“Reinhart and Rogoff observe that following systemic banking crises, the duration of housing price declines has averaged roughly six years, while the downturn in equity prices has averaged about 3.4 years. On average, unemployment rises for almost 5 years. If we mark the beginning of this crisis in early 2008 with the collapse of Bear Stearns, it seems rather hopeful to view the March 2009 market low as a durable “V” bottom for the stock market, and to expect a sustained economic expansion to happily pick up where last year’s massive dose of “stimulus” spending now trails off. The average adjustment periods following major credit strains would place a stock market low closer to mid-2011, a peak in unemployment near the end of 2012 and a trough in housing perhaps by 2014. Given currently elevated equity valuations, widening credit spreads, deteriorating market internals, and the rapidly increasing risk of fresh economic weakness, there is little in the current data to rule out these extended time frames.”
U.S. HOUSING PRICES STILL MORE EXPENSIVE THAN ANY POINT IN LAST 120 YEARS | PRAGMATIC CAPITALISM
I just referenced this, but the graph is too pretty to ignore.
Fed's Bernanke doesn't see double-dip recession
Given that he didn’t see the first recession, is this good news or bad news?
Ok, I had nothing to write about today. G.19 showed total consumer credit expansion, but revolving credit contracted at a rapid clip.
Comments like this from Bernanke are completely meaningless. I don’t know exactly where the line is but there comes a certain level of public power where you just can’t say that bad things are likely because it will make them more likely, a self-fulfilling prophecy. Bernanke is absolutely on the side of the line where this applies. This is why the videos of public figures in major political positions from 2006-2008 saying everything will be ok aren’t as interesting as people make them out to be. So Hank Paulson saying we’re going to be ok: he has to. Ben Stein saying everything is fine: go back to being an actor because this economist thing isn’t working out. Tim Geithner or Ben Bernanke says a double-dip hasn’t started yet but is likely: stock market crash.
“Dear Chief Secretary, I’m afraid to tell you there’s no money left.”
“Everybody thinks rising home prices are good, but rising property prices may make many of us unnecessarily poorer by making it harder for future buyers and renters to pay the bills. I wonder if the poor are hurt most by a policy which artificially supports housing prices? If true, then the Fed and the Treasury are taking dramatic action against the most vulnerable. The affordable housing people arguing in favor of foreclosure prevention are arguing against their own goals.”
Spanish Whispers: The leader of the opposition party in Spain implies it’s the next Greece (click through for a more thorough explanation).
“At this point, I think we’re in Wile E. Coyote mode. Nobody look down or all of Europe falls apart.”
Crazy Nut Job does such a great job summarizing the economic turmoil that I don’t feel like I need to read as many other sources as I used to (which is lucky because my focus has shifted). And he says he’s being lazy. If you want to keep up with the global economy, I think it’s a great way to do so.
