Chapman University economists? Where did they get their Ph. Ds? Oshkosh Community College?

Thank God you did not quote the University of Phoenix economists that we are in deep shit.

Maybe I wasn't paying close enough attention last week, but the Royal Bank of Scotland's warning of a global stock market crash within the next quarter doesn't seem to have generated much discussion over here.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

Such a slide on world bourses would amount to one of the worst bear markets over the last century.

OK - since Gregor has already noted that Chapman isn't exactly the same as UCLA, let me just add that this LATimes article failed to note how Chapman defines a recession. Paul Krugman recently noted on his blog that we likely need to rethink the traditional definition given how employment can continue to fall even as real GDP rises. So could UCLA be using the traditional definition while Chapman is doing something different?

Chapman University economists? Where did they get their Ph. Ds? Oshkosh Community College?

No, Grant College.

As the housing crisis deepens, it will send ripples throughout the economy, schools will close, local governments will contract, more folks will see their utilities cut-off.

The rising cost of energy impacts everything, and it doesn't help to see the US dollar tank.

The only way out of this economic vortex is to switch 50% of the defense spending into domestic programs. (1/2 of the Pentagon's budget is wasted anyway so this really is a winner!).

It is also imperative that alternative energies receive massive tax breaks (and not BIG OIL/COAL) and extensive R & D on a large scale never seen before. We need to MAKE stuff in the USA, where are the solar cell plants??? (gone overseas).

The dire economic times ahead are rooted in neanderthal thinking.

Time for new mindsets!

The economy is in a recession when your friends and neighbors are out of work. It is in a depression when you are out of work.

The gasoline bubble might actually end up helping America. The automakers are all working hard to change our fleet to hybrids and electrics. There is a lot of interest in going green and in developing alternative energy. We might actually begin putting people back to work.

Over all the next 4 or 5 years could be very good for America. Of course, we have to stop screwing around in the Middle East. We really can't afford to spend our time, soldiers and money propping up the Saudi royal family and big oil. It is time to move to the next level.

We really can't afford to spend our time, soldiers and money propping up the Saudi royal family and big oil. It is time to move to the next level.
Posted by: Ron Byers

Dig it. Got any ideas as to how?

"Against stupidity, the very gods themselves must contend in vain." - Friedrich von Shille

OT: Just upgraded to Firefox 3.0 and all I can say is "woo-hoo!"

This sucker's FAST.

'This country belongs to the people. Its resources, its business, its laws, its institutions, should be utilized, maintained, or altered in whatever manner will best promote the general interest.' - Theodore Roosevelt

But turban wearing liberal lesbians are marrying in California so they abort snowflake babies!

"The good news: nationally, they think the recession will be mild and the economy will start to turn up by the end of the year."

-STOP SMOKING CRACK. CRACK IS WACK!
Seriously though, there are far too many subprime mortgages out there and now, especially with a weak economy and high gas prices, we are going to be seeing even more walk away's and foreclosures. Especially with a continuing wave of mortgage rate resets on ARM's. my guess is that we haven't hit the peak of foreclosures yet and wont this year.

'They' who? Same 'they' never saw this freight train comin' down the line? Bah! Humbug!

“The next phase of de-leveraging will focus on the real economy. The availability of debt has contracted sharply. The cost of funding has increased. This will force de-leveraging of corporate and personal balance sheets.� - Satyajit Das, May 2008

MsNThrope

The Chevy Volt (or some other similar electric technology) combined with increasing solar, wind and nuclear electrical production to recharge the batteries. We are not going to drill our way to economic freedom from the House of Saud. We are going to use technology to fundamentally change the way we do transportation.

The traditional definition of a recession is a useful thing, but its certainly not the one and only definition of a bad economy. Declining aggregate output is a real problem.

But a decline in the median real income, or a decline in the the 25th percentile of real income, or a decline in the ratio of the median income to the mean, all those can be real problems as well.

The problem isn't with the traditional definition of the recession, the problem is with the fixation (more among the media than the public: consumer confidence figures show that the public can recognize a bad economy whatever the aggregate figures are) on the binary "are we or are we not in/heading into/coming out of a recession" as the sole important factor in describing the economy.

...UCLA says we're not in a recession...

I will be sure to remind my employees of that when I hold a company meeting later this morning. In my 20 years here, we have never had such an abrupt downturn. Revenues were down 40% in the last 2 months. I have had to reduce staff by 20% this year -- with likely more to come.

Granted I work for a small company and there are other factors that impact a niche seller like ourselves, however, there is no doubt that discretionary spending is way, way down.

Junebug -

Very coincidental. There is also an interest rate strategist at Credit Suisse, who in a report released on June 20th, has a remarkably similar view of the report that the Royal Bank of Scotland released. Credit Suisse contends that equity markets are on the cusp of a major leg downward similar to 2002, and predicting an even lower S&P than RBS, ending up at around 900 from present levels. The report though, did not give a time frame of when it will be at that level.

Seems like a perfect storm of financial and resource (peak oil) collapse is upon us.

Scary, very scary. What does one do????????

Awareness of the specific things causing our problems is very high. Congressional action is occurring about as fast as it can. The single biggest problem facing America is Dubya. Were it not for his policies we could do more quicker.

After Bear-Stearns...Frank & Dodd & Shelby are working on the Home Mortgage crisis.

Stupak (in the House) and others are working on the gasoline prices. It appears international oil trading will have to be revisited in the future.

The Green revolution is revving up and should produce more jobs and lower energy costs to everyone. With luck this will extend to 'clean coal' technology and selling 'green' technology abroad as well as the creation of a very broad range of solutions here at home. More commuter trains, more non-gasoline hybrid autos, more solar & windmill energy fed into the grid, more solar-cell technology on home roofs, etc.

It's painfully slow to rev up, but it is underway. Can we avoid severe economic difficulties? That's anybody's guess and should give headaches to many money managers.

For the economy to turn up by the end of the year, consumers (70% of the economy) are going to have to start getting more money to spend. Where will it come from?

Wages are not rising. Employment is not increasing, and is in fact decreasing. Credit standards are being tightened and credit is being withdrawn because the Banks do not have the capital required to lend more money. That includes credit card credit, also. Limits on credit cards are being generally lowered, to include those for customers with good payment records.

Oil prices will continue to rise, and food inflation is costing every household more money, money that is needed for consumption if the economy is to rise. Inflation is rising and will continue to rise, so that the same goods will cost nominally more. Inflation is not an increase in consumption, and inflation is going to get worse.

The "wealth effect" has been used for over a decade to increase consumption. With home prices continuing downward, the wealth effect is working in reverse and will continue to do so until the overpriced housing is cleaned out of the market. That's a big reason why consumer sentiment measurements are testing new lows. The banks are resisting that drop in home prices because they want to get paid back in full for the overpriced mortgages they have no their books, but the drop in home prices won't stop until home prices are back in line with rental rates.

Companies continue to sit on large cash reserves because there are no likely decent markets to invest in. Such markets are created by consumption, and there is no additional money going to consumers to create those markets. That means that giving more cash to companies and investors just sends that money outside the U.S. to where good investments can be found. In other words, Republican supply side economics can't work. The government will not, however, provide more aid to consumers in the amounts required to jump start consumption. The Republicans will stop that in its tracks.

Anyone who thinks the recession will be improving by the end of this year is simply spitting into the wind. That prediction is hope speaking instead of good sense.

"The gasoline bubble might actually end up helping America. The automakers are all working hard to change our fleet to hybrids and electrics. [Snip]

Over all the next 4 or 5 years could be very good for America.

Ron Byers on June 25, 2008 at 12:28 PM "

Ron, it takes seven years for Detroit to field a new model automobile. A crash program might make it in five. But we are talking about having to develop new technology first, and no one knows how long that will take.

After that the support industries for cars and trucks has to adapt to the new technologies - training, parts, distribution, and so on.

Employment will only start to increase towards the tail end of that period.

In the meantime, it's not just automobiles which have become obsolete at current oil prices. The current truck fleet will soon be scrapped, as will the current airline fleets. Neither can continue to operate at the current level of fuel prices without completely redesigned equipment. That's seven years or more for trucks and longer for airlines. How long has it taken Boeing to field the latest airliner? The one they are still slipping the arrival date back on?

Cars, trucks, airliners - that's a lot of unemployment for at least the next seven or more years. Only the train system will benefit, and it doesn't create a lot of employment.

Plus towns and cities are going to have to be rebuilt to reduce the dependence on cars and trucks. Long distance travel will be generally cut back, available only to the wealthy. Long commutes to work are over for most. Travel time and cost to work will matter more than pay increases - it already does.

In the long run this may be good for the auto industry, but I'd say America is in for an extended rough patch, and there is no magic bullet to prevent it.

What does one do????????

Learn to grow greens, raise rabbits, distill alchohol and intercept satellite TV signals.

Black market skills will also be valuable for survival.

gregor asks: Chapman University economists? Where did they get their Ph. Ds? Oshkosh Community College?

Actually, the head of the econmetrics unit is a U of Chicago PhD economist, and a literal student of Friedman. (It's fun to make jokes in the absence of information, isn't it?)

More significantly, these folks have a history of getting it right. The Chapman team predicted to the month the turnaround in the California housing market in 1996, called the current housing bubble a bubble more than two years ago, and were calling 2008 a recession year back in early 2007. Interestingly, they run an "econometric" projection for presidental elections, and despite the Friedmanista credentials, they are calling for an Obama victory in November.

Given a choice between a Chapman forecast and a UCLA forecast, bet with the Chapman forecast.

Accepting the false dichotomy -- shallow recession versus deep recession -- concedes the argument and conceals the truth.

The question nobody wants to consider is, how deep is the hole into which our economy is falling? Do we hit bottom at recession? Depression? Economic collapse? Is the bottom receding like some horror show f/x as we approach?

Forget the price of gas in 2025, the new dead pool is: what will the Earth's poplulation be in 2025?

The smart money is already prepared for the worst. Are you?

The last time I drove by UCLA, students were waving huge Israeli flags along Wilshire Blvd.

UCLA may be well known for its basketball program, but its economics department may not be staffed with any economists that are any better than Chapman University's.

"its economics department may not be staffed with any economists that are any better than Chapman University's."

I trust you are kidding.

Recession , who's worried about a measly recession????

Think Depression