Economy to hit rock bottom in 5 years or recover in 2010?

[Bast]

Don't mean to sound like a Pauline apostle but the former is what people in my office were talking about and how so many factories are shutting down in China every day.

But then I've seen a lot of articles on the internet about how 2009 will be a bad year but the economy will recover in 2010?

 

[Ramius75]

Well, thats the million dollar question Bast.

The fact is, nobody knows... not even Warren Buffet himself.

The 2009 bad year and 2010 recovery is the general consensus atm. But very few people are aware of how bad the situation is.

There are a few cases.
1) IF the worst for the Financial sector is over in 2008. Then the 2010 prediction will probably come true.
2) But IF the financial sector are still taking more hits and losses as per now. As HSBC, Citibank, RBS, BOA required more bailout. Then the worst isnt over yet. And maybe the recovery will take 1 more year to recover.

But what i can give advise now is. Please make sure that you have enough saving and not to waste money on anything that is not required. And when the time is right. U can start making little investment from time to time to pick up the cheap assets and investment.

The world is not going to end tomorrow.

 

[Snorrius]

But then I've seen a lot of articles on the internet about how 2009 will be a bad year but the economy will recover in 2010?

No. It is just wishful thinking. In reality world is going to decade(s)-long depression until world find new economic paradigm instead of consumer one.

So it means economy is to hit rock bottom in 5 years.

 

[RedRalph]

Of course no one knows for sure, but a trend I've noticed is that every time more is found out about the state of economies, the financial sector etc, things are revealed to be WORSE than though, almost without exception. Bailout follows bailout, growth figures get revised down (with exceptions), lending wont get going again seemingly no matter what, etc etc. All of which makes me suspect the people who say this will end in 2010 might be being a bit too optimistic.

The 'experts' do not seem to have seen this coming, do not seem to have initially grasped how bad it is and do not seem to have the first idea what to do. Given that, I'm less inclined to trust what they say.

 

[renohol]

i vote that the World will reover in 2012 the day before the Stroid kil us all!

 

[Godwynn]

Subscribed, to be necro'd later.

I think this is pretty useless and I advise everyone to sing Bill Clinton's 1992 campaign song.

Dont stop, thinking about tomorrow,
Dont stop, itll soon be here,
Itll be, better than before,
Yesterdays gone, yesterdays gone.

/taps his foot along the tune

 

[kronic]

There are a few cases.
1) IF the worst for the Financial sector is over in 2008. Then the 2010 prediction will probably come true.
2) But IF the financial sector are still taking more hits and losses as per now. As HSBC, Citibank, RBS, BOA required more bailout. Then the worst isnt over yet. And maybe the recovery will take 1 more year to recover.

In my opinion, the financial crisis will not be over before the entire banking system is nationalised. And a few government defaults seem entirely likely. I'm wondering how many countries will manage to keep the AAA rating.

But since it has now become a general economic crisis helping out the banks can only be a part of a recovery plan. I certainly don't see recovery in 2009 and have only little hope for 2010.

 

[RedRalph]

Eurozone will shrink by 1.9% next year, some thnk this is optimistic http://news.bbc.co.uk/2/hi/business/7837286.stm

Brits have to begin a SECOND bailout of their banks, see articles on same here http://news.bbc.co.uk/2/hi/business/7836782.stm and here http://www.guardian.co.uk/politics/2009/jan/19/economy-banking (particlularly interesting analysis from a UK Minister in 5th paragraph).

What exactly are the grounds for optimism?

 

[JerichoHill]

We'll be in a recovery prior to Obama going for term #2.

Call me cynical

RRW, look at the TED SPREAD. That's a pretty good leading indicator of where things are going.

 

[Ramius75]

In my opinion, the financial crisis will not be over before the entire banking system is nationalised. And a few government defaults seem entirely likely. I'm wondering how many countries will manage to keep the AAA rating.

But since it has now become a general economic crisis helping out the banks can only be a part of a recovery plan. I certainly don't see recovery in 2009 and have only little hope for 2010.

Wow, i cant imagine how the economy will be like if this scenario plays out...

But the usual advice will be to keep spending to minimum and try to save more cash.

I will still think that to invest in good companies and natural resoruces is the way to go. and Whomp's suggestion that Tech stocks might be worth looking into also...

 

[azzaman333]

Anything could happen.

 

[Narz]

Don't mean to sound like a Pauline apostle but the former is what people in my office were talking about and how so many factories are shutting down in China every day.

But then I've seen a lot of articles on the internet about how 2009 will be a bad year but the economy will recover in 2010?

How do they say it will recover? How will it happen?

Anything could happen.

No it can't. There are physical laws.

Seriously though, the only reason fuel prices are so low is because of the recession. We can't climb out without causing oil prices to rise back up dramatically which will cause us to fall back into a recession.

Are all the closing factories in China going to reopen after the "recession passes"? Are people going to start start spending money on stuff they can't afford again, start paying hundreds of grand for hastily constructed crappy homes?

I just don't understand how anyone thinks that this is just a blip in the road & things will soon "go back to normal". Normal is highly disfunctional & what got us into this mess in the first place. Society is going to have to change because exponential growth is maxing out. We're going to have to transition to a steady state economy (well realisticly we'll probably have to deal with perpetual decline for a few decades at best, just like any people who lives beyond their means).

BTW Bast, what's a "Pauline apostle". Also, do you mind posting some of the articles you've mentioned?

 

[cubsfan6506]

Bast stop trying to act smart with one line posts in 5 years or in 2010.

 

[innonimatu]

In my opinion, the financial crisis will not be over before the entire banking system is nationalised. And a few government defaults seem entirely likely. I'm wondering how many countries will manage to keep the AAA rating.

But since it has now become a general economic crisis helping out the banks can only be a part of a recovery plan. I certainly don't see recovery in 2009 and have only little hope for 2010.

Ratings were used by banks and other "financial institutions", intermediaries in every bond deal. Once all of these get nationalized ratings will be discarded, and governments will move on to simply creating whatever amount of money they want. European governments first have to figure out how to split control over the euro, and will waste precious time wrangling over it.
Ratings were never right anyway, the "rating agencies" were part of the big credit deceit, what is amazing is the credulity of people who still pretending that those ratings mean something. They don't want to face reality, like that band said to have played while the Titanic sunk...

 

[Shadylookin]

I predict that by 2010 our economy will be so bad that lolcats become the new currency

 

[innonimatu]

Inflation on the way, finally?

[UK] Treasury gives go-ahead to 'print money'

And one more call for default on government debt on the other side of the Atlantic:

Soros said the United States needed "radical and unorthodox policy measures" to prevent a repeat of the Great Depression of the early 20th century that include recapitalizing banks and writing down the country's accumulated debt.

Also, he said, it should create more money to offset the collapse of credit and then rapidly pull that cash out of the system when inflation emerges. The government would have to be very nimble in the timing of such moves, he said.

 

[Narz]

When in doubt just print more money (and then take it away once people are debt-free). Brilliant! These guys sound about as sophisticated as the racers in that arguing on the Internet pic. Why not just skip the playing games and cancel everyone's debt.

 

[Grisu]

I predict that by 2010 our economy will be so bad that lolcats become the new currency

stealing from webcomics, are you?

 

[GenMarshall]

Seriously though, the only reason fuel prices are so low is because of the recession. We can't climb out without causing oil prices to rise back up dramatically which will cause us to fall back into a recession.

If that were the case, then we should start drilling in our own backyards and stop being dependent on the Saudis, OPEC, and other Oil exporting countries ?

 

[Shadylookin]

stealing from webcomics, are you?

pfft xkcd predicts all funny pictures will become currency. He's clearly wrong as only lolcats will become currency.