Is the US in a Recession?
Six leading US economists take on this question in the NYT, and it doesn’t sound good:
 http://www.nytimes.com/2007/12/16/opinion/16recession.html
Six leading US economists take on this question in the NYT, and it doesn’t sound good:
 http://www.nytimes.com/2007/12/16/opinion/16recession.html
Negative Equity, Bank losses and Credit Raters
Krugman a makes a few important points on the state of the sub-prime mess and for me it is the straw that breaks the recessionary camels back. Underneath all the wealth of the US economy was a who lot of seemingly unsecured and bad debt. Not just sub-prime, but just regular prime as well. I guess as Krugman points out, as housing prices continue their retreat, how much negative equity will be created and how much does this translate into further losses, bankruptcies, bad debt write-offs and the rest of it. It would be an interesting curve to follow along its pathway.
The question is to what extent will this have one consumption, from both a consumer and business standpoint, and all the wonderful dynamics sustained declining consumption brings along for the ride. On the upside there is a devaluing American dollar, but the American export market is rather small compared to its entire economy.
I guess the one of the notions that sticks out in my mind centers on an economy that fails to produce the types of jobs that can sustain effective demand, is the new adjustment to the model debt financed effective demand. I am all for debt as it has been one of the successful pillars that has upheld and lubricated important components within the functioning of modern economies, but how about some notion of regulation within these constructs and ultimately realities of everyday life. This economic transitiioning is not about bad credit, over spending, bond raters with only triple A stamps, liquidity shortages and the rest of the nexus that is twisting away south of the border. It is about inequity and a failure of the economic system to provide avenues to a socially optimal division of wealth generation. It is about 20 years of anti-union practices, it is about racism, it is about corporate corruption, it is about inadequate social spending, it is about inadequate public institutions and infrastucture, and finally it is about a misguided neo-conservatism, war, destruction and greed. It is about what our neighbour south of the border has become. It is about the economic appendage, that we have become part of and what all this will mean for us.
Oops, is that ranting, I am not sure!
krugman link
http://www.nytimes.com/2007/12/14/opinion/14krugman.html?_r=1&oref=slogin