View Full Version : "Recession"?
From 'The Daily Economist'
http://www.henrythornton.com/diary.html
It is time to report the emerging view that the global recession may not be as bad as feared in the wake of the terrorist attacks. As one example, The New York Times has just run an interview with Gail D. Fosler, chief economist at the Conference Board, a business-sponsored research group in New York. Fosler argues that the economy was beginning to rebound before the attacks and that "people are out and they're spending money." Retail spending is likely to be surprisingly strong in the forth quarter and business spending and investment did not decline faster in the fourth quarter than in the third quarter. "This may turn out to be, in terms of absolute duration, one of the shorter recessions, and it may turn out to be one of the mildest. I'm old enough to remember when things were really, really bad. Back in 1981- 82, we had 10 percent unemployment. We haven't got to there."
The mooted fiscal stimulus package would have hastened recovery but the economy will get there on its own in slower time. And on the possibility that interest rates will soon be rising, Fosler said: "The Fed could take rates from 1.75 percent to 2.5 percent, I would think around the middle of 2002, the third quarter, but then I think the Fed could hold rates constant for quite a while. I view this recovery as rather sort of flattish - we will move back to positive growth, but a 1 or 2 percent growth range for nine months or so. So while the Fed might redress its exceptionally low rates, the notion they will go into a tightening phase is just misguided."
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What I believe has been happening is that a lot of companies were already in trouble before the WTC attack. With the attacks came a convenient scapegoat for everyone to hang their past failures on.
Now that it might not be so bad, they are going to pat themselves on the back for pulling their companies out of the poop.
Sales people have this act down to an art form. If sales are bad, it is the economy and they should not have to lose out at bonus time. If sales are good it is their skill at selling that did it, and they should have a higher bonus.
God bless U.S. economists, with their global recessions and US recoveries.
Who else can attribute the collapse of the Enron Corporation (expected to be bigger than the entire Savings & Loans scandals of the 80s), the tech-wreck, and the major economies of Argentina, Russia, and Japan, all to 'terrorism'.
Last time I checked an economic recovery was not spending and investment decreasing at a slower rate than the previous quarter, but actually involved some measurable growth of economic activity. The fact that unemployment hasn't reached 10% so the economy is still robust is a rather dubious argument.
And wow, consumer spending increasing in the December quarter. Who could have possibly foreseen that.
I have never read anything from an economist promising things are going to worse next year compared to the present, even my elementary economic study recognises the propaganda.
The Fed is literally giving away money to borrowers in the US, to protect fragile market confidence because weak confidence now would cripple economic growth, and accurately simulate ideal conditions for a depression.
The result of loose monetary policy? The U.S. dollar remains artificially high, Americans keep building up their already record levels of debt, and the economy gets some breathing space.
Eventually though everybody has to pay off their debts.
London Dave
26 Dec 2001, 20:07
This ones worth a read, sums it up pretty well me thinks...
http://globalarchive.ft.com/globalarchive/article.html?id=011222000940&query=barry+riley#docAnchor011222000940
and personally, things are gonna get a bit worse I reckon
Bloodstained Angel
27 Dec 2001, 07:10
With Crude Oil at less than 20 USD a barrel - there is absolutely no way in the world we will be having a prolonged recession.
Don't forget it was a big surge in oil prices during the last quarter of 2000 that originally started to slow down the US economy and which in turn started all these current difficulties.
Since September 11 the price of oil has gone from 32US a barrel to just below 18US a barrel.
Cheap fuel, more than any other factor, is what drives economic prosperity in the OECD. If fuel is cheap (which it is atm) then that releives inflationary pressure on the whole range of prices and costs.
If prices and costs are kept down, then it becomes an easier business environment for all concerned, so more money is taken into profit instead of getting swallowed up by costs.
So I reckon while the price of fuel remians low - we ain't gonna have a recession - no way.
cheers
Originally posted by London Dave
This ones worth a read, sums it up pretty well me thinks...
http://globalarchive.ft.com/globalarchive/article.html?id=011222000940&query=barry+riley#docAnchor011222000940
and personally, things are gonna get a bit worse I reckon
You're in the best place LD Britain at the moment is better placed than most to avoid the worst of any worldwide recession that's one of the reasons why all the asylum seekers are trying to come here rather than France/Germany etc.
God Bless low levels of Goverenment social spending:D
Originally posted by Bluey
Sales people have this act down to an art form. If sales are bad, it is the economy and they should not have to lose out at bonus time. If sales are good it is their skill at selling that did it, and they should have a higher bonus.
Exactly who are the 'sales people' ?
A nice quote I often use is "It is the purpose of every person in a Company to maintain and increase customers', and it is very true. So can i assume the sales people are every person in the Company?
Whilst marketing and sales skills are important these people are usually the first to be fired in a downturn as they are expensive overheads. The basis of any company operation needs to be a rolling five year plan. It has to roll because of external variables and be reviewed at least every six months and ammended.
It would have been impossible to preditc a catastrophe like Sept11 as would earthquakes and the bubonic plague. There is no doubt that the US economy was on a downward slope before Sept 11th and that the Dow Jones had already effected it. The reality is that Sept 11 made things look worse. The other reality is that if another disaster occurrs the crash will deepen. And it almost did. If the detonator on that guys shoes had worked then another plane disaster would have shook the world markets.
Inevitably we will recognise that it is not a war against terrorism but a religious problem that can only be won by taking out the religious leaders that spawn the likes of Bin Laden, and whilst that is not the focus then more terrorism from other directions than Al Qaida will occur and cause recessionary dips.
Back to the Company: If your product meets market needs, is of high quality and competitively priced it will generally sel to the market available. Problems in these areas are quack R&D guys (very common), a beligerant workforce and, mostly, poor top management who haven't got a clue about what's going on.
In US their overweight dollar loses them orders internationally but they win on the hi tech stakes where software exports abound and are a virtually invisible export by country statistics. I believe it is this cash inflow that is a major responsibility of the high US Dollar. I agree with the effect that high oil prices have on the world economy. The high price of crude last year was a political move by the Arabs to support Iraq. It backfired and now they are cutting production to boost prices. But why does the UN allow a price fixing cartel. It is illegal in most countries. I could go to jail if I just had a meeting with a competitor and discussed fixing prices! It's a strange world!
So back to the 'sales guy'. 'IF' they are on a bonus scheme it would be performance related (commission etc). No orders no bonus. If their skills are better than the next man they get a higher salary or the competition poaches them. Law of the jungle.
Porthos
30 Dec 2001, 15:21
Why does the UN allow activity that goes directly against its charter.....ie. the US invasion of Afghanistan? And if you think price fixing isn't happening in Australia now, you're very naive. Look at, for example, Qantas and Ansett........high priced tickets for a long time, then Virgin come in, and suddenly Qantas can afford to match them....is anyone suing Qantas and Ansett for price fixing?
No, because people charge what the market can afford. So if people decide to raise or lower the rate of oil production, which are issues over which the UN has zero jurisdiction, then thats whats going to happen. As you said in that case, it backfired in any case.
War against religion? Yes, its all islam's fault I suppose. I mean, there's no possibility that the organizations aiding the US have a predominant religious similarity, is there.
Originally posted by Porthos
War against religion? Yes, its all islam's fault I suppose. I mean, there's no possibility that the organizations aiding the US have a predominant religious similarity, is there.
I think you need to explain what you mean by "predominant religious similarity".
As I see it the western world has thrown off religion as was and has adopted a materialistic stance where values fly in the face of Islam. Inevitably the result is a widening divide between the material wealth of Islam versus the rest. In fact you can add Chinese, Japanese and Indian religions to those of the western world where the people have chosen the material route.
Whenever a huge divide occurs between wealth levels then extremism is rife, but in this case Islam itself is being challenged from within with many embracing wstern materialism. Look at Singapore, Indonesia and Pakistan for clear proof of this. Where does that leave many of the Islamic religious leaders who have weilded such power for centuries? They try to get things back the way they were by whatever route possible ie extremism.
Religion has always been extremely powerful as it gives a person 'a reason for living or dying'. Northen Irelands long sectarian battles would have been history a long time ago if it was not for the religios extremists on both sides.