Thursday, August 13, 2009

WSJ: Economists Say Recession Is Over

From an unlikely source, The Wall Street Journal, this optimistic report that the Recession of 2008-09 is over:

Economists are nearly unanimous that Ben Bernanke should be reappointed to another term as Federal Reserve chairman, and they said there is a 71% chance that President Barack Obama will ask him to stay on, according to a survey.

Meanwhile, the majority of the economists The Wall Street Journal surveyed during the past few days said the recession that began in December 2007 is now over. Battling the downturn defined most of Mr. Bernanke's term, which began in early 2006 and expires in January, and economists say his handling of the crisis has earned him four more years as Fed chief.


Kingfish said...

Yeah, the same economists who completely blew it in saying one was coming, who blew it on the creation of the tech and housing bubbles, and the same economists who've been consistently wrong.

I also didn't see you quoting economists last fall when a bunch of them condemned the bailout.

Economy is getting worse and they are ignoring quite a bit. Balance sheets and housing prices for example.

Kingfish said...

What factors are you going to rely on?

Housing price increase? Freddie Mac said it as seasonal blip. Housing prices are still going down. Option Arms resets are about to start hitting the housing market and underwriting is much tougher so fewer mortgages are being written. The new appraisal code is making it much tougher as well. Translation: less demand for housing. Not to mention there is a shadow inventory of foreclosed homes that are not on the market as of now. When they do come online, housing prices will go down even further. Oh, and Duestchebank said last week in a year or two nearly half of all mortgages will be underwater.

Also, the implosion of Colonial Bank and taylor, bean, and whitaker is going to cripple the mortgage industry even more as many lenders depend on them for their credit lines. Just think Realty Mortgage on a grand scale. FHA is also seeing its defaults skyrocket.

Unemployment? U6 is 16.3 and hasn't moved much. Unemployment figure normally given out is 9.4. The economy still lost jobs. What you seem to forget is every month that unemployment figure is REVISED and the revised number has been coming out WORSE.

Then there is the deficit spending. Keep piling it on, its going to cause inflation and cause interest rates (set by 10 year T bond) to go up and choke off any recovery.

As for the banks, well, they are sitting on a load of toxic assets and have been kicking the can down the road inorder to avoid the implosion of their balance sheets. The truth is most of the biggies are insolvent and are being allowed to use accounting games to hide that fact. Not to mention FDIC is out of money. See my Regions post today as they are probably insolvent.

Then there is the Baltic Dry Index. Lowest since October, when it literally cratered. That means trade is slowing down even more, hurting our export industries.

But these guys have been right all along, right?