Double-Dip Recession

[Sir Jeffrey]

I guess we need to buy 535 mirrors for them to look into.

[hammondjam]

If so many jobs are moving to China and the politicos know about it....do something besides BS for votes!!

In the meantime, we all need to try to buy American as much as we can.

[Whoo]

My exes' father was Polish but soooo proud to be an American he insisted nothing was to be brought into his home unless it was made in the USA.  If more people would take the time to do the amazingly scary treasure hunt we did trying to find stuff still manufactured and sold in the US, maybe the outcry would have some reasonance with our politicians.

[Sir Jeffrey]

If people bought just USA that would put Wal-mart out of business.

[taxidr]

OH NO !!! What would happen to the people of Wal-mart? :o

[Whoo]

I guess they would have to take their fashion faux pas elsewhere!!! ;D  Eghads, I just really have a hard time with people wearing their pj's and house shoes out in public. ::)

[Terry]

Taxpayer Revolt?
People working in the private sector apparently were willing to accept the higher pay, more job security and better retirement benefits for state and local employees in past years. High employment in the private sector and robust economic growth at least held out the hope that their lots would improve tomorrow. But with slow economic growth, limited income expansion and high unemployment now expected by them for years, voter attitudes appear to be changing.

Americans still want basic municipal services like police and fire protection, good schools for their kids, clean streets and garbage collection. But they apparently are deciding they're paying too much for those services; that 34% higher wages for state and local employees compared to private sector workers isn't justified as pay cuts multiply in the private sector and those laid off earn much less if and when they can find another job; that 66% higher benefit costs is over the top, especially as private sector employees are paying more of their health care premiums and seeing their defined benefit pension plans replaced by much more uncertain 401(k)s.

As taxpayers revolt, there are plenty of things that can be done to reduce state and local government costs in an orderly way. Following in the footsteps of bankrupt GM, two-tier wage structures are being established with existing employees continuing at current salary levels, but new hires paid the much lower wages adequate to attract qualified people. And the new people are enrolled in defined contribution pension plans that require employee contributions, not defined benefit plans, while their retirement ages are increased.



Read more: http://www.businessinsider.com/gary-shilling-double-dip#ixzz13T1Iidoo

IT"S not just the ' Fed'.  State & local learned quick from their Daddy!
Uncle Sam?

[Terry]

No double-dip recession
By Lakshman Achuthan and Anirvan Banerji, CNNMoney guest columnistsOctober 28, 2010: 12:47 PM ET


Commentary: Lakshman Achuthan and Anirvan Banerji are, respectively, co-founder and chief operating officer and co-founder and chief research officer of ECRI, the Economic Cycle Research Institute.

The good news is that the much-feared double-dip recession is not going to happen.

That is the message from leading business cycle indicators, which are unmistakably veering away from the recession track, following the patterns seen in post-World War II slowdowns that didn't lead to recession.

71Email Print CommentFor 25 years, we've personally spent every working day studying recessions and recoveries. Based on our work and that of our colleagues at ECRI, we've called the last three recessions and recoveries without any false alarms, including an accurate forecast of the end of the most recent recession in the summer of 2009.

After completing an exhaustive review of key drivers of the business cycle, ranging from credit to inventories and measures of labor market conditions, we can forecast with confidence that the economy will avoid a double dip.

But the bad news is that a revival in economic growth is not yet in sight. The slowing of economic growth that began in mid-2010 will continue through early 2011. Thus, private sector job growth, which is already easing, will slow further, keeping the double-dip debate alive.

Of course, it is the renewed job market weakness, combined with deflation fears, that is behind the Fed's promise to implement a second round of quantitative easing, or QE2.

The problem with QE2
The worse news is that, even without the nightmare of a new recession, an uglier scenario may still lie ahead in the form of unintended consequences of such Fed stimulus.

Fed policy shifts have been chronically late, resulting in the need for increasingly heroic measures to right the economy.

Because monetary policy acts with "long and variable lags," the Fed should, in principle, rely on forward-looking measures to time its actions. Yet, in practice, it does pretty much the opposite, relying on backward-looking statistics like core inflation and hard-to-assess measures of the so-called output gap, including estimates of "full employment."

In early 2010, when we warned publicly of an approaching slowdown, a sanguine Fed was plainly focused on its "exit strategy" to remove the trillions of dollars of cash it had injected into the economy after cutting short-term interest rates to near zero -- only to belatedly reverse its stance some weeks ago.

This is hardly the first time the Fed has been spectacularly behind the curve in detecting a turn in the business cycle.

In mid-2003, the last time "core" inflation was this low, the Fed cut rates to just 1% and kept it there for a year, contributing in no small measure to the inflation of the housing bubble that ended so disastrously.

In mid-2008, oblivious to the recession that had begun six months earlier, they telegraphed to the markets a 50% increase in rates by year-end, from 2% to 3%, in order to fight inflation.


0:00 /2:42A long, winding road ... no double-dip
The consequences of these mistakes played out in the subsequent quarters and years to the severe detriment of the economy. But today the fallout from such timing errors, which are likely to set off bigger boom-bust cycles with more frequent recessions, could be far greater with the Fed's balance sheet as gigantic as it is, and poised to expand further.

In fact, the Fed is about to launch QE2 because it believes inflation to be too low, which really means they are willing to go to new extremes to head off the risk of deflation.

Yet, over the last two centuries the U.S. economy has seen sustained deflation only when it has mostly been in recession -- a scenario that our analysis rules out for now. While the current expansion is likely to be shorter than anyone is used to, its demise in not imminent.

Today, the car that is the U.S. economy is crawling uphill, slowing as its engine sputters. With politicians fighting about whether to use a screwdriver or a spanner wrench to fix the motor, the Fed is convinced we'll end up using neither. Determined not to let the car start rolling back disastrously downhill, yet unaware that the road is about to level off, the Fed is strapping an untested rocket onto the car in hopes of blasting it over the top.

The Fed, looking out the rear-view mirror to steer the car, won't know when we're approaching a bend in the road, though we're now high up in the mountains, with a dangerous abyss below.

::)