Forget about all the talk of recession. According to a number of the world's leading economists, we are now living through the second Great Depression. After a brief respite, the world's economies are set to plummet.
As long ago as 1997, British economist Fred Harrison predicted the current crisis. He places the blame on the prevalence of land and property speculation. The scenario painted in The Fred Harrison Blog is not a pretty one, but is one that must be taken seriously. Governments could fall, unemployment could rise dramatically and a depression could ultimately lead to World War III. Unfortunately, governments are not listening.
David Rosenberg has already declared that the US economy is in a state of depression. Rather than improve, the situation is likely to get worse. Already, the July 2010 statistics show a 27% fall in the sale of real estate in the US - the worst fall ever recorded. Rosenberg believes that there has not been a recovery at all and that the worst is still to come.
Arthur Laffer, well known for the "Laffer Curve" that illustrates that lower tax rates can produce more revenue than higher tax rates, believes that the US will head into full scale depression once the Bush tax cuts expire in 2011. He cites the record and unsustainable levels of debt as being central to the collapse of the great economies of the world.
Other economists have joined the trend, naming the current crisis as The Great Depression II.
There can be little doubt that the policies being followed in the UK and Europe are likely to cause hige increases in unemployment and possibly even deflation. By the same token, the US fiscal rescue package is not being put to use or is being used in ways that will not stimulate the economy or produce jobs.
In the meantime, it seems that we are all aboard a sinking ship that is sinking fast.
Showing posts with label Recession. Show all posts
Showing posts with label Recession. Show all posts
Thursday, 26 August 2010
Monday, 21 January 2008
Recession
Today the international stock markets collectively took quite a dive. Bears dominated the markets. Fears of a US led global recession are gripping the planet! Expectations are running rife of a full blown market recession. Perhaps a major stock market crash!
And all of this because a number of ‘highly intelligent’ investors invested without brains!
While on the subject of the sub-prime crisis, the simple fact is that it should never have happened! It defies logic. Why would anyone invest $1 million to something that is only worth $100,000? The only possible reason is a promise of disproportionate returns. Does anyone remember the dotcom boom – and crash? A simple case of widespread greed as investors chased easy money. If you haven’t seen the John Bird and John Fortune explanation, then click here to see it now. Hilarious but true.
Back to the impending recession.
John Smith is a rep for a large company. His first appointment for the week is with Samantha Froggins. Samantha usually places a substantial order from John. Today the order is for less. Much less.
"I'm being cautious" she says. "I heard that we’re going into recession. I don’t want to be saddled with dead stock. The reports are very worrying. I'm not sure that I've cut enough".
Not all of John's clients have cut back, but there are enough to cause concern.
At 4:00 p.m. John finally arrives at the BMW dealership. Fred is there to meet him. The papers are ready for John’s new 5 series BMW. The commission is substantial, and in anticipation Fred has booked a table at the exclusive La Vie en Rose.
Fred can't believe what he hears next. "Fred, we are moving into a recession. I have had three cancelled orders today and another five were reduced. I'm really sorry, but we'll have to put the car on hold. The Golf will have to do for another year."
Fred is devastated. If ever there was a done deal, this was it. He calls the restaurant and cancels his booking.
Soon La Vie en Rose will be laying-off staff. And so the cycle goes.
For a recession to happen, there have to be participants. No participates - no recession. As they say, markets, and the economy, are driven by sentiment.
Barry
And all of this because a number of ‘highly intelligent’ investors invested without brains!
While on the subject of the sub-prime crisis, the simple fact is that it should never have happened! It defies logic. Why would anyone invest $1 million to something that is only worth $100,000? The only possible reason is a promise of disproportionate returns. Does anyone remember the dotcom boom – and crash? A simple case of widespread greed as investors chased easy money. If you haven’t seen the John Bird and John Fortune explanation, then click here to see it now. Hilarious but true.
Back to the impending recession.
John Smith is a rep for a large company. His first appointment for the week is with Samantha Froggins. Samantha usually places a substantial order from John. Today the order is for less. Much less.
"I'm being cautious" she says. "I heard that we’re going into recession. I don’t want to be saddled with dead stock. The reports are very worrying. I'm not sure that I've cut enough".
Not all of John's clients have cut back, but there are enough to cause concern.
At 4:00 p.m. John finally arrives at the BMW dealership. Fred is there to meet him. The papers are ready for John’s new 5 series BMW. The commission is substantial, and in anticipation Fred has booked a table at the exclusive La Vie en Rose.
Fred can't believe what he hears next. "Fred, we are moving into a recession. I have had three cancelled orders today and another five were reduced. I'm really sorry, but we'll have to put the car on hold. The Golf will have to do for another year."
Fred is devastated. If ever there was a done deal, this was it. He calls the restaurant and cancels his booking.
Soon La Vie en Rose will be laying-off staff. And so the cycle goes.
For a recession to happen, there have to be participants. No participates - no recession. As they say, markets, and the economy, are driven by sentiment.
Barry
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