The verdict is in. The variables that lead to a recession are in motion. The hours of employees in the durable goods industries have shrank since July of 2010. Likewise, the number of people working in manufacturing has been declining since then. These are among the first indicators of a coming recession. There are others and I will keep you posted.
One thing is likely. Once corporate profits drop, the economy will sink into recession relatively quickly. In the prediction that I made in September of 2006, I figured the recession wouldn't hit until late in 2007 or early 2008. That's because the longer the boom, even one as weak as the United States suffered under President Bush and the Republican congress, the longer the lag period that leads us into recession.
If the variables continue to unfold, all of which are provided in my book, The Rigged Game: Corporate America and a People Betrayed, then the lag period should be short. Most likely the recession will unfold rapidly. So if corporate profits drop in this quarter, we should be in recession sometime in 2011. But it all depends of when corporate profits drop.
Showing posts with label recession. Show all posts
Showing posts with label recession. Show all posts
Monday, October 18, 2010
Saturday, May 2, 2009
Hope and the Obama Scheme
Every economic downturn has its brief moments of glory; those times on the downsize when new government economic data is released that shows something positive. And each kernal of good news in the midst of unmitigated disaster is treated by the government and the news media as a golden nugget of opportunity to support the conservative and liberal economic conviction that the calamity is caused by mass depression among the populace. And so members of the Obama administration and their sychophants in the news media have touted a few nuggets of gold amidst a mile high heap of economic cow dung and are now telling us good times are right around the corner. They're figuring the absolute cure for the recession is a golden nugget of bullshit.
It may take a couple of years, but as the next election cycle approaches, Herr Obama, the master of the silver tongue of hope, will come to the conclusion that his cure for mass distemper will have relieved the unemployed of their desperation for life's little pleasure (like jobs); but his cure will likely have resulted in rising unemployment and a tendency among the underlying population to blame the president for the economic madness that has scuttled their hopes and dreams. It's possible the economy will come out of this funk, but if it does, the unemployment rate will remain stubbornly high. So whatever he outcome he faces two years from now , Obama will have no choice but to decide to change course in order to become reelectable.
He'll need to figure out that being the next Herbert Hoover isn't helping, that his remedy of hope for hopelessness is stupid, so he'll mosey over to the political left, just a little, but not enough to help with his re-election campaign. At some point, he'll need to become the next Roosevelt, but the odds are when he decides to become a great president, rather than hover just above George W. Bush on the all time lists, he'll be too little and too late.
That's when he'll discover that conveying to the mass of citizens a nugget of hope is not a cure for a recession.
It may take a couple of years, but as the next election cycle approaches, Herr Obama, the master of the silver tongue of hope, will come to the conclusion that his cure for mass distemper will have relieved the unemployed of their desperation for life's little pleasure (like jobs); but his cure will likely have resulted in rising unemployment and a tendency among the underlying population to blame the president for the economic madness that has scuttled their hopes and dreams. It's possible the economy will come out of this funk, but if it does, the unemployment rate will remain stubbornly high. So whatever he outcome he faces two years from now , Obama will have no choice but to decide to change course in order to become reelectable.
He'll need to figure out that being the next Herbert Hoover isn't helping, that his remedy of hope for hopelessness is stupid, so he'll mosey over to the political left, just a little, but not enough to help with his re-election campaign. At some point, he'll need to become the next Roosevelt, but the odds are when he decides to become a great president, rather than hover just above George W. Bush on the all time lists, he'll be too little and too late.
That's when he'll discover that conveying to the mass of citizens a nugget of hope is not a cure for a recession.
Saturday, January 17, 2009
Another Economic Forecast reached
Last week, the Associated Press reported that average home mortgage rates had dipped to 4.96 percent. In September, 2007, I forecast that home mortgage interest rates would drop to less than five percent during our current recession, which I also accurately forecast.
In that same memorandum, I also forecast "that it was possible home mortgage rates could possibly drop to less than four percent."
People scoffed at me for suggesting such nonsense. In September 2006, when I predicted that a recession would occur sometime between the fall of 2007 and the summer of 2008, and that it would be "the worst since 1981, and possibly since the Great Depression," even long time friends laughed at me. Now I'm doing the laughing.
In that same memorandum, I also forecast "that it was possible home mortgage rates could possibly drop to less than four percent."
People scoffed at me for suggesting such nonsense. In September 2006, when I predicted that a recession would occur sometime between the fall of 2007 and the summer of 2008, and that it would be "the worst since 1981, and possibly since the Great Depression," even long time friends laughed at me. Now I'm doing the laughing.
Tuesday, November 11, 2008
The Economy Will Flirt or Go into Deflation
The U.S. economy should begin flirting with deflation soon, something predictable as far back as 2001 when the economy last brushed up against it. I also predicted its coming over two years ago, based on my studies that became my book, The Rigged Game.
Deflation is an overall decline in prices; a widespread drop in prices reduces profit margins. This condition triggers additional layoffs and other cutbacks than would otherwise be the case in an economy dominated by publicly traded limited liability corporations, jsut like the U.S. economy.
Most CEO’s know little as to how their companies produce goods and services. Let’s face it. It’s difficult for a person to know what’s going on if they’re the CEO of a multi-national corporation manufacturing airplane parts when they just transferred over from Walmart or some other unrelated corporation; and even if they've been with the same company for years and years, they most likely know little of what is going on in their factories and stores; or how their products are produced; and that is precisely why rising profits, dividends and share prices are primarily the sole determinate of the effectiveness of corporate leaders.
When business plummets due to a recession, CEO’s have no option but to reduce costs, because that's all they know how to do; and those cutbacks include employment, wages, salaries, benefits and business-to-business transactions. But then when prices drop on top of that, companies are more likely to experience losses as profit margins on their products narrow or are eliminated. At that point there is no choice; it's cut, cut, cut.
While deflation is good for citizens who have jobs, since it enhances their spending power, it increases the numbers of the unemployed, making the recession worse as more and more citizens are thrown out of work. Deflation can turn a recession into a Great Depression.
One final note: Deflation or even flirting with it signals that the re-distribution of income and wealth from working people to the affluent since Ronald Reagan was president has gone too far, inasmuch as it has choked off the demand for goods and services. That's why the mass of prices are likely to be going down in a deflationary spiral. That condition is precisely what the New Dealers figured out when they took office in 1933. And that's what they sought to reverse. They did it quickly and successfully by re-distributing income back to working people.
Deflation is an overall decline in prices; a widespread drop in prices reduces profit margins. This condition triggers additional layoffs and other cutbacks than would otherwise be the case in an economy dominated by publicly traded limited liability corporations, jsut like the U.S. economy.
Most CEO’s know little as to how their companies produce goods and services. Let’s face it. It’s difficult for a person to know what’s going on if they’re the CEO of a multi-national corporation manufacturing airplane parts when they just transferred over from Walmart or some other unrelated corporation; and even if they've been with the same company for years and years, they most likely know little of what is going on in their factories and stores; or how their products are produced; and that is precisely why rising profits, dividends and share prices are primarily the sole determinate of the effectiveness of corporate leaders.
When business plummets due to a recession, CEO’s have no option but to reduce costs, because that's all they know how to do; and those cutbacks include employment, wages, salaries, benefits and business-to-business transactions. But then when prices drop on top of that, companies are more likely to experience losses as profit margins on their products narrow or are eliminated. At that point there is no choice; it's cut, cut, cut.
While deflation is good for citizens who have jobs, since it enhances their spending power, it increases the numbers of the unemployed, making the recession worse as more and more citizens are thrown out of work. Deflation can turn a recession into a Great Depression.
One final note: Deflation or even flirting with it signals that the re-distribution of income and wealth from working people to the affluent since Ronald Reagan was president has gone too far, inasmuch as it has choked off the demand for goods and services. That's why the mass of prices are likely to be going down in a deflationary spiral. That condition is precisely what the New Dealers figured out when they took office in 1933. And that's what they sought to reverse. They did it quickly and successfully by re-distributing income back to working people.
Friday, October 10, 2008
The Rigged Game: Corporate America and a People Betrayed
Based on my book The Rigged Game: Corporate America and a People Betrayed, I made several predictions in September 2007. One of them was that a recession would occur sometime between the autumn of 2007 and the summer of 2008. That prediction has obviously come true, but it wasn't that big of a deal when you consider I made that prediction in the autumn of 2006. All recessions follow the same patterns as outlined in my book, and it was obvious that we were on our way to another one two years ago.
I wrote several articles about the coming recession along with my predictions, and not even the good liberals at http://www.alternet.org/, http://www.commondreams.org/, or Amy Goodman's website were willing to publish it.
Now here is where things become more interesting. I predicted this recession would be at least as bad as the downturn of 1981-82 based on the horrible job creation machine under the Republican Bush administration, the decline of family income, the continued transfer of income and wealth from working people to the rich, and the likely bursting of the housing market. The recession of the early eighties was the worst since the Great Depression. This current crisis will beat it thanks to Republican Party economics.
In September 2007, a conservative wealth manager asked me to write some of my predictions. I said we were heading into a recession; the Dow Jones could drop below 8,000 and possibly even 6,000. The Dow fell below 8000 today, October 10, 2008.
I also wrote the economy will flirt with, and possibly fall into deflation. Inflation is cooling, signaling the coming of deflation. If the economy moves into it, the result will be the worst business downturn since the Great Depression, and possibly as bad as parts of that.
By the way, in September 2007, I predicted the unemployment rate would rise to between six and twelve percent. We hit 6.1 percent two months ago.
One final note; this is a Republican created recession. It has been brought about the work of its elites to transfer more and more income and wealth from working people throughout the world to their base, "the have and the have mores." Their proposals to fix their problem are foolish.
Right now there are crack head intellectuals working for the Republican Party trying to place the blame for the housing meltdown on a small, poverty stricken community organizing group called ACORN. Barack Obama has tenuous and distant ties to that organization. So obviously the current recession has been caused by Obama and ACORN according to these intellectual crack heads of the Republican Party.
I wrote several articles about the coming recession along with my predictions, and not even the good liberals at http://www.alternet.org/, http://www.commondreams.org/, or Amy Goodman's website were willing to publish it.
Now here is where things become more interesting. I predicted this recession would be at least as bad as the downturn of 1981-82 based on the horrible job creation machine under the Republican Bush administration, the decline of family income, the continued transfer of income and wealth from working people to the rich, and the likely bursting of the housing market. The recession of the early eighties was the worst since the Great Depression. This current crisis will beat it thanks to Republican Party economics.
In September 2007, a conservative wealth manager asked me to write some of my predictions. I said we were heading into a recession; the Dow Jones could drop below 8,000 and possibly even 6,000. The Dow fell below 8000 today, October 10, 2008.
I also wrote the economy will flirt with, and possibly fall into deflation. Inflation is cooling, signaling the coming of deflation. If the economy moves into it, the result will be the worst business downturn since the Great Depression, and possibly as bad as parts of that.
By the way, in September 2007, I predicted the unemployment rate would rise to between six and twelve percent. We hit 6.1 percent two months ago.
One final note; this is a Republican created recession. It has been brought about the work of its elites to transfer more and more income and wealth from working people throughout the world to their base, "the have and the have mores." Their proposals to fix their problem are foolish.
Right now there are crack head intellectuals working for the Republican Party trying to place the blame for the housing meltdown on a small, poverty stricken community organizing group called ACORN. Barack Obama has tenuous and distant ties to that organization. So obviously the current recession has been caused by Obama and ACORN according to these intellectual crack heads of the Republican Party.
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