US recession?

[bascule]

76% of Americans think their (and also my) country is in a recession:

 

http://www.usatoday.com/news/washington/2008-03-17-economy-poll_N.htm

 

For the first time in history, the Swiss Franc is worth more than the dollar:

 

http://www.bloomberg.com/apps/news?pid=20601085&sid=aeOYYi8PVJG8

 

Not to mention that the Japanese Yen now outvalues the dollar, which it hasn't been for more than ten years. Oh, and Canadian dollars are worth more than American dollars. So much for all those jokes.

 

This is scary:

 

 

I know it hasn't been 2 quarters yet, but can we start calling it a recession?

[ecoli]

I don't see a specific correlation between the gray "recession areas" and the blue line. Can you explain the graph further?

[Pangloss]

Why is it so important what we call it? Is that about recognizing a lagging economy, or getting a Democrat elected this fall?

[ecoli]

Why is it so important what we call it? Is that about recognizing a lagging economy, or getting a Democrat elected this fall?

Either way, people are going to remember the economy under Clinton and think that partisanship has something to do with it. It makes me a little nervous actually.

[bascule]

Why is it so important what we call it? Is that about recognizing a lagging economy, or getting a Democrat elected this fall?

 

I think it's important to recognize the reality of the situation

[Realitycheck]

Check this one out. BRB.

 

...

[ecoli]

fine... but in that case, there doesn't seem to be an indication between recession periods and the borrowing of funds. I completely reject the idea of the Fed borrowing money, but what does it mean!

[Realitycheck]

The writer of the e-mail directs his readers to the most recent H.3 report, which shows total reserves ($41.6 billion) less TAF credit ($50 billion) less discount window borrowings ($390 million) equals non-borrowed reserves (minus $8.8 billion). The negative number is really an accounting quirk: If banks borrow more than they need, non-borrowed reserves are a negative number.

 

This gentleman is overlooking the fact that the Fed is ``a monopoly provider of reserves,'' said Jim Glassman, senior U.S. economist at JPMorgan Chase & Co. ``This is a non-starter. There is no such thing as a banking system short of reserves. The Fed has absolute control over the supply.''

 

There may be times, such as late last year, when banks are reluctant to lend to one another for a period longer than overnight. ``And any one bank can have a problem'' funding itself, Glassman said. But in a world where ``the Fed can print money, there is no shortage,'' he said. ``The banks get the reserves they want.''

http://www.bloomberg.com/apps/news?pid=20601039&sid=a7E...

 

In short, there is no correlation between economic behavior and inter-institutional banking details.

[Phi for All]

I got my notice last week telling me I'll be getting another notice before they send me my economic stimulus check. Honestly, this griped me so bad when it was done last time, just to put a face to the man who's giving you some money... even though it's really your money, part of what you'd get back normally next year.

 

If we aren't in a recession now, postage and printing on two unnecessary notices for every taxpayer should put us over the limit.

Why is it so important what we call it? Is that about recognizing a lagging economy, or getting a Democrat elected this fall?

Stop motive-hunting. Honestly, it's wearying, and it introduces partisanship where it wasn't before. It is possible to detest the direction in which Bush/Cheney have driven this country without hating all Republicans or only supporting Democrats.

 

In fact, I don't know anyone on these boards who is a platform Democrat. I've seen some pretty rabid platform Republicans who support Bush/Cheney even though they continue to push neo-con agendas but I can't recall anyone ever saying the Dems are best no matter who they are.

[doG]

If we aren't in a recession now, postage and printing on two unnecessary notices for every taxpayer should put us over the limit.

 

Don't count the eggs too soon. I know at least one of us (me) that got a double notice with the first mailing. Now I wonder if both of my first notices will get doubled the second round for a double double notice. I'm not normally a conspiracy theorist but now I'm beginning to wonder if this was all a scheme to stimulate the postal service since their rate hikes seem to be coming more frequently now....

[Pangloss]

I think this is worse than the Clinton downturn of 2000, but it seems to be more or less on a par with the Bush I downturn of 1992. But these things are cyclical and not really a source of major concern, IMO. It's being handled, in so far as such things can be managed (which isn't very far).

[ecoli]

I think this is worse than the Clinton downturn of 2000, but it seems to be more or less on a par with the Bush I downturn of 1992. But these things are cyclical and not really a source of major concern, IMO. It's being handled, in so far as such things can be managed (which isn't very far).

I think the apparent problem (and this may not be accurate) is that whenever the gov't. or the Fed meddles, it's just a temporary fix that delays and even worsens the problems til the next time around and that's how you get depression era crashes.

[Pangloss]

I agree, which is why I think it's valid to question the motives of both Republican and Democratic presidential candidates who are criticizing the Bush administration over economic matters. They keep suggesting that we haven't spent ENOUGH money, as if somehow spending $4 billion instead of $2 billion will actually allow us to steer a $14 trillion economy. What hubris!

 

(Although I do note a big difference in the way Obama talks about this stuff. He SAYS people are hurting, but he doesn't come right out and offer billions in welfare, wheras with the other two I feel like it's absolutely certain that they'll be ripping money out of my pocket before I can sneeze.)

[iNow]

WARNING: Blatant drive by post with little desire to go searching for the plethora of facts which are actually available to support it...

 

 

Bush is doing the same thing to the US that he did the Texas Rangers...

[Pangloss]

Signing a deal with a young, up-and-coming Rafael Palmeiro?

[Realitycheck]

Depression-era crashes are a thing of the past. There are too many safeguards in place and people are much more educated now to let that sort of thing happen. That does not mean that long, sustained bears cannot happen. However, it's pretty hard to just swipe equity off of the books and have it reflected in the market.

 

When it comes to adjusting for market forces though, things really get hairy. I mean, how many people wait to start a business until rates go down? I think we had quite a refi boom going on for a while, but now everybody is pretty much maxed out. Just how much lower can rates go when 80% of the people out there already have the lowest rate they have ever dreamed of? Just how much more can they milk out of the process? I just don't see rate cuts as effective of a solution anymore. Of course, we can sucker in some more new home loans with cheap money on the fly, but realistically, it ain't happening. So we get into tax rebates to infuse petty cash into the GDP. Woohoo, it's money time!

 

Put your propellerheads on people! It's MAD MONEY! As a great man named Solomon once said, "It's all for naught. Go back to the basics."

 

Of course, we could go back a few decades and start emphasizing domestic allegiance and this WOULD WORK. It would not sound "cool", but it would work, expecially when you spell it out to people and educate them. But it wouldn't "sound cool", it wouldn't be "cool". For years, I was always a devoted Sony man, but my latest televison is a corn-bred Magnavox and I am very happy with it. Magnavox is a pioneer in televisions, and while Sony may spend more money on ingenious ways to improve on perfection, so what? My Magnavox is cool. The Pontiac Solstice that I don't have is cool, etc., etc., or am I just getting old?

 

 

 

 

WARNING: Blatant drive by post with little desire to go searching for the plethora of facts which are actually available to support it...

 

 

Bush is doing the same thing to the US that he did the Texas Rangers...

 

Somehow, my link to the explanation eroded to nothing, so I'll point out the really relevant facts, since my first quote really didn't do much justice. Maybe Huffington doesn't like being linked to or something.

 

What's caused the hullabaloo recently is the dive in non- borrowed reserves from $44 billion in early December to minus $8.8 billion at the end of January.

 

It isn't a mystery what happened. The Fed announced the creation of a Term Auction Facility on Dec. 12, enabling banks to borrow for 28 days versus a wide range of collateral. The minimum bid the Fed accepts is the expected funds rate one month out, which in the current environment means cheaper funding costs than the fed funds market.

 

So what would you do if you were a bank?

 

Lower Cost

 

Loans made through the TAF are categorized as borrowed reserves. The Fed had $50 billion of loans in place at the end of January, which ``caused the borrowed reserves figure to balloon and the non-borrowed figure to decline by a corresponding amount,'' said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, in a Feb. 6 commentary. (He's on the same e-mail lists I am.)

 

All of a sudden, people who never glanced at the Fed's H.3 statistical release are now experts on ``Aggregate Reserves of Depository Institutions and the Monetary Base.'' Their e-mails have the same sense of foreboding as the missives put out by the Black Helicopter/Tin-Foil Hat crowd.

 

``What if the Fed's rate cuts aren't motivated by the desire to stave off recession, rather to prevent a major banking crisis?'' one e-mail read. ``The Fed's not telling anyone what it's up to because it doesn't want to cause panic, but the evidence is there in its own data.'' (Gosh, you'd think it would do a better job of hiding it. Maybe send H.3 to join M3!)

 

In a commentary this week, Goldman Sachs Group Inc. senior economist Andrew Tilton dismissed the case of the disappearing non-borrowed reserves as ``evidence of the markets' obsession with the health of the financial system.''

 

It's just a fluke in banking numbers caused by an irregular auction. I mean, what does 50 billion dollars mean anyway? We're talking about the price of shoe-laces.

[bascule]

IMO. It's being handled, in so far as such things can be managed (which isn't very far).

 

I think it's clear from those graphs that the way it's being handled is abnormal in the absurd extreme

[Pangloss]

I think it's clear from those graphs that the way it's being handled is abnormal in the absurd extreme

 

Wow, is that what it says? I thought it showed non-borrowed reserves of depository institutions. I'll be darned -- that's quite a chart!

 

I think that's a pretty broad case to make based on a single indicator. But you're welcome to try and make it. I'm thinking you might need to throw an ellipses or two into that argument, just to make sure you nail it down.

 

The Dow was up over 400 points today and NASDAQ over 90 following admission that there's a downturn and the promise to act accordingly. As the Treasury Secretary put it the other day, 92% of mortgages are being paid on time, and only 2% are in foreclosure. Economic expansion has slowed to a crawl but that's hardly the same thing as a collapse, unemployment isn't falling in spite of decreasing job numbers (which means more people are going back to school, yay!), and global investor confidence has risen three straight months in a row (source).

 

I don't think anything is being ignored, and I don't think the case has been made that the handling is wrong. What kind of "handling" do you feel is warranted?

[bascule]

I don't think anything is being ignored, and I don't think the case has been made that the handling is wrong. What kind of "handling" do you feel is warranted?

 

Looking at these two graphs, it would appear that no other administration in history has handled the problem in the manner it's being handled presently:

 

 

I don't want to be a cargo cult economist, but something tells me this approach will have some consequences which made all other administrations reluctant to handle the problem in such a manner.

[Realitycheck]

The Term Auction Facility is an instrument of monetary policy, introduced by the Federal Reserve to increase liquidity in United States financial markets. Although first instated as a temporary policy, as of 21 December 2007, the Fed will continue to hold bi-weekly auctions through the TAF.[1]

 

The Fed is using the TAF as a trial of this type of monetary tool. Depending on its success and usefulness, the Fed may begin to use it as part of a more permanent program.

http://en.wikipedia.org/wiki/Term_auction_facility

 

It looks more like an accounting irregularity that was reported improperly more than anything. While the "wide range of collateral accepted" might be questionable, I doubt that the Fed is up to making significant mistakes like that. They've got some pretty big players here in the Bank of Canada, Bank of England, the ECB and the Swiss National Bank.

[iNow]

Signing a deal with a young, up-and-coming Rafael Palmeiro?

 

Try not to forget, he also let Sammy Sosa go to the White Sox.

[Pangloss]

Worst (mlb) President Evar!

 

 

 

 

 

 

(Yeah I know, he was an owner, not a team president. It's just funnier this way!)