Thursday, October 27, 2011
WASHINGTON (Reuters) - Risks are rising that a moribund job market and potentially steep drop in inflation could push the United States into a downward spiral of falling wages and prices. That nightmare scenario of deflation might seem remote considering a recent rebound in growth, and the Federal Reserve would almost certainly try to head it off, probably well before prices started to fall. But some investors and economists say the risk is real. Inflation is expected to more than halve over the next year as a spike in prices for goods like oil and grains unwinds. Unemployment, meanwhile, will likely hold at nearly double its pre-recession level well into next year, keeping incomes under pressure. If forecasts are correct, that could present a dangerous combination the Fed might not allow to brew for very long. "You run the models and that all points to deflation," said Joshua Dennerlein, an economist at Bank of America Merrill Lynch in New York. "Without some kind of monetary policy help you would definitely get deflation." Already, many forecasts for price increases are lower than they were a year ago when the Fed announced it would pump $600 billion into the banking system to boost growth and counter fears of deflation, which were growing at the time. The inflation rate, which hit a three-year high of 3.9 percent in September, could fall to 1.3 percent by October 2012, according to a measure of expectations calculated by the Federal Reserve Bank of Cleveland. That would leave the rate below the U.S. central bank's 1.7 percent to 2 percent comfort zone. FOUNDATION FOR ACTION With this year's inflation surge as a backdrop, the Fed is not expected to make any move at its policy meeting on Tuesday and Wednesday. But looking to mid-2012, when the central bank's current stimulus program known as "Operation Twist" is due to expire, a high jobless rate and slowing inflation could look worrisome, especially if inflation expectations decline further. "That would provide more of a foundation for action both to try to reduce the probability of slipping into deflation and to try to provide some more support for economic growth," said Randall Kroszner, an economist at the University of Chicago who served on the Fed's board until 2009. When Kroszner was a policymaker, deflation fears were perhaps their highest since the Great Depression, the last time U.S. prices and incomes sank in a vicious, self-feeding cycle. To counter inflation, central banks can always raise interest rates. But the Fed's normal tool kit for countering falling prices is limited since it has already cut short-term borrowing costs nearly to zero. The key would be to find a way to ensure a deflationary psychology does not take hold. If consumers and businesses put off purchases because they could be cheaper down the road, that could undercut the economy and push prices down further. While growth likely accelerated to around a 2.5 percent annual pace in the third quarter, nearly double the second-quarter rate, several Fed officials have continued to talk about steps they could take to spur a stronger recovery. Some of the third quarter's relative strength reflects a one-time bounceback from shocks caused by a spike in oil prices and an earthquake in Japan that disrupted manufacturing. And dark clouds remain. Economists say a worsening of Europe's debt crisis could easily send the United States back into recession, further increasing deflation risks. MONEY PRINTING Already, nearly one fifth of Americans believe their family incomes will fall during the next six months, the highest level of wage pessimism since October 2009, according to data released on Tuesday by the Conference Board. At the same time, consumer expectations for long-term inflation, as measured by a Thomson-Reuters/University of Michigan survey, fell this month to the lowest level since the Fed was readying a $600 billion bond-buying plan a year ago. Growth in wages has slowed markedly since the recession and they could eventually start falling if the unemployment rate remains high, said Paul Ashworth, and economist at Capital Economics in Toronto. A Reuters poll of economists expects the jobless rate to edge down to just 9 percent in the second quarter of 2012 from 9.1 percent now. Some analysts think the Fed's extraordinary actions to help the economy -- it has already pumped $2.3 trillion into the banking system -- make it nearly impossible for a sustained deflation to take hold. While much of that money has not seeped into the wider economy because of weak demand and tighter lending standards, eventually it will, greasing the gears of growth and fueling inflation, said Richard Burdekin, an economist at Claremont McKenna College in Claremont, California. "There is a legitimate concern about deflation," he said. "But to have a deflation when you have the sort of money growth we're seeing would be unprecedented." Yet investors who believe most ardently that deflation is coming see evidence in the declines in the values of a number of asset classes. U.S. housing prices have fallen about a third since their pre-recession peak, while the Standard & Poor's stock index is down about a fifth. The Reuters-Jefferies CRB commodities index has also dropped about a third since its 2008 peak, and nearly 15 percent since April of this year. "When you have deflation in all these other areas, it's kind of difficult to see how goods and services are going to resist the trend," said Gary Shilling, who formerly worked on the staff of the San Francisco Fed and as an economist at several Wall Street firms.
Tuesday, October 25, 2011
Sunday, October 23, 2011
Saturday, October 22, 2011
Friday, October 21, 2011
Thursday, October 20, 2011
Wednesday, October 19, 2011
As part of the Occupy Las Vegas movement .. this was a proud moment ... tho I couldn't be at this particular protest .. I have been at the others ... people pouring into the streets demanding their rights ...
Monday, October 17, 2011
Watch from 4 min 30 sec as the 1st part of this video is repeat of last vid i posted ... with different video images ...
I do not endorse all views I post here ... I simply post to let people know in case they are right ... I am still in the USA & am not leaving yet ... I'll be sure to post here when i leave & when I know more which i expect to know more soon ...
This is what I have been saying all along ... that the plans for depopulation are based on real problems . Ones we cannot avoid. Clean water shortages, top soil erosion, Food price commodities skyrocketing, climate change effecting crops, severe weather .... the 1% are thinning the population as they see it is the only choice ... but it is mostly that our way of living is UNSUSTAINABLE !!
This planet can sustain 60 billion people bcuz there presently is more than an acre per person ... but not with the way we live ... want instead of need ....
This planet can sustain 60 billion people bcuz there presently is more than an acre per person ... but not with the way we live ... want instead of need ....
She's a 40-year-old mother of eight, with a ninth child due soon. The family homestead in a Burundi village is too small to provide enough food, and three of the children have quit school for lack of money to pay required fees.
"I regret to have made all those children," says. "If I were to start over, I would only make two or three."
At's prosperous farm in eastern Uganda, it's a different story.
"My father had 25 children — I have only 14 so far, and expect to produce more in the future," says Kasadha, who has two wives. He considers a large family a sign of success and a guarantee of support in his old age.
By the time Ndageramiwe's ninth child arrives, and any further members of the Kasadha clan, the world'swill have passed a momentous milestone. As of Oct. 31, according to the U.N. Population Fund, there will be 7 billion people sharing Earth's land and resources.
In Western Europe, Japan and Russia, it will be an ironic milestone amid worries about low birthrates and aging populations. In China and, the two most populous nations, it's an occasion to reassess policies that have already slowed once-rapid growth.
But in Burundi, Uganda and the rest of sub-Saharan Africa, the demographic news is mostly sobering as the region staggers under the double burden of the world's highest birthrates and deepest poverty. The regional population of nearly 900 million could reach 2 billion in 40 years at current rates, accounting for about half of the projected global population growth over that span.
"Most of that growth will be in Africa's cities, and in those cities it will almost all be in slums where living conditions are horrible," said John Bongaarts of the Population Council, a New York-based research organization.
Is catastrophe inevitable? Not necessarily. But experts say most of Africa — and other high-growth developing nations such as Afghanistan and Pakistan — will be hard-pressed to furnish enough food, water and jobs for their people, especially without major new family-planning initiatives.
"Extreme poverty and large families tend to reinforce each other," says Lester Brown, the environmental analyst who heads the Earth Policy Institute in Washington. "The challenge is to intervene in that cycle and accelerate the shift to smaller families."
Without such intervention, Brown says, food and water shortages could fuel political destabilization in developing regions.
"There's quite a bit of land that could produce food if we had the water to go with it," he said. "It's water that's becoming the real constraint."
The International Water Management Institute shares these concerns, predicting that by 2025 about 1.8 billion people will live in places suffering from severe water scarcity.
According to demographers, the world's population didn't reach 1 billion until 1804, and it took 123 years to hit the 2 billion mark in 1927. Then the pace accelerated — 3 billion in 1959, 4 billion in 1974, 5 billion in 1987, 6 billion in 1998.
Looking ahead, the U.N. projects that the world population will reach 8 billion by 2025, 10 billion by 2083. But the numbers could be much higher or lower, depending on such factors as access to birth control, infant mortality rates and average life expectancy — which has risen from 48 years in 1950 to 69 years today.
"Overall, this is not a cause for alarm — the world has absorbed big gains since 1950," said Bongaarts, a vice president of the Population Council. But he cautioned that strains are intensifying: rising energy and food prices, environmental stresses, more than 900 million people undernourished.
"For the rich, it's totally manageable," Bongaarts said. "It's the poor, everywhere, who will be hurt the most."
The executive director of the U.N. Population Fund, former Nigerian health minister Babatunde Osotimehin, describes the 7 billion milestone as a call to action — especially in the realm of enabling adolescent girls to stay in school and empowering women to control the number of children they have.
"It's an opportunity to bring the issues of population, women's rights and family planning back to center stage," he said in an interview. "There are 215 million women worldwide who need family planning and don't get it. If we can change that, and these women can take charge of their lives, we'll have a better world."
But as Osotimehin noted, population-related challenges vary dramatically around the world. Associated Press reporters on four continents examined some of most distinctive examples:
THE ASIAN GIANTS
It's 6 p.m. in Mumbai, India's financial hub, and millions of workers swarm out of their offices, headed to railway stations for a ride home. Every few minutes, as a train enters the station, the crowd surges forward.
For nearly 7 million commuters who ride the overtaxed suburban rail network each work day, every ride is a scramble. Each car is jam-packed; sometimes, riders die when they lose their foothold while clinging to the doors.
Across India, the teeming slums, congested streets, and crowded trains and trams are testimony to the country's burgeoning population. Already the second most populous country, with 1.2 billion people, India is expected to overtake China around 2030 when its population soars to an estimated 1.6 billion.
But even as the numbers increase, the pace of the growth has slowed. Demographers say India's fertility rate — now 2.6 children per woman — should fall to 2.1 by 2025 and to 1.8 by 2035.
More than half of India's population is under 25, and some policy planners say this so-called "youth dividend" could fuel a productive surge over the next few decades. But population experts caution that the dividend could prove to be a liability without vast social investments.
"If the young population remains uneducated, unskilled and unemployable, then that dividend would be wasted," says, a Population Council demographer in New Delhi.
Population experts also worry about a growing gender gap, stemming largely from Indian families' preference for sons. A surge in sex-selection tests, resulting in abortion of female fetuses, has skewed the ratio, with the latest census showing 914 girls under age 6 for every 1,000 boys.
Family planning is a sensitive issue. In the 35 years since one government was toppled for pursuing an aggressive population control program, subsequent leaders have been reluctant to follow suit.
For now, China remains the most populous nation, with 1.34 billion people. In the past decade it added 73.9 million, more than the population of France or Thailand.
Nonetheless, its growth has slowed dramatically and the population is projected to start shrinking in 2027. By 2050, according to some demographers, it will be smaller than it is today.
"It's like a train on the track that's still moving but the engine is already off," says Gu Baochang, a professor of demography at Beijing's Renmin University.
In the 1970s, Chinese women had five to six children each on average. Today China has a fertility rate — the number of children the average woman is expected to have in her lifetime — of around 1.5, well below the 2.1 replacement rate that demographers say is needed to keep populations stable in developed countries.
Three decades of strict family planning rules that limit urban families to one child and rural families to two helped China achieve a rapid decline in fertility but the policy has brought problems as well.
Before long, there will be too few young Chinese people to easily support a massive elderly population.
Also, as with India, there's a gender gap. The United Nations says there are 43 million "missing girls" in China because parents restricted to small families often favored sons and aborted girls after learning their unborn babies' gender through sonograms.
"China is always so proud of how quickly we brought down fertility from high to low, and how many births were avoided but I think we did it too quickly and reduced it to too low a level," says Gu. "I wish that India can learn this: 'Don't make it too quick.'"
WESTERN EUROPE AND THE U.S.
Spain used to give parents 2,500 euros (more than $3,000) for every newborn child to encourage families to reverse the country's low birth rate. But the checks stopped coming with Spain's austerity measures, raising the question of who will pay the bills to support the elderly in the years ahead.
It's a question bedeviling many European countries which have grappled for years over how to cope with shrinking birth rates and aging populations — and are now faced with a financial crisis that has forced some to cut back on family-friendly government incentives.
Spain and Italy, both forced to enact painful austerity measures in a bid to narrow budget deficits, are battling common problems: Women have chosen to have their first child at a later age, and the difficulties of finding jobs and affordable housing are discouraging some couples from having any children at all.
In 2010, for the fourth consecutive year, more Italians died than were born, according to the national statistics agency. Italy's population nonetheless grew slightly to 60.6 million due to immigration, which is a highly charged issue across Europe.
Italy's youth minister Giorgia Meloni said earlier this year that measures to reverse the birth rate require "millions in investment" but that the resources aren't available.
Unlike many countries in Europe, France's population is growing slightly but steadily every year. It has one of the highest birth rates in the European Union with around 2 children per woman.
One reason is immigration to France by Africans with large-family traditions, but it's also due to family-friendly legislation. The government offers public preschools, subsidies to all families that have more than one child, generous maternity leave, and tax exemptions for employers of nannies.
Like France, the United States has one of the highest population growth rates among industrialized nations. Its fertility rate is just below the replacement rate of 2.1 children per woman, but its population has been increasing by almost 1 percent annually due to immigration. With 312 million people, the U.S. is the third most populous country after China and India.
Lagos, Nigeria, is expected to overtake Cairo soon as Africa's largest city. Private water vendors there do a brisk business in the many neighborhoods that otherwise lack access to potable water.
The drone of generators is omnipresent, at offices and markets, in neighborhoods rich and poor, because the power grid doesn't produce enough power. Periodic blackouts extend for hours, days, sometimes weeks.
Such is daily life in Nigeria's commercial capital, where the population is estimated at 15 million and growing at 6 percent or more each year. Problems with traffic congestion, sanitation and water supplies are staggering; a recent article in UN-Habitat said two-thirds of the residents live in poverty.
The rest of Nigeria isn't growing as fast — estimates of its growth rate range from 2 percent to 3.2 percent. But it's already Africa's most populous country with more than 160 million people.
Ndyanabangi Bannet, the U.N. Population Fund's deputy representative in Nigeria, notes that 60 percent of the population is under 30 and needs to be accommodated with education, training and health care.
"It is a plus if it is taken advantage of," he said of Nigeria's youth. "But if it is not harnessed, it can be a challenge, because imagine what hordes of unemployed young people can do."
In Uganda, another fast-growing country, President Yoweri Museveni used to be disdainful of population control and urged Ugandans, especially in rural areas, to continue having large families.
Recently, the government has conceded that its 3.2 population growth rate must be curbed because the economy can't keep pace. Earlier this year, anti-government protests by unemployed youths and other aggrieved Ugandans flared in several communities, and nine marchers were killed in confrontations with police.
"The government has been convinced that unless it invests in reproductive health, Uganda is destined to a crisis," says Hannington Burunde of the Uganda Population Secretariat.
Among those who are struggling is John Baliruno, 45, of Mpigi in central Uganda, a father of nine.
"I never intended to have such a big number," he said. "I with my wife had no knowledge of family planning and ended up producing one child after another. Now I cannot properly feed them."
Looking ahead, he's pessimistic.
"The environment is being destroyed by the growing population. Trees are being cut down in big numbers and even now we can't get enough firewood to cook food," he said. "In the near future, we will starve."
Another of the fastest-growing countries is Burundi. With roughly 8.6 million people, it's the second most densely populated African country after neighboring Rwanda.
Omer Ndayishimiye, head of Burundi's Population Department, said continued high growth coincides with dwindling natural resources. Land suitable for farming will decline, and poverty will be rampant, he said, noting that 90 percent of the population live in rural areas and rely on farming to survive.
The government has been trying to raise awareness about the demographic challenges among the clergy, civic leaders and the general public.
"We are suggesting couples to go to health clinics to get taught different birth control methods," Ndayishimiye said. "But we are facing some barriers ... Many Burundians still see children as source of wealth."
At her modest house in Gishubi, Godelive Ndageramiwe ponders the changes that have made her regret her large family.
"Children were a good labor force in the past when there was enough space to cultivate," she said. "Today I can't even feed my family properly. My kids just spend days doing nothing."
After her fourth child, she began to worry how her family could be cared for.
"But my husband was against birth control and wanted as many children as possible," she said. "It was delicate because he could marry another wife.
"My friends advised me to go to a nearby clinic, but I was told I must come with my husband. Now I have laid the issue in the hands of God."
David Crary reported from New York. Associated Press writers Alexa Oleson in Beijing, Nirmala George in New Delhi, Angela Charlton in Paris, Daniel Woolls in Madrid, Victor Simpson in Rome, Onesime Niyungeko in Bujumbura, Burundi; Yinka Ibukun in Lagos, Nigeria, and Godfrey Olukya in Kampala, Uganda, also contributed to this report.
UN Population Fund: http://www.unfpa.org/public/
Population Council: http://www.popcouncil.org/
Sunday, October 16, 2011
Saturday, October 15, 2011
Communism wins !! ... ah, the failures of Capitalism have never been more apparent ... the Marxists & Socialist Democrats of the world must be so happy ... tho it is not talked about in the country as the failure of capitalism ... cuz that would be against our true religion ... which is money ....
The number of Americans who lack access to basic necessities like food and health care is now higher than it was at the peak of the Great Recession, a survey released Thursday found. And in a finding that could worsen fears of U.S. decline, the share of Americans struggling to put food on the table is now three times as large as the share of the Chinese population in the same position.
The United States' Basic Index Score, a Gallup measure of access to necessities, fell to 81.4 in September--even lower than the 81.5 mark it reached in February and March, 2009. The recession officially ended in June of that year, but the halting recovery hasn't given a sustained boost to the number of Americans able to provide for themselves. The government reported last month that a record number of Americans is living in poverty.
Between September 2008 and last month, the share of Americans with access to a personal doctor plummeted from 82.5 percent to 78.3 percent. The share with health insurance fell from 85.9 percent to 82.3 percent. And the share saying they had enough money to buy food for themselves and their family dropped from 81.1 percent to 80.1 percent. Gallup's surveys are based on phone and in-person interviews.
Meanwhile, Gallup found that just 6 percent of Chinese said there were times in the past 12 months when they lacked enough money for food for themselves or their family, compared to 19 percent of Americans. Just three years ago, those results were almost reversed: 16 percent of Chinese couldn't put food on the table at times, compared to 9 percent of Americans.
Wednesday, October 12, 2011
The story has now changed to ELenin the 1st was actually a moon of the actual dwarf star which is behind it ... so we are not out of the woods yet ... I know these events are going to happen but don't know if ELEnin is in fact real or if these dates mean anything . I share all this info in case they are right ... I did not leave in September bcuz I did not feel we were in danger. The time was not now ... yet ... but there is a large object out there .. whatever it is & it makes sense that gravity pulls cause earthquakes ...
Vice Presidentsaid today that "nothing has been taken off the table" when it comes to the U.S. response to an alleged plot by to assassinate the Saudi Arabian ambassador to the U.S. and unleash deadly terrorist bombings in
"It is an outrageous act that the Iranians are going to have to be held accountable," Biden told ABC News' "Good Morning America". "This is really over the top."
U.S. Attorney General Eric Holder announced Tuesday theand had disrupted a plot "conceived, sponsored and... directed from Iran" to murder the Saudi Arabian ambassador to the U.S. in or outside a crowded Washington, D.C. restaurant which potentially would have been followed up by bombings of the Saudi Arabian and Israeli embassies. The U.S. said an Iranian-American, 56-year-old Manssor Arbabsiar of Corpus Christi, Texas, was working for elements of the Iranian government when he attempted to hire hitmen from the feared Zetas Mexican drug cartel to carry out the hit, but was unwittingly speaking to a DEA informant from the start.
Senior Obama administration officials had previous told ABC News the U.S. response would not include the possibility of an armed conflict with Iran and -- though a complaint filed in federal court directly tied Iran's elite Quds military unit to the plot -- there was no information that Iran's top leaders were aware or had any role.
Biden said the U.S. was in the process of "uniting world opinion" against Iran as it goes forward with a response. The U.S. Treasury Department announced Tuesday sanctions against five Iranians allegedly tied to the plot.
A lawyer for Arbabsiar has not returned requests for comment, but the man's wife, Martha Guerrero, said he was wrongly accused.
"I may not be living with him being separated, but I cannot for the life of me think that he would be capable of doing that," she told ABC News' Austin affiliate KVUE, noting the two had been separated some time. "He was at the wrong place at the wrong time. I'm sure of that."
Iranian officials have strongly rejected the U.S. accusations, calling them a "fabrication." The head of the Iranian mission to the United Nations penned a letter Tuesday to U.N. Secretary General Ban Ki-moon expressing "outrage" at the allegations.
"The U.S. allegation is, obviously, a politically-motivated move and a showcase of its long-standing animosity towards the Iranian nation," the letter says. "The Islamic Republic of Iran categorically and in the strongest terms condemns this shameful allegation by the United States authorities and deplores it as a well-thought evil plot in line with their anti-Iranian policy to divert attention from the current economic and social problems at home and the popular revolutions and protests against United States long supported dictatorial regimes abroad."
Alleged Terror Plotter Claims He Was 'Directed By High-Ranking' Iranian Officials
The new case, called Operation Red Coalition, began in May when Arbabsiar unwittingly approached a DEA informant seeking the help of a Mexican drug cartel to assassinate the, according to counter-terrorism officials.
Arbabsiar reportedly claimed he was being "directed by high-ranking members of the Iranian government," including a cousin who was "a member of the Iranian army but did not wear a uniform," according to a person briefed on the details of the case.
Arbabsiar and a second man, Gohlam Shakuri, an Iranian official, were named in a five-count criminal complaint filed Tuesday afternoon in federal court in New York. They were charged with conspiracy to kill a foreign official and conspiracy to use a weapon of mass destruction, a bomb, among other counts. Shakuri is still at large in Iran, Holder said.
Holder identified Shakuri as an Iran-based member of the Quds force.
Arbabsiar, a naturalized U.S. citizen, expressed "utter disregard for collateral damage" in the planned bomb attacks in Washington, according to officials.
The complaint describes a conversation in which Arbabsiar was allegedly directing the informant to kill the Saudi ambassador and said the assassination could take place at a restaurant. When the informant feigned concern about Americans who also eat at the restaurant, Arbabsiar said he preferred if bystanders weren't killed but, "Sometimes, you know, you have no choice, is that right?"
U.S. officials said Arbabsiar met twice in July with the DEA informant in the northern Mexico city of Reynosa, across the border from McAllen, Texas, and negotiated a $1.5 million payment for the assassination of the Saudi ambassador. As a down payment, officials said Arbabsiar wired two payments of $49,960 on Aug. 1 and Aug. 9 to an FBI undercover bank account after he had returned to Iran.
Officials said Arbabsiar flew from Iran through Frankfurt, Germany, to Mexico City Sept. 29 for a final planning session, but was refused entry to Mexico and later put on a plane to New York, where he was arrested.
Officials said Arbabsiar is now cooperating with prosecutors and federal agents in New York, where the case has been transferred.
"Though it reads like the pages of a Hollywood script, the impact would've been very real and many lives would've been lost," FBI Director Robert Mueller said of the foiled plot.
Tuesday, October 11, 2011
Monday, October 10, 2011
How bad can it get if the US falls into recession?
NEW YORK (AP) — Are investors overreacting to the prospect of a?
The slightly better jobs report on Friday notwithstanding, the odds of a recession appear to be climbing, and that's bringing back scary memories. Though stocks may look cheap thanks to record corporate profits, that was also true the last time the U.S. was heading into a downturn. Based on recent, profits could fall a third if the economy crumbles.
Investors have been worried about a new recession for months. Headlines last week ratcheted up the fear.
On Tuesday, the Federal Reserve Chairman Ben Bernanke testified to Congress that the recovery is "close to faltering." Goldman Sachs said Europe could fall into recession by the end of the year, and push the U.S. "to the edge" of one itself. A co-founder of the, a forecasting firm that called the last three downturns, made the rounds of TV news shows to say a U.S. recession was all but inevitable.
With memories of the Great Recession so fresh, investors are understandably spooked. A year after that downturn began in Dec. 2007, profits at companies in the Standard & Poor's 500 index turned into losses. Three months after that, stocks hit bottom at half their pre-recession peak.
But recessions come in many varieties, and most are less scary than the last one. A review of past ones shows that:
— Profit drops range widely. From peak to trough, profits at S&P 500 companies, excluding financial firms, fell an average 32 percent in the past five recessions, according to Adam Parker, U.S. equity strategist at. He excludes financial firms because their record write-offs in the last recession turned S&P profits into losses, and would exaggerate the drop at the average company in the index.
The biggest fall in profits: 57 percent from the peak before the 2001 dot-com recession. Profits during the 1981-82 recession fell 17 percent.
— Recessions usually last less than a year. A recession that began in January 1980 was over in six months. The Great Recession that ended June 2009 lasted 18 months, the longest since the Great Depression. The 11 recessions since World War II averaged 11 months.
— Stock investors can get clobbered, but not always. Bear markets that accompany recessions have pulled stocks down an average 38 percent in the last five downturns, based on data from Sam Stovall, chief investment strategist at Standard & Poor's. From their October 2007 peak before the last recession, stocks fell 57 percent. But in the bear market during the recession that began in July 1990, they fell only 20 percent.
— By the time the economy falls into recession, much of the damage to stocks is usually over. The stock market famously looks forward six to nine months, and that's mostly true on the cusp of downturns, too. Stocks had been dropping for a year by the time the 2001 recession began. That's worth remembering if another recession is coming. The S&P 500 is already down 15 percent from its recent peak in April.
Problem is, not even experts who study downturns can predict exactly what kind of recession may come next. "Everyone wants a recession playbook, but there aren't enough similarities with prior cycles to know which one to pick," says Morgan Stanley's Parker.
To be sure, most Wall Street analysts and economists think one isn't even likely now. Jim Paulsen, chief investment strategist at Wells Capital Management, notes that recessions are typically preceded by what he calls "excesses" that need to be purged from the economy. He doesn't think that's true today.
"Have banks been aggressively overextending loans? Has anyone been borrowing too much lately? Are companies overstaffed?" Paulsen writes in a recent report. "It's hard to see why the U.S. would experience a recession when almost nothing requires a correction."
Even if he's wrong, investors bracing for a downturn on the scale of the last one may be pleasantly surprised.
In the Great Recession, the output of many countries shrank at the same time, punishing earnings of U.S. companies that had hoped sales abroad would soften the blow from lower U.S. sales. Fear spread that banks wouldn't make good on their own loans, and that led them to stop making loans to businesses of all kinds. Companies cut more than 600,000 workers a month for six months in a row. With fewer jobs, people had less money to spend and companies sold less, which led them to cut more jobs.
How likely is a repeat?
Banks have fatter cushions against losses now than before the financial crisis. Companies in the S&P 500 are making more money than ever, and squirreling away some as cash reserves, a sort of rainy-day fund. They've laid off so much staff and are running so lean, it won't be as easy to cut jobs like they did in the last recession.
The government reported Friday that non-farm payrolls rose 103,000 in September, better than expected but not enough to lower the unemployment rate. That rate held steady at 9.1 percent.
So if a recession is coming, how bad might it get? That depends on whether the U.S. falls into one alone or together with other countries as it did the last time.
Parker, of Morgan Stanley, is a sort of grim optimist. He doesn't think stocks are the bargains that Wall Street analysts claim. But he doesn't think a worldwide downturn that would send them plummeting is likely, either. If a U.S. recession is coming, he thinks the odds favor a garden-variety one. He says profits for S&P 500 companies could fall to maybe $85 per share in 2012, a quarter below the $112 that analysts expect now.
That could still hurt stocks. But since they're down already, the fall from here might qualify more as a slide than a crash.
Sunday, October 9, 2011
Plot notes: Warning, America is on a 'road to financial ruin'
Scene 1: Power and wealth create false sense of invincibility
Scene 2: Greed consumes America: Gambling replaces real work