2009 Will Be Very, Very Bleak

[Danascot]

The latest from Dr. Doom:

by Nouriel Roubini

It is clear that 2008 was not a very good year, and it is official that the current recession started in December 2007. So how far are we into this recession that has already lasted longer than the previous two (the 1990 and 2001 recessions lasted eight months each)? I believe the U.S. economy is only half way through a recession that will be the longest and most severe in the post-war period. U.S. gross domestic product will continue to contract throughout 2009 for a cumulative output loss of 5% and a recession that will last close to two years.

Let us look at the picture in detail:

Personal Consumption
The resilient U.S. consumer started to give up the ghost in the third quarter of 2008, when for the first time in almost two decades, personal consumption contracted. With personal consumption making up over two-thirds of aggregate demand, the outlook for the U.S. consumer is at the center of the dynamics that will play out in the real economy in 2009.

In my view, personal consumption will continue to contract quite sharply throughout 2009 as a result of negative wealth effects from housing and equity market losses, the disappearance of home equity withdrawal from the second half of 2008, mounting job losses, tighter credit conditions and high debt servicing ratios (the debt to income ratio went from 70% in the 90s, to 100% in 2000, to 140% now). This retrenchment of the U.S. consumer will result in a painful rebalancing in the economy that will eventually restore the savings rate of a decade ago.

The wealth losses for households related to the fall in home prices are roughly $4 trillion so far, and are clearly bound to increase further as home prices continue to fall--eventually reaching the $6-8 trillion range (compatible with a 30-40% fall in home prices peak to trough). With a negative wealth effect of 6 cents on the dollar, the reduction in personal consumption could amount to a whopping $500 billion. And negative wealth effect from fall in equity prices--on the wake of a bleak 2009 for corporate profits--will also contribute to the contraction in personal consumption by an estimated $100 billion (compatible with a 25% contraction in the stock markets).

lots more - http://www.forbes.com/opinions/2009/01/07/recession-stimulus-spending-oped-cx_nr_0108roubini.html

[BlueJazz]

1. Rats...then my $27.00 in the Bank is only going to be worth $19.50

:)

[Citizen Number 9]

4. How long does a box of reeds last you?

Go for the happiness before inflation robs us.

[BlueJazz]

13. I buy them in boxes of 10.... usually last about 3 weeks. I use a #4 reed

:)

[Citizen Number 9]

16. You play w-a-a-a-y more than me.

I can make a box of reeds last 9 months or more.

Maybe I'll be playing more in 2009. That was actually a "sorta resolution" I considered this year. B-)

[FirstLight]

2. what's worse is that these numbers tell only a fraction of the story

How many people are homeless, under-employed, have no more stamina to even "look" for work or a better life...?
I have been on the edge like this most of my adult life, if not all...and I tell you it takes a LOT of stamina to just get through the normal bullshit, much less the freaking out that a downturn or depression can cause.

I almost can't bring myself to even read these reports any more, not only are they talking about a strata of society I have no stake in, but they are telling me it will get worse, when my bad to worse is getting downright scary.

I NEED to hang on to my hope or my dreams that I may stil have a chance to make something of myself before I am too old to count, that I could give my kids some kind of help to enter the world with a fighting chance.
If I lose sight of that dream, that "somehow, someway it's gotta happen soon" feeling, I may as well give up for good!

[truedelphi]

10. On e of my consolations right now is how lucky I was to live in the era

I lived in - back when my son was little - my rent was $ 120 a month for a place half a block from a lake.

I could afford health insurance. The public schools were decent. There was a sense of community.
I shopped at a food co-op, and my groceries were organic and rather cheap. When I needed to work, a 32 hr a week job paid my bills.

I feel bad that most young people today will know nothing of this lifestyle.

[roguevalley]

11. agreed. a two story house rented for $56 a month, a park, good food, big

cars and little money. I am glad I was born back in the day and not now. No one now will remember that it ever was any different. They should call the young guys now Generation WTF?! or Generation Fucked.

[truedelphi]

15. In 1969, gasoline was like 29 cents a gallon. And the attendant BEGGED

You to let them clean your windowshield for you!!

To me that says it all. If you needed help, all you needed was a gas station to stop at - there were real people there, not slaves confined to cages.

Community was built into every arena of life back then.

Your title for the young people now is very apt. Sadly it is very apt.

[Citizen Number 9]

17. What? No soliloquies for the passing

of free "steak knives"?

[.... callchet ....]

3. 12,000,000

There are over twelve million unemployed now

[rucky]

5. We need to look out for the people on fixed incomes.

us younguns can ride this out.

[Citizen Number 9]

6. Maybe the next few years will see more

extended families under one roof. I don't think that will harm either the kids or the parents. Or the Grandkids for that matter.

Okay, maybe there will be a little spoilage.....

[Warpy]

7. Extended families look great to people who don't live in them

Remember, the first thing people did when they managed to get a steady retirement income was avoid moving in with their children.

Grandkids might benefit from having grandparents on premises. Nobody else does.

The worst thing you can do to any elderly person is take away their independence.

[GliderGuider]

8. There are different kinds of extended families.

After all, that's basically what a tribal village is, and they worked well for us for hundreds of thousands of years.

I see problems with "slightly" extended families in the context of a culture that doesn't promote or support the idea. An extended nuclear family trying to survive in the accumulating wreckage of a collapsing modern industrial society might have some problems. On the other hand, a non-extended family will have more, so I guess it's all relative...

[barb162]

9. I think he's being too optimistic right now.

That's how bad I think it is going to get. :(

[Pale Blue Dot]

12. Agreed. nt

[Phred42]

14. Lets keep in mind that this whole thing was engineered.

and those that did it (the ones at the top of the heap) will probably get away with it.

[Citizen Number 9]

18. Do you mean the executives and employees of WaMu?

Or Bear Stearns or Lehmann Bros?

[Phred42]

19. try not to be a putz