8/18/2011 - Second US recession imminent, but ultimately depression

“Until last year policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery.” Roubini writes. “Zero policy rates, QE1, QE2, credit easing, fiscal stimulus, ring-fencing, liquidity provision to the tune of trillions of dollars and bailing out banks and financial institutions – all have been tried. But now we have run out of rabbits to reveal.”

A number of economists, investors and financial experts have weighed in on the US debt crisis today, following Friday’s S&P downgrade, warning that economic meltdown is close.


Renowned Economist Nouriel Roubini, who predicted the 2008 crash and has been predicting a double dip recession for some time, noted in the Financial Times today that the recent media driven impression of a short term “recovery” was a “delusion that has been dashed.”


“Even before last week’s panic, the US and other advanced economies were odds-on for a second severe recession.” Roubini writes.
“America’s recent data have been lousy: there has been little job creation, weak growth and flat consumption and manufacturing production. Housing remains depressed. Consumer, business and investor confidence has been falling, and will now fall further.”


The New York University professor, who recently warned of a “perfect storm” of fiscal woe converging on the global economy in 2013, states that he believes avoiding another severe recession is tantamount to “mission impossible”. Source: (1) Infowars


Transferring 28 trillion dollars in Wall street/banker debt to the people off balance sheet, then monetizing debt since early 2009 does not equal a recovery. Just saying you got out of a recession over and over then changing mark to market to reflect whatever price you want doesn’t equal a recovery. Just because Wall street is doing better than it was a year ago doesn’t mean anything if more and more people are not working in reasonably good paying jobs.


Smoke screens and illusions people, that’s all that the “market” is today, most of the activity in the market is computers trading back and forth giving the illusion of activity.


GDP figures misleading

The reported figures of GDP to assess whether or NOT a country is “In Recession” are terribly misleading and flawed! The method was created some 70 years ago and does NOT reflect the realities of an economy today.


Example: In the USA, “consumer spending plus government health care spending is 70% of GDP.”
Next, an awful lot of product “consumed” is produced offshore. (how many of those electronics…clothes, do you think are made in the U.S.?). A dollar of consumer spending does not translate into a dollar of domestic production.


” In fact, the whole way that the BEA presents the GDP statistics points the public debate in the wrong direction. GDP stands for “gross domestic product”— that is, domestic production. But the breakdown of GDP is into expenditures categories—personal consumption expenditures, government consumption expenditures, etc. So we have grown used to thinking of “spending” as “production”—that’s the way it is presented.





We need to move towards presenting GDP in terms of production, rather than spending. We need a shift from the consumer to the producer as our main unit of analysis.” Perhaps Obama can go and tell the more than 17% not working, and the more than record 41,000,000 people collecting food stamps, that the recession is over!


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