

The recession may be lifting - nopinsight
http://www.economist.com/world/unitedstates/displayStory.cfm?story_id=13411349&source=hptextfeature

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david927
I think we'll be hearing a lot of this now, and it's my feeling that it's a
sucker's rally. Every single one of those who correctly called the financial
crisis are quite clear: it's not over by a long shot. The fundamentals have to
return, and to do that we have to pay off debt and start having savings again,
which means not spending (i.e. liquidity trap), which means that we'll go
through a period of undervaluation, both in terms of assets and labor, before
the smoke clears.

There's no happy six month reversal here; just a dead cat bounce. And those
who are selling you that it's the end of the depression are those who sold you
the whole Ponzi mess in the first place. Shame on them.

~~~
9oliYQjP
I'm afraid you're correct. I wish people would just pick up and read a history
book. The Great Depression didn't start overnight. People have this
misconception that things just got really sh*tty one day after the stock
market crashed. Reality proved to be different. Things got a little better,
then a little more worse. Rinsed and repeated until the Dow Jones lost 90% of
its peak value. Couple this with a severe drought, the U.S. calling in its WWI
loans from Europe, and a couple of other protectionist decisions, and you had
yourself a depression.

Wishful thinking got us into this mess. And right now, we may as well view the
stock market like a slot machine. It'll pay out a little, drag people in, and
then take a lot of their money.

The other problem is that when lots of people start focussing on aggressively
paying off their debt in bad times, it actually ends up temporarily hurting
the economy. This is precisely what happened before the Great Depression. Why?
Because they stop spending the money, and instead give money to big banks
which do nothing but hoard it because the banks have lost paper money on the
stock market. As the banks look to replenish their stock piles they largely
refuse to loan the money out again. In a way, it's like chemo therapy in that
the treatment for people's financial ailments might actually be the thing that
kills them. But eventually the huge swaths of cash that the banks build up
from debt repayments will come back into the market and there'll be a surge in
investment activity, but that won't happen until the banks themselves are
comfortable on their own feet, which is far from the case right now.

~~~
9oliYQjP
Oh, and here's the source for my pessimism. I've been following this website
for a while now. The guy that runs it is a computer hacker to boot! I'm a big
fan of his analytical skills and refusal to make predictions, just provide the
numbers.

<http://dshort.com/>

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adamhowell
"Keith Kelley, a Las Vegas estate agent, has an investor interested in
offering about $80,000 for a foreclosed, four-unit apartment building which,
fully let, could bring in over $25,000 a year in gross rent."

Wow, when reading stuff like, I sometimes wonder if I'm not wasting time
putting all my efforts into web apps, etc. Find a few deals like this, hire
someone to maintain them, profit.

Of course, I'd probably hate every second of it, but still.

~~~
HeyLaughingBoy
Perhaps you are :-)

A friend of mine likes to tell the story of him discussing a technology idea
with a business-owner friend of his. The reaction of the businesss guy was
"you know, I see all these tech guys building these grand online empires that
never make them a dime. Meanwhile, Town Hall has a contract out for
$100,000/year to vacuum the floors and scrub toilets and no one is bidding on
it!" Just something to think about :-)

~~~
falsestprophet
How can one find these contracts?

~~~
adbachman
Most governments (city, county, state, and even national) are required to post
all requests for proposals (RFPs) publicly and consider all proposals they
receive. As with any business or political process, it helps if you know
people.

<http://lmgtfy.com/?q=city+RFPs%7Cstate+RFPs%7Cfederal+RFPs>

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patrickg-zill
Dead cat bounce, in my opinion. How many jobs have been lost each month for
the past 3 months? About the same number each time.

~~~
ojbyrne
Unemployment is a lagging indicator.

~~~
nostrademons
People always say that, but it applies only in an ordinary, garden-variety
recession. In the great depression, payrolls started dropping around May of
1930, roughly 8 months after the financial contagion began (where are we now?
7 months after the financial contagion began). Then they _kept dropping_ for
about 2 years. Each time someone was laid off, they spent less, which meant
some other business took in less revenue, which meant they had to lay off
people, who in turn spent less...

It's too soon to tell, but I'd bet this recession is a lot more like the Great
Depression than the 91 or 01 recessions, or even the 80-82 and 73-75
recessions. 91 and 01 were fueled by the bursting of economic bubbles in
specific sectors of the economy (S&L and tech, respectively). 73-75 was an
exogenous supply-side shock (oil crisis), and 80-82 was because of monetary
policy (Volcker lifting rates to squeeze out inflation). Both 29-32 and 08-??
came about because the consumer is _tapped out_ \- they've taken on more debt
than they can possibly service, so there needs to be a period of deflation
while those debts are unwound and prices readjust.

~~~
ojbyrne
As you said, it's too soon to tell. I think a lot of consumers (me included)
aren't tapped out - they've been furiously saving money since September or
October, and are feeling the urge to spend. Admittedly I live in a government
town so we're somewhat sheltered but the lineups I see in stores (which have
cut back on staff) are getting pretty long and annoying.

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tokenadult
Another link just submitted to HN says that the recession will last for a long
time. Somebody is wrong. My bet is that the recession will last longer than
indicated by this Economist article, based on other trends that The Economist
(a good magazine, which I like a lot and subscribe to) has missed in the last
few years.

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TweedHeads
The stocks are also rising. AAPL went from low 80s in march to 115 today.
Those who were waiting for the right time to buy may have missed the boat.

I always thought the DOW hitting 6000 was the lowest it would get without
causing world collapse.

~~~
dschobel
The problem with trying to pick the bottom of a slide is that you never know
until you're many months if not years out of it. It could just be a bear
bounce. I certainly wouldn't start proclaiming that people have missed the
boat on the value.

Either way, the bottom line is that there's historic value out there today and
it just depends on your level of optimism whether America and the civilized
world in general (and their economies) will be around for another 100 years.

So unless you're glenn beck, there's cause of optimism.

~~~
electromagnetic
If you're looking for a long term investment, then I don't think anyone's
missed the boat. In the long run, buying in a few months late won't affect you
much right now. IMO Apple is pretty much guaranteed to double in value when
the economy returns to normal, so if I had a spare $20,000 I wouldn't mind
putting it into the company, if they pulled off another iPod effect on their
stock then all the better.

