old 09-30-2008, 11:52 AM   #2
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Yes, I believe that a recession is coming no matter what - in fact it's already here no matter what the GDP stats say. The damage is already done. Anything to "prevent" it or seriously alleviate it would have had to be done last year.

The question now is how severe and how prolonged.....

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Old 09-30-2008, 12:19 PM   #3
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Could be more will be drinking well scotch instead of single malt.
That's tough to swallow.....
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Old 09-30-2008, 12:25 PM   #4
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Look how many high paying jobs in banking and brokerage and finance and real estate have already disappeared.
Be careful - this sounds like trickle down economics.
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Old 09-30-2008, 12:27 PM   #5
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Old 09-30-2008, 01:02 PM   #6
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This is good because the stock market usually rises during a recession. (It's before a recession that it drops.)
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Old 09-30-2008, 01:51 PM   #7
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As I read the Bailout #1 draft legislation the other day, I wondered just how long it would take the Treasury Dept to actually put all of the administrative & technical apparatus into place and get it working. To me, it seemed like the timeframe was on the order of months, not weeks or days. However, then I realized that it really didn't matter, since the administration was doing first and foremost doing psychological engineering (immediately restore confidence in American financial institutions) rather than technical engineering (restore the American economy to health and vigor). However, it seemed that the massive theft of resources from our children and grandchildren would occur too late to head off some kind of downturn.
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Old 09-30-2008, 02:14 PM   #8
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So, how do we prepare for a recession? Save more in the EF? Cut back spending?

I have a pretty secure Gov't job. Expect a raise in JAN, 3.9% COLA plus something else based on performance (I may owe them money).
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Old 09-30-2008, 02:20 PM   #9
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I predict:

1)Bailout passes.

2)Pelosi takes credit

3)Govt drags its feet until Bush 43 is gone.

4)President Obama announces on his Inauguration Day that "everything is in place to fix what the past Administration did".........

5)Two months later, President Obama, looking stoic, announces the largest tax increase in American history to help fix "Main Street USA NOW, not LATER".......
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Old 09-30-2008, 02:32 PM   #10
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I predict:

1)Bailout passes.

2)Pelosi takes credit

3)Govt drags its feet until Bush 43 is gone. Anyway, things work better when they do nothing.

4)President Obama announces on his Inauguration Day that "everything is in place to fix what the past Administration did".........

5)Two months later, President Obama, looking stoic, announces the largest tax increase in American history to help fix "Main Street USA NOW, not LATER".......
1. Agree

2. Long line of folks looking to take credit.

3. Uh... what are they doing now?

4. Obama inauguration speech "This thing is broken, and it's gonna take lots of work to fix"

5) Shortly thereafter, President Obama announces the largest spending program and budget deficit in US history.

6) In 2011 tax rates revert. Obama blames Bush, says it was all a gimmick, then announces a tax cut for the middle class - reducing them to where they were in 2009.
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Old 09-30-2008, 03:08 PM   #11
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Hmmm . . . interesting predictions, but what about the impact of global financial markets?

There will be a world-wide recession (as there was in late 1987). For interesting perspective on the inter-relationship of "our" problem and the world's finances, see the Schwab web-site today "Breaking commentary" by Liz Ann Sonders.

https://www.schwab.com/public/file?c...efpid=P-997178

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Old 09-30-2008, 04:50 PM   #12
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1966 - 1982 Homebrew(Bier House International) and cheap Crawford's Scotch.

Now that I'm old - Folger's decaf and I get my jollies with mumbling:

Psst - Wellesley! The Norwegian widow gets her dividends and the SEC yield off Target Retirement, 2015 in my case.

I just hope we don't take as long to sort this little difficulty out - I'm hoping it is more along the line of the S&L crisis - I had to hire a lawyer to chase thru a series of rapidly failing S&L's to get my duplex loan paid off and gain title - that was a scary trip.

heh heh heh -
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Old 09-30-2008, 05:31 PM   #13
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So, how do we prepare for a recession? Save more in the EF? Cut back spending?

I have a pretty secure Gov't job. Expect a raise in JAN, 3.9% COLA plus something else based on performance (I may owe them money).
Having grown up in a town that was hit hard by the recession in the early eighties, here are the "lessons" ingrained in my grade-school brain:

1. Job security trumps all, but is especially important for those with little savings. I didn't realize there were hard times in our town until classmates' seats showed up empty for weeks and intense questioning of our teacher finally resulted in truth: They'd moved because mommy/daddy/both had lost their jobs. Sometimes being laid off can't be avoided, but learning an indispensable skill in your job helps make you valuable to your company.

2. Living lean buys you time. If you've got slim savings, cutting back before you're cut from your job (and let's just assume it's going to happen) gives you breathing room in two ways: It boosts your savings and it prepares you for even further belt-tightening if necessary. It's hard to go from flush to broke; if you can take an intermediate cut in spending you'll benefit emotionally as well as financially. Also, when you're cutting back, I'd try to keep my dollars local. That means that I'd cut back on cable TV before I'd cut back on food at the Farmer's market or our monthly breakfast at our local diner.

3. Diversify your income stream. Relying on one job (even one that seems secure) is always a bit riskier than relying on two jobs, or more. Even if one spouse chooses to stay home, it's worth it to brush up your resume, gain skills, and be on the lookout for cash opportunities. In our town, mill jobs and timber (the mainstay of the economy) tanked; those who could parlay their skills into related fields did best (ie, mill workers who'd paid attention during shop class/on-site maintenance found jobs as maintenance workers with the county road yard; Log truck drivers headed an hour north to bring the hay crop in; hobby fishermen went to Alaska to work the fishing boats). If there's a skill set in demand in your area, learning it BEFORE the crunch comes couldn't hurt. In my case, I'm signing up for basic Spanish at our community college.

4. Have a plan. Figure out what you would do "what if." It seems to me that those who plan for adversity are better able to withstand it. Think about all sorts of scenarios, and what you could do under each one. Planning won't make it happen -- it will just make you able to respond effectively if it does.

5. Tell your kids the truth. If hard times come to where you are and your kids bring it up, let them know what's happening and how it might affect you. I remember asking my dad if his job was secure; he told me it was but talked about why some other people's weren't. His honesty reassured me and also prepared me for the times ahead. It also taught me that not everything is within our control.

6. Build networks. Now is the time to strengthen bonds between yourself and your coworkers, neighbors, and family. Strong communities with close ties do better in recessions because people help each other out. It might be as simple as sharing a ladder with a neighbor, or as generous as providing free childcare for friends who have to job-hunt unexpectedly. The families in our neighborhood who were able to ask for help seemed to weather the storm better than those left twisting in the wind by themselves.

7. Show compassion. We'd all like to think that hard work and sacrifice will always be rewarded, but recessions show us that isn't always the case. I'd say that for those of us who have enough to eat, a relatively secure income and a place to stay, remembering those who struggle is important. Food banks and homeless/transitional shelters (especially those that accommodate families without requiring them to split up) seem especially deserving of increased support. I remember this because the year I turned 8 the "gift tree" at our local mall was nearly bent double by the weight of the requests, and the requests for kids were for things like warm coats and underwear, not toys. I asked Mom why there were so many kids without warm coats, and why Santa didn't come to their houses like he came to ours. I don't remember Mom's exact explanation, but I do remember that we picked up twice as many tags that year as the last. I doubt we were really able to afford those gifts, but if that Christmas was skimpier for it -- well, I don't remember.

That's what my kid brain remembers. Others out there probably have better advice -- especially in the financial zone. My guess is that the sailors among us will probably say that if you see a storm riding on the horizon, you should plug the leaks, batten down the hatches, and prepare for a blow. But, you should also render aid to small craft out there with you.
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Old 09-30-2008, 07:38 PM   #14
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Urchina,

That was well written and heartfelt advice.
Thanks,

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Old 09-30-2008, 08:21 PM   #15
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Hmmm . . . interesting predictions, but what about the impact of global financial markets?

There will be a world-wide recession (as there was in late 1987). For interesting perspective on the inter-relationship of "our" problem and the world's finances, see the Schwab web-site today "Breaking commentary" by Liz Ann Sonders.

https://www.schwab.com/public/file?c...efpid=P-997178

-- Rita
I have always enjoyed Liz Ann's commentary, going back to her appearances on Louis Rukeyser's weekly show. Below is a piece from the link above.

Yesterday, the VIX closed at 46.7, which is the highest level in the index’s history. Since 1990, there have been four other periods when the VIX closed above 40. Following each period, the S&P 500’s performance was mixed the following week, but over the following month and quarter, the S&P 500 had consistently positive returns. But before getting too excited, let me make one final comment on yesterday’s stock market action. It’s very rare to see selling pressure this great when the market is diving to a fresh 52-week low. It has only happened once in history and that was the crash of 1987. Historically, when we’ve seen similar action, the precedent is for a short-term bounce followed by extreme volatility which has typically, though not always, led to a medium-term lower low.

She's kind of easy on the eyes.

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Old 09-30-2008, 09:29 PM   #16
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I went out this evening for a happy hour attitude adjustment (which worked just fine!). I had a glass of wine and a small plate of spinich crepes, a few bites of frites with aioli sauce. A friend said "As long as we can still afford this once a week, then we're doing fine." We are a very low maintenance group.
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Old 09-30-2008, 09:39 PM   #17
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I went out this evening for a happy hour attitude adjustment (which worked just fine!). I had a glass of wine and a small plate of spinich crepes, a few bites of frites with aioli sauce. A friend said "As long as we can still afford this once a week, then we're doing fine." We are a very low maintence group.
Congratulations. Sounds like fun! I was alone today, but it was a beautiful sunny day and I went down to the waterfront and had some oysters on the half shell and talked with my Mexican buddy who runs the place.

Still crammed with tourists. I think they will be there as long as the sun is out. I enjoy the tourists. I don't know if it is because they are on vacation, or just that people from the interior are more friendly, but it is always fun to BS with them.

Ha
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Old 09-30-2008, 09:44 PM   #18
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I have always enjoyed Liz Ann's commentary

She's kind of easy on the eyes.
So now the truth comes out!

Actually, I have really been impressed with a series of articles she has written this week for the Schwab web site. Well balanced and well-written.

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Old 09-30-2008, 09:56 PM   #19
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She's kind of easy on the eyes.
Smart as a whip too!

I've been watching her for well over 10 years. And she doesn't look a day older. How does she do that!?!?

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Old 09-30-2008, 09:59 PM   #20
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FWIW I predict that when the Bureau of (whatever it is - can't remember) finally gets around to announcing the current recession will identify the start as Nov (or maybe Dec) of 2007.

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