It was the Best of Times, It was the Worst of Times

[TotallyOz]

Is the recession over? Are we headed up? Or, is this just a pause in the problems? Alan Greenspan was in NBC's Meet the Press and signaled that a possible double digit dip may be in the future. Your thoughts?

Bloomberg News

Former Federal Reserve chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a "quasi-recession," and the economy might contract again if home prices decline.

"We're in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession," Greenspan said on NBC's Meet the Press.

Asked if another economic contraction, a so-called double dip, was possible, Greenspan said, "It is possible if home prices go down. Home prices, as best we can judge, have really flattened out in the last year."

Slowing economic growth, and a decline in housing activity following the expiration of a government tax credit, have raised fears that the economy could return to a recession before completing its recovery from the worst downturn since the 1930s.

The former U.S. central bank chairman said that most economists expect "a small dip" in home prices.

The National Association of Realtors reported that the pace of home sales fell in June for a second month.

Homes are selling at an annual rate of 5.37 million, and the group's chief economist Lawrence Yun said transactions will be "very low" in coming months.

"If home prices stay stable, then I think we will skirt the worst of the housing problem," Greenspan said. "But right under this current price level, mainly 5, 7 or 8 percent below, is a very large block of mortgages, which are underwater, so to speak, or could be underwater. And that would induce a major increase in foreclosures, foreclosures would feed on the weakness in prices, and it would create a problem."

Home prices in 20 cities rose by 4.6% in May, according to a report from S&P/Case-Shiller last week. Because of the index's lag in reporting, the extent to which home prices may slacken in June and July is not yet determined.

Greenspan's successor, Ben Bernanke, told Congress last month that the economic outlook is "unusually uncertain." Bernanke and his colleagues on the Federal Open Market Committee will meet Aug. 10 in Washington.

Last week, the Commerce Department reported that the recovery slowed in the second quarter this year. The economy grew at a 2.4% pace, following growth of 3.7% in the first quarter.

http://www.usatoday.com/money/economy/2010-08-02-greenspan02_ST_N.htm

[seattlebottom]

Greenspan was largely the architect of what has happened so I don't really think he's the first person I would turn to for a prognostication in this area. I work in an area largely tied to economics and I began to see problems back in 2006. Many of the people I am in contact with are cautiously optimistic about their finances but many more see no light at the end of the tunnel.

[TampaYankee]

Greenspan was largely the architect of what has happened so I don't really think he's the first person I would turn to for a prognostication in this area.

Maybe so, but his past errors were in, in part, being too optimistic about the nature of traders not to fuck the Golden Goose for short-term gain. He really didn't buy deeply enough in his own irrational exuberance warnings.

However, his latest comments blow in the other direction of hard times if not doom and gloom, depending on what happens with taxes and jobs spending and deficit reduction. Not only that but his trend is in line with other economists including Mark Zandi, Simon Johnson and Paul Krugman, not generally of the same stripe of thought.

IMO it really doesn't matter whether it is a double dip recession or not. If the recovery remains flat or tepid then to paraphrase Bette Davis in All About Eve -- fasten your seatbelts it's going to be a bumpy ride. (Japan just went through a lost decade for failing to address their economic and banking problems years ago.)

So far, Congressional spending for jobs recovery has stalled. Unless it turns around strongly after the election I see a weak economy stretching out for the better part of a decade. What many fail to acknowledge is that 70% of our GDP is driven by domestic demand. With 15% - 17% real unemployment, substantial demand is unlikely to increase enough to bring back a strong economy. Likely we will limp along with gradual improvement for some years. Of course that is very bad news for the deficit as that gets lowered only by government tax receipts. People who don't have a job don't pay taxes.

I hope I am proven wrong.

[JKane]

Greenspan is getting up there with Joe Lieberman and Andy Rooney on my list of guys I wish would just die already.

I am also worried about the strength of the economy and would like to avoid any more colossally stupid moves in my retirement account, but Greenspan's the last place I'd turn to for advice. My recollection is he missed two major bubbles that greatly impacted our economy (tech bubble being the first).

If fact, anybody relying on any kind of Ayn Rand-ian 'invisible hand' -- i.e. the only problem is too much regulation -- mode of 'thought' is immediately discounted as a imbecile interested only in their own short-term best interest in my book. Seriously, how many more times can those fucktards be proven wrong before people stop giving them microphones (or positions)?

[BiBottomBoy]

The problem is the EU banks haven't cleaned up their act and still have a ton of toxic loans - some from member countries - on their hands and their banking system is so tied into ours that when they start failing it will hit us even though we've cleaned up our act.

[TampaYankee]

The problem is the EU banks haven't cleaned up their act and still have a ton of toxic loans - some from member countries - on their hands and their banking system is so tied into ours that when they start failing it will hit us even though we've cleaned up our act.

Even though not widely discussed anymore, our banks are still sitting on their mountain of bad paper too. Paulson was supposed to buy up that bad paper with TARP. (He did buy up much of Fannie and Freddie bad paper.) Instead he bought shares in the banks and loaned a little of it to them. The loans have been paid back but we still own lots of stock in those banks sitting on all that bad paper.

The fact is that we are not that much, if somewhat, better off than 18 months ago. We just think we are and that confidence is 90% of the game, however fragile it may be.

[BiBottomBoy]

Yeah, but in much of Europe they haven't even invested in the banks. Societe General has a lot of Greek and Spanish paper and Credit Lyonais has a ton of Greek and Portuguese paper.

It's not going to be pretty.

[Lucky]

I tried to give JKane's post a + sign, but was told that I had reached my quota of plus signs for the day. I take it that the function does not work, so:

JKane I liked your post!

[BiBottomBoy]

Thank you for pointing out the existence of the plus signs!

[JKane]

Thank you for pointing out the existence of the plus signs!

Yeah, I kinda wish they worked! (And the minus signs.)

[BiBottomBoy]

Good point. I just tried it and even though I've never used them before am up to my quota.

[TampaYankee]

I tried to give JKane's post a + sign, but was told that I had reached my quota of plus signs for the day. I take it that the function does not work, so:

JKane I liked your post!

Frankly, I didn't know we had the capability to post a plus (or minus).

More importantly, I would counsel there is no need to rate member posts as each of us knows what we think of any given post. If you are moved to post a positive comment then please do it.

Distilling conbributors to a count of +'s and -'s won't help the atmosphere around here. I make this observation from history at HooBoy's where for a period of time there was a capability for members to rate each other. It resulted in a terrible flame war among members that caused all sorts of havoc. The capability was soon removed with prejudice. We do not need to repeat history here.

+s and -s could be a slippery slope. If you like somebody's post tell them. One thing to remember on a message board like this one is that there is no need to post everything that goes on in one's head. That eventually contributes to a decline of civility. FWIW

[BiBottomBoy]

It could be like Facebook where there is a "like" button, but no "unlike" button.

[MsGuy]

Frankly, I didn't know we has the capability to post a plus (or minus).

Maybe it's not actually enabled. I just tried to + this post & got the over quota messege.

If you like somebody's post tell them.

Not only more civilized but better suited to a board like this one. It's not like we have a vast universe of active posters who need some automated crowd think mechanism to judge the reliability each other's posts.

[BiBottomBoy]

Like.

Maybe it's not actually enabled. I just tried to + this post & got the over quota messege.

Not only more civilized but better suited to a board like this one. It's not like we have a vast universe of active posters who need some automated crowd think mechanism to judge the reliability each other's posts.

[MsGuy]

Like.

Perfect exemplar of TY's proposition: I get my ego stroked & BBB gets a resevoir of warm feelings to draw on in the future.

----

Or maybe this post (mine) supports TY's other admonition :

One thing to remember on a message board like this one is that there is no need to post everything that goes on in one's head.

[BiBottomBoy]

Is it really your ego that wants to be stroked?