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Job market to significantly weaken - expect no recovery for next 5 yrs




I am a currency strategist with one of the major banks and keenly sutdy macro economics

The economy and job market are is not going to recover any time soon - have no hopes and prepare for the worst and here are the reasons:

The engine of world economy - US consumer(retail spending is 70% of US gdp ) has not only retrenched but all but vanished- we will see over 70000 stores closing this year alone - with few mega chains like Sears.

The retail bankruptcy will soon spill into commercial real estate and eventually the 'safe' canadian banks.

The job situation is deteriorating at a rate similar to the one seen during the great depression. We are losing One million + jobs in US and Canada together every month.

House prices are not set to stabilize any time soon - despite Obama's housing bill. AS the Star reported - roof has just caved in on housing starts in Canada.

GM, Ford, Chrysler -will all fail this year - combined they lost around 20 billion dollar last year - to put that in perspective -it is more than many small countires' entire GDP. Their failure will lead to 9 million job losses in 2009 alone.

Credit still remains frozen - banks are too afraid to lend to other banks and consumers. That means many small businesses - life blood of NA economy will go under.


Equities have just had their worst Feb ever - in March , dow will hit low 6000s that means trying to retire off of their 401ks and RRSPs will have to continue working - thereby further exacerbating the job situation.


economyzombie.blogspot.com


 
jinxed

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Post ID: 138834 28-02-09 00:29:33
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investpro
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Trip on doom gloom
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News from The Globe and Mail

Divas of doom find their fame in peddling the direst of fortunes to pessimistic masses
Bleak is chic as demand grows for dark oracles of blood-filled streets and 'zombie banks'
IAN BROWN


00:00 EST Saturday, February 28, 2009

The financial headlines can make your eyeballs bleed. William Burroughs, the great Beat writer, could have fashioned one of his cut-up poems out of a single day's fare:

Markets tumble as bank fears linger

Will invoking the Great Depression bring it on?

Manulife needs to confront its reality

There will be blood ...

The boom in doom reached a new peak Tuesday. That was the day Harvard financial historian Niall Ferguson declared, in this newspaper, that the global recession is about to produce blood in the streets, "civil wars" and toppled governments. By Friday it was the No. 1 all-time best-read story on globeandmail.com, and a global Internet tizzy as well.

Bad, bad news has been avalanching ever since. Nouriel Roubini, New York University's famous Dr. Doom, is predicting the collapse of Eastern Europe. "The financial system is actually imploding right now," the professor implacably informed his TV audience this week.

Meanwhile, Standard and Poor's has downgraded Ukraine's foreign currency rating to CCC-minus - that's seven levels below investment grade, ladies and gentlemen, the equivalent of your dope-smoking teenage son getting a mark of 13 in physics. The prospect of a default has European bankers sprinting for the Valium.

In Toronto, Paul Volcker, a former chairman of the U.S. Federal Reserve Bank, has admitted he has no idea how to fix the mess.

In New York, Nobel-Prize-winning economist Paul Krugman is calling for the nationalization of banks. In England, storekeepers are posting a sign in their windows: Keep Calm and Carry On, it reads, a slogan revived from the Blitz. The new bad news is so bad, even Bernie Madoff has been knocked out of the spotlight. By now he barely qualifies as a shoplifter.

This is the way we live these days, hiding under the blankets. But as frightening as the future looks, we seem to enjoy being told how much it's going to hurt. Dire news makes us feel like grown-ups, serious once more. We might consider seeing a collective psychiatrist. At the very least, we should take a close look at what we're afraid of.

Niall Ferguson wields the whip of shame the way we like it. "Niall is a self-publicist and a controversialist," one of his fellow Cassandras on the global lecture circuit says. "That's his stock in trade."

The Scottish-born, Oxford-trained, Harvard-seated professor's fourth book, The Ascent of Money, is currently No. 4 on the New York Times's business bestseller list. His website is stacked with his latest pronouncements. They range from a discussion of pre-First World War central bank incompetence, which led to the rise of fascism and Hitler (his ever-ready theme), to an imaginary economic retrospective of 2009 (predictions include an assassination attempt on Barack Obama by al-Qaeda next Thanksgiving).

He works the rhetoric of doom like a master. Is violence inevitable because of this crisis? "There will be blood, in the sense that a crisis of this magnitude is bound to increase political as well as economic [conflict]"- but we already knew that, where's the evidence? "It will cause civil wars to break out that were dormant" - again, where, and were they about to break out anyway?

Prof. Ferguson's best stroke is to nuzzle up to the Direst Prediction of All, without touching it. "I don't see it producing anything comparable with 1914 or 1939." By then, of course, the war horse is out of the barn.

Most of all, he's a good storyteller. His prose style is as brisk as his speeches are lucrative, at $50,000 per. Don't complain: You deserve it.

Nouriel Roubini, the other dark oracle of the Collapse of '08, is known to fans as "The Professor," which is what he is at the aptly named Stern School of Business at New York University. He's also the chairman of RGE Monitor, which provides a relentless barrage of online bleakness about the global economy, assembled by teams of economists and analysts. The reports sell "to an average retired person," the RGE receptionist explained recently, "for about $5,000."

The professor in New York isn't as flashy as the historian in Boston, but he is easily as respected. It was Prof. Roubini who first predicted, back in the day (2006) that the housing collapse would produce the credit squeeze. (He underestimated the losses, though, at $1-trillion, versus a reality of as much as four times that number.) "People called us lunatics," Christian Menegatti, the managing editor and chief economist of RGE Monitor, recalls.

Lately, Prof. Roubini has been ratcheting up the fear factor with talk of "zombie banks" - liabilities greater than assets, hence worth "less than zero." His expressionless delivery -the man rarely blinks - has the same staggering effect that kryptonite had on Superman. His mantra is "the worst is yet to come." When the recovery does arrive - growth of 1 per cent or less, at the very end of 2010 - it will be so feeble "that it will feel terrible even if the recession is technically over."

Excuse me while I lie down in front of that truck.

Compared with Profs. Ferguson and Roubini, other economic alarmists are practically upbeat. At 86, Paul Volcker is the Eeyore of the woe-wringers: He doesn't threaten dire decline so much as he renders you catatonic with the incessant unfathomability of it all.

"I have never, in my lifetime, seen a financial problem of this sort," he recently told an audience in Toronto. "I'm not saying it's going to get anywhere as serious as the Great Depression, but that was not an ordinary business cycle either." Aiiiieeeeee!

Why do we hunger for their dark predictions? It's an interesting question. Maybe Tolstoy was right: Unhappiness tells us more about ourselves than optimism. Maybe the prospect of a sharp cleansing purge makes us feel better about our languid lust for pleasure: ow trumps oooh. Maybe, as Martin Wolf, the renowned chief economic pundit for the Financial Times (and no stranger to the international doom circuit) says, "This is a shock. And in periods of shock, people get real. They ask big questions about their lives."

"There is a peculiar human need to contemplate disaster," Vivian Rakoff, professor emeritus in the department of psychiatry at the University of Toronto, says. "Because there is the sense that if it gets bad enough, we can start over again."

Things are different here in Canada. When I telephoned Wendy Dobson, a former director of the C. D. Howe Institute who now teaches at the University of Toronto, she said "Calm down!" before I even said hello. Dr. Dobson takes Niall Ferguson's alarms with a grain of the old salt: "Predictions of civil war and depression?" she says. "He's right - in some small, badly governed country." And while she admires Prof. Roubini's foresight, she claims he occupies "the bleeding edge of prognostication," so far out in the future that's it's hard to be anything but cautious and non-committal about his views.

Optimism isn't common here, but it isn't unheard of. "We continue to maintain the view that a recovery will take hold by the end of the year," Douglas Porter, the chief economist at the Bank of Montreal, said yesterday, "despite the recent wave of downbeat economic releases."

Mr. Porter and Dr. Dobson are rarities: Most economists have an ingrained terror of being caught out as the Dolt of the Century - like, say, James Glassman, who published the ultimate text of optimism, Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market, in 1999, when the Dow Jones industrial average was exuberantly cresting 11,700. Today, the Dow sucks air just over 7,000.

Even worse to be Irving Fisher, the eminent Yale economist who promised Americans the stock market had reached a "permanently high plateau" in 1929, a week before its pants fell off, and 24 years before it pulled them back up to where they'd been. Promise up or down, but down is safer. "What doesn't sell," Mr. Wolf says, "is being in the reasonable middle. If you're going to hear a speaker, you either want a new point of view or a list of calamities."

Today's extreme pessimism is a lesson even the doomsayers learned the hard way. Mr. Wolf has taken of late to talking to his wife about his past economic predictions. "I find all the embarrassment today, looking back three or four years ago, is that I was clearly too optimistic." He wasn't alone. "Nobody came close to being pessimistic enough. That is the most significant feature in the past 12 months. Essentially, what has happened is way more pessimistic than anyone predicted."

Which, oddly enough, is predictable. Even Niall Ferguson and Nouriel Roubini, the most daring doom divas, hesitate to raise the spectre of the Great Depression. "I'm not making the comparison to this crisis," Mr. Wolf says. "I'm not. But without the Great Depression, Hitler would never have come to power." Europeans are especially sensitive to the destabilizing power of severe recessions, to the fact that the Depression in the United States led to fascism in Europe. Drs. Ferguson, Roubini and Wolf all are Europeans.

"The countries with pretty strong democracies withstood it," Mr. Wolf says. "Those without did not. I don't find that so implausible. Really frightened people do really frightening things."

The trick, then, is not to be frightened - to resist not just the urge to panic, but also "the puritanical dislike of the world human beings have made," as Dr. Rakoff puts it, that makes us welcome doom and bust. "This crisis does seem more serious, and I don't want to be an idiot. But I do think that for one of the first times in history, everybody is in it. No one is chortling. It's a single raft of the economy, afloat in the stormy sea."



***

DOOMSTER ROSTER

No period in economic history has been without its Cassandras. Here are some past examples:

If worrying were a sport, Henry Kaufman would be in the hall of fame. In his heyday as chief economist at Salomon Brothers in the 1970s and early 1980s, Mr. Kaufman was a thundering prophet of American malaise and decline, consistently predicting higher interest rates and lower bond prices. He was known in the press as either Dr. Gloom or Dr. Doom, and you can't say the nicknames were unfair. "I am aghast at how much our country has faltered," he said in a characteristically downbeat 1980 speech. "The path to sustainable economic growth seems lost to us." And his prophecy of doom had some truth: Not only did Lehman Brothers, where he served as director and chairman, go out of business, Dr. Doom also had money invested with Bernard Madoff.

Hans Sennholz, an inspirational speaker at investment conferences in the 1970s and 1980s, is cut from the same cloth. He thought high inflation was just around the corner and Wall Street was headed for collapse at a moment's notice. In the 1970s, Mr. Sennholz warned that America was headed toward an inflationary armageddon.

In his 2005 book The Long Emergency, James Howard Kunstler painted a dystopic view of how the United States would fare in the wake of the "cheap oil fiesta." Mr. Kunstler believed the human race would survive, but the high standard of living created by gorging on cheap oil would not. Oh, and America as a political entity will be toast, too.

During the 1920s, some economists did warn that a severe depression was unavoidable. In the summer of 1929, for instance, the Austrian Ludwig von Mises refused an important job at the Kreditanstalt Bank because, as he told his fiance, "A great crash is coming, and I don't want my name in any way connected with it."

Mr. von Mises had been warning for years that the central banks' loose monetary policies would bring on a depression. Likewise, Friedrich von Hayek warned that the U.S. economy was heading for a crash. Writing for the Austrian Institute of Economic Research Report in February of 1929, he successfully predicted that "the boom will collapse within the next few months."

Mr. von Mises and Mr. von Hayek were not alone in their dire warnings. Roger Babson, a well-known Boston financial adviser, was warning investors in September of 1929 of an imminent crash. And E. C. Harwood, founder of the American Institute for Economic Research, and Benjamin Anderson, chief economist at Chase National Bank, also warned that a crash was unavoidable.

Sources: Fortune Magazine,

Salon, The Daily Reckoning,

Safe Haven

The Globe and Mail




 
Post ID: 138839 28-02-09 07:32:34
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freakoutguy
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Posts: 666
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One man's pill is another man's poison;)

 
Post ID: 138876 01-03-09 10:03:13
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jinxed
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Member since: May 05




Posts: 51
Location:


Investpro apparently you need a class in economics 101 - see if you can find some material in your local library.

Dow jones will fall through 4500 - BDI is frozen,housing , umemployment, credit all are frozen - the full wrath of CDO unwinding is yet to happen, which will take down C or BAC or maybe both. GM is days away from bankruptcy and with it will go all the parts suppliers.

Nouriel Roubini and Paul Krugman are celebrated economists and not mere prophets of doom (I am an avid follower of both) - in fact Roubini called the current crash back in 2006

A smart investor goes with the trend - I have made very nice money buying puts and bear spreads. Also currencies and commodities are an excellent play. Your misguided optimism -( read wishful thinking) will only lead the readers on this forum to l0se what little they might have left


 
Post ID: 139361 08-03-09 16:47:28
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ILOVENA
Senior Desi
Member since: Jan 09




Posts: 295
Location:

The economic doom and gloom.
Not a day passes without news of an impending economic disaster, layoffs, a financial scandal or a company in liquidation. Be it the CNN, the Headline News or a daily newspaper, nothing is different. These news media are churning hundreds of hours of bad, depressing news. It looks like there is nothing good happening in this world.

I can agree that there are a million bad things happening, but should we focus on that here too, on Canadian Desi?. I don't want to be an ostrich that buries it's head in the sand - we have so much of big bad news from the idiot box...... can't we at least share some good news from back home or from any other part of the world?

Before someone jumps into any conclusions, let me say that I have no investments in the stock market, have a stable job, and my debts are under under 3 K. I know that things aren't looking too good, but then again this is because of individual and corporate greed on a massive scale. I also know that this is HIS way of punishing those who thought of nothing but material wealth, threw family and basic values to the winds, and forgot that there is a supreme being.

To a poster like jinxed, who believes that anything said positive would mean that my fellow Desi's will invest in the stock market and lose more, I have this to say: Let us not forget that the biggest losers are those who invested in the equity market, for exponential returns (read "greed";), and not those who invested in GIC'S & Government bonds, where the returns were less than 5 % per year. Now I know that it sounds stupid to invest in such sectors, but at least one would not have lost his entire investment (like the one's in the equity market did)

Not withstanding all of this, as much as all of what we see is a reality, I believe that we will see good times, again, soon. Be it warren buffet, or any of my die hard pessimist Desi brothers, I refuse to give credence to what they spread. We do not have the capacity to foretell the future........... so why not be positive, pray and share our capacity to remain focused on the (little) good, that is around?





 
Post ID: 139468 10-03-09 08:39:10
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rajivjuthani
Senior Desi
Member since: Jun 05




Posts: 146
Location: Mississauga


Hello All,

Sure doomsday is coming ( economic doomsday that is), every one is predicting a worse scenario than the other. Everyone say's I said so. However what is the solution for us normal people.

Back to the basics.

a. Do not take on more debt.
b. Pay off your debts and save.
c. Spend wisely.
d. Save, Save, Save.

Like the generations before us , we will prevail over this storm. However we will need strength ( money with us), when the storm is over.

This is my 2 cents,

Someone may add that if we all save, then what will drive the economy ?

CD's may add comments.
Rajiv


 
Post ID: 139478 10-03-09 09:53:27
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akscanada
Senior Desi
Member since: Jun 07




Posts: 227
Location: GTA, ONTATIO, CANADA

Hello

North America is not built that way.

Thay don't go by the Save Save Save philisophy.

If people do not spend their Economy will come to stand still.

One of main reason of this whole mess is people over-spending than what they can afford.
Whether it comes to Housing or normal day - to - day things.

Here people use a Credit Card as a source of Income.

Only Asians have a Save Save Save philisophy.

Maybe people will now start to change a bit, I would really doubt it.

The government is spending Billions of Dollars so that the Credit keeps flowing. So people here eventually will get access to credit and will be more in debt.

It will not change my friend.


 
Post ID: 139509 10-03-09 15:24:41
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investpro
Senior Desi
Member since: Nov 06




Posts: 1628
Location: carl sagan's universe


Quote:
Originally posted by jinxed

Investpro apparently you need a class in economics 101 - see if you can find some material in your local library.

Dow jones will fall through 4500 - BDI is frozen,housing , umemployment, credit all are frozen - the full wrath of CDO unwinding is yet to happen, which will take down C or BAC or maybe both. GM is days away from bankruptcy and with it will go all the parts suppliers.

Nouriel Roubini and Paul Krugman are celebrated economists and not mere prophets of doom (I am an avid follower of both) - in fact Roubini called the current crash back in 2006

A smart investor goes with the trend - I have made very nice money buying puts and bear spreads. Also currencies and commodities are an excellent play. Your misguided optimism -( read wishful thinking) will only lead the readers on this forum to l0se what little they might have left



Interesting. Actually I am a guest speaker in various unis for their eco 101 classes and also for the MBA programs in supposedly illustrious unis incl. my alma mater Cornell U.

I have met Roubini on a couple of occasions and many other well known economists in my time incl. Milton Friedman.

They are Dadas in their own respect, but in certain circles I am known to be a maven on the Indian economy. I laugh when I think of that, 'cos I know tons of people who are better than me in that field, only thing is that they don't network as much as I do which is probably why I get certain kudos which should rightfully be theirs.

At any rate, it is my belief and that of several pundits that no economy guru really knows what is currently happening and that includes both Roubini and Klugman.


To state a oft repeated dull truism- your trip to believe what you will. If you wish to believe the Dow will crack below 4500, please do so.

My fingers are crossed that this will not come to pass at least not in the near future.

Enjoy!


 
Last edited by: investpro on 18-03-09 10:16:13
Post ID: 140017 18-03-09 10:14:09
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investpro
Senior Desi
Member since: Nov 06




Posts: 1628
Location: carl sagan's universe


Hi Jinxed,
Just as an FYI, I attended Roubini's seminars in 2006 and 2007 and he attended one in the fall of 2007 where I was a speaker, basically to listen to what I had to say on India.

I do not purport to be in the same league as he is, far from it.He is a real Dada and is constantly involved in the study of economics. I am a mere small time potato.

What I wish to suggest is that I do not need a course in eco 101.

Your trip if you think I need one.


 
Post ID: 140020 18-03-09 10:34:29
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jinxed
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Member since: May 05




Posts: 51
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Appreciate your modesty and apologies for my tripping
OK I owe you an explanation for my rather harsh response - my post was an original - but you just copy pasted an aritcle - rather than refuting my post (which you actually did in the later posts) - I just get annoyed by people not having any originality and pasting articles when they might write a couple of lines and just post the link.

I also very much appreciate your dignified response - you made your point without indulging in counter insulting - need to do more of that myself. You also command my respect because of

Ok pleasantries exchanged, now what do you think from a fundamenta/technical standpoint will keep the market from crashing down to mid 4000(next major resistance ) now that it has broken past the very strong 7400.

To me North American consumer is what makes the world economy tick and it has retrenched - which causes unemployment (first in retail and then ripples across to other sectors) - causing further retrenchment - you see the vicious cycle ?

Rajiv,

I agree you need to be frugal, but more than that knowledge will help you ride the tide - you know how to short the market ? If not learn it - study options and look at things like oil trading - thats what will help you keep a steady secondary income even if you lose your job - Knowledge is Profit.


 
Post ID: 140022 18-03-09 11:04:06
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