An ugly, unrecognizable recession

There is no knowing what will happen. We are all guessing, educated guesses, wild guesses and otherwise. That you are still making up your mind is understandable, since this crisis is so hard to fathom and takes so much reading to appreciate the amount of fake value that is now being destroyed, from home values that were falsely inflated or based on faulty expectations, to bank earnings that were falsely supported by earnings models that have been long since disproved. Things are collapsing, not because our economy is unsound, but because we indulged in an unsupportably huge volume of credit, on every level from personal, to corporate, to financial, to governmental. All of that is collapsing now.

Personally, I have no clue what is going to happen. I have been convinced by those people who simply have accurately predicted what is happening today. I have hitched my wagon to them. I’m listening to those who have been proved right, rather than proved wrong. When Ben Stein or Bob Brinker or Jim Cramer talk, I don’t listen as they have been wrong.

So I listen and read works from Nouriel Roubini, Meredith Whitney, Eric Janzsen, Lee Adler, Peter Schiff, Doug Noland, Mike Shedlock, and others who have been proved right.

I can’t say if this downturn will be as bad as I believe it will be, based on reading the works or those I listed above. But reading what they have said, and reading how far reaching, how massive the credit bubble was, it leads me to believe that the deleveraging that must occur will take years, not months. And those years will involve a constant, irrepressible march of business closures and layoffs. So I can’t see any recovery on the horizon. Not until house values stop falling. Not until all of the faulty, bloated credit is wrung from the system.

Frankly, it is happening very fast. I predicted the stock market crash (too early, as I usually do) but it has come far faster than I expected. I didn’t know we would see a 40% drop in value so soon. But the government is trying to prop everything up, and this is just going to draw the deleveraging out much longer.

As you can see, I believe the recession will be longer and deeper than most people, which I suppose includes your brother. That was the point of my post. Most folks are not going to take the time to study how large and widespread the credit bubble was and so they are not going to understand how long and deep the economic contraction will be for the economy to destroy that massive credit bubble.

My father lived through the depression. His father was a baker through the entire length of it. He made ample money during the entire depression. His family was poor only because my grandfather pissed away the money he made as a baker, while he was trying to impress his friends. Other than that, my father’s would have done just fine as a child of the depression.

My mother lived through the depression as well. Her father was a Vice President of Bank of Italy (now Bank of America) in San Francisco. They did very well indeed, living quite nicely through the depression. My grandfather drove a 12-cylinder Buick, if that is any example.

That your grandmother makes it sound like everyone suffered in the depression is simply not true. Those who suffered, REALLY suffered, as it was endless. That is why you had able-bodied men walking around begging work and saying, “hey buddy, can you spare a dime for a meal? I haven’t eaten in a couple of days.”

But those who had jobs all during the depression, which was most people, didn’t suffer much at all. What NVDave is saying, is that the people with essential jobs — things you need to survive or that you need on a daily basis to live, to work, for school, for life — those jobs would still be filled in a depression. Those non-essential jobs will evaporate, and the people who don’t have the higher skills to get an essential job would end up suffering and for a good long time as there would be few jobs available, and they would be filled immediately by family and friends.

>>in other words, it’s just that the recession is the reality of inverted demographics striking?<<

Sort of. But another facet is that a LOT of the spending the teens and early 20-somethings were spending was money given to them by mom and dad because mom and dad felt rich since their house kept appraising for more and more. It could be a double whammy. The good news is that the kids will learn some character from the economic reality. They may end up being the next “great generation” after things like the economic collapse and obama’s true colors see the light of day over the next couple of years.

People who can maintain COBOL, RPG, CICS/MVS applications are just short of being able to name their price these days.

I can do Cobol, but why? I can recreate the most intricate cobol app in about 5% of the time it took to originally code it, in C#, and it will be 1000 times more maintainable.

The old farts are retiring, and the kids today are too proud and too arrogant to learn COBOL - all they want to do is lecture people as to why C++ or Java is the wave of the future.

It is the wave of the future, not because it's cool, but because it leverages your productivity amazingly. Still, I'm not so proud I wouldn't do it if needed.

Not true. Many people have not been right “eventually”. You mistake his being early for his being constant.

Back in 1998, I pleaded with my co-workers to get out of the NASDAQ because it was a bubble. I was completely wrong for 2 years and people continued to make money hand over fist. In 2000, the NASDAQ collapsed. Vince lost over $30,000 and Jonathan lost over $40,000. These were young engineers in their 20s who invested in things like Webvan and Pets.com in 1999 and they lost the bulk of the money they had saved to date.

I had a friend who had been investing in NASDAQ stocks like Microsoft, Intel and Cisco since the mid 1990s. By the time the smoke cleared, he had lost all of his profit over 6 years and was down to only the money he put in the NASDAQ.

Now, was I right “once” because I had “always predicted doom” on the NASDAQ, or was I just two years early in my astute prediction?

By 2000, my friends said the exact same thing of me that you accuse Roubini of. They said, “you always said the NASDAQ would go down, of course you would be right eventually.” No, I was dead right, just early on my prediciton, because I didn’t realize how stupid people are. How stupid corporate financial managers are. I thought the party had to end in 1998 because I thought everybody was as smart as I was and could see that the NASDAQ was nothing but an empty bubble. I was early on my call, because I underestimated the stupidity of people.

Roubini seems to have made the same mistake and now you accuse him of the same thing my friends and co-workers accused me of. I was early, not a perma-bear. Roubini was merely early in his call, not a perma-bear.

And up against the government, you have no recourse. That type of government abuse and tyranny is exactly what our forefathers tried to protect us from via the constitution.

I’m afraid that we’ve let the leftists get away with editing and trashing our constitution for too long now. It’s probably too late to save it at this point, short of an all-out civil war. And I really don’t think most Americans have the stones for that kind of fighting any more. We have become soft, lazy, apathetic and complacent...sitting in our recliners with the remote in one hand and the cell phone in the other.

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