Posted on 06/28/2010 6:56:32 AM PDT by blam
Double Dip? We're Already In Recession
By Andre Julian
Jun 28, 2010 9:20 am
Even though the market never exactly repeats itself, a comparison of data points to ones in the past seems to point to a turbulent road ahead.
Often when we ask poignant questions, we don't get the answers we're seeking. Instead, we get more questions. However, it's in the asking of these questions that we often find insight. Consider the question, “Is the economy recovering?" It seems that it is. After all, the US Commerce department reports that we had 2.7% GDP growth last quarter and 5.6% in the last quarter of 2009. By definition, when we have two straight quarters of GDP growth, we're supposed to technically be out of a recession. Then, why is it that we continue to ask, “Are we out of the woods yet?" Inevitably, that's a much more important question investors should be asking.
Even though past performance isn't necessarily indicative of future results, it's often the only basis we have to support our assumptions. So, even though the market never exactly repeats itself, the data points we see today can easily be compared to ones in the past and seem to point to a turbulent road ahead.
Past performance isn't necessarily indicative of future results.
The chart chosen compares the Dow Jones Industrial Average from 1937 to 1939 to the SPDR S&P 500 from 2008 to 2010 during the same monthly time period. These two specific indexes were selected because they allow for a graphic comparison without the need for re-scaling (which would require two separate graphs and wouldn't be as dramatic).
If you examine the chart above, you'll see that bear markets are accentuated by the red lines and bull markets are accentuated by the green lines. The chart pattern we see when comparing the two time periods to each other is ominously similar, and the data points to another major decline in the stock market. It's important to note that the rallies are seen by many analysts as liquidity rallies rather than market rallies, and are based more on a reaction to government stimulus than investor sentiment because during both time periods, there was massive government-spending to promote growth. Because the stock market is considered to be a leading indicator, strong rallies tend to give the impression that the economy will soon improve. The health of the stock market can appear to be propped up through stimulus, which gives the "lagging" economy time to catch up and recover. However, if the economy cannot catch up soon enough and the stock market hits too much resistance, it can dip again.
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How much more unemployed can a person get? lol
Government actually has the following ways to solve the current economic problem :
* Increase spending, increase taxes ( Krugman’s solution )
* Increase spending, decrease taxes (Bush’s solution when he first took office )
* Decrease spending, increase taxes ( the European solution )
* Decrease spending, decrease taxes ( The Steve Forbes Solution )
I don’t think the Forbes or Bush solution is on the table anywhere.
RE: We’re already in a recession
Well, a recession is defined as two or more consecutive quarters of NEGATIVE GDP GROWTH. If we are to believe the reports, Q1 of 2010 showed a (Downwardly revised) GDP of 2.7%. Yes I know, it’s unsatisfactory and too meager an increase, but hey, definitions are definitions. Based on this definition, we came out of the recession in Q1. SMALL COMFORT THAT IS.
+Q1 = Government Spending
Q2 > Q3 Modest improvement due to profits pushed into 2010 to avoid 2011 taxes.
2011 - Lookout below!
IT IS WITH LIBERALS!..............
Hey Blam, you should post this one by Cramer, remarkably good.
http://finance.yahoo.com/news/Cramer-Why-Obama-Is-Bad-for-tsmf-2364771359.html?x=0
The depression started and has only been slowed by massive Federal spending. There never has been a ‘recovery’.
More like a double dunk - I feel like my head was under water, I got a moment or two to catch my breath, and now it’s into the the dunk tank again.
There never has been a “recovery”. Big time.
The media keeps talking about a jobless recovery, but that does not exist. A recovery can’t exist without new hiring going on. To add gas to the fire, come Jan 1 the Bush tax cuts expire, all existing federal taxes are going up, and we can pretty well be sure that a vat will be implemented as well. Then for some more gas, the congress is not going to pass a budget until after the November elections. Who knows what kind of surprises are going to be in that.
"The corruption of this administration, the fraud occupying the White House and the revolting, despicable scumbags running Congress, defy description. They are corrupt, subhuman slugs."
The recession in the SYSA (Socialist Yankee States of America) may never really end. Major downsizing is required.
Meanwhile in other areas, things are really not so bad. Not back to what was normal, but better.
Exports are doing well. Export containers and vessel space is very tight and hard to come by.
I agree with you 100%. The US government forced a false end to the recession with their massive debt spending. It never really took us out of this mild depression as it continues to unwind. Now that the momentum from this massive federal debt spending is spent, we are heading back down.
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