Discussion in 'Off-Topic' started by Integral, May 1, 2009.
That is a pretty spectacular drop alright. Makes me proud to be Irish
I've heard this too - care to comment JH?
think it could make it up to last years highs again?
Probably not (at least in terms of appropriate dollar's purchase parity). Significant share of former prices were a bubble created after money ran from housing to natural resources' market.
I honestly don't know much about European banking. I wouldn't be suprised but it would be just a continuation of the wave that started in America, the world is a few months behind America in the timing of the recession I suppose.
Ireland is in a depression, not a recession
from Irish Times
I'm not sure I like that definition of depression. I prefer 10% drop in a single quarter as the marker
Thats for posting that example of bad journalism. I can't resist making some comments:
And so the media still continues to repeat that old . .. .. .. .. .. .. .. . first embraced by Thatcher (hey, my economic experiments and incompetence destroyed most of the british industry, but don't worry, the future is in exporting services!), and later taken on by Blair and other would be third way "leftists" over the world. They were the ones who first dumped the idea of at least attempting to balance national economies and decided to replace it with ever-increasing financial Ponzi schemes.
Services follow industry. I don't care what shape some idiotic newspaper columnists claim the world to be; geographic proximity and hands-on experience both weight in when choosing service providers. And so do costs, obviously. If industry moves to another country chasing lower wages, services are sure to follow! Specialist skills? So all the other people on the world would be too idiot to learn or what?
Only those services which do not depend at all on industry will be immune to this. But those don't really have a big export potential, do they? And an economy cannot be build solely upon consumer-oriented services: all commercial services must be paid, and that wealth must originate somewhere. Consumer-oriented services by themselves do not create wealth in a sustained way: go into any town where some big industrial employer/exporter has closed its factory and watch all those services wither and die: who'll have money to spend in restaurants, hairdressers, etc? Who will have money to remain a client of banks? Who will buy services from some local engineering firm which supplied the now closed factory? That last one might attempt to export, but in the mists of an international depression with double-digit cuts on industrial production? Good luck! That's the other obviously silly lie on the paragraph above: that services exports would recover before industry did. How? Who would pay for those services? Shrunken industries? No way! Unemployed workers? Certainly not also! Where would the service exports of Ireland find a market, then - on Mars, perhaps?
Material goods must come from somewhere and be paid; when the capability to get those fails everything else crumbles.
Upon looking for the "Ask an Economist" thread, I saw that it was closed, so I though I'd post this article in a related thread:
To what extent does this article provide a reasonable assessment of economic policies in the last few decades, especially in regard to the current recession?
Are there weaknesses in the suggested policy changes that would render them less effective than current practices or would need to be revised before being implemented?
I wonder where the author thinks property taxes are low?
Paul Krugman thinks the worst is over:
Despite this, expect unemployment to continue to climb through the second half of the year.
A selection of the indicators from the past few weeks:
- Capacity utilization is at 69.1%
- State and local unemployment for April can be found here
- CPI didn't change in April; core CPI continues to increase at trend
- Residential construction:
Regional reports come out this week, as do most of the other housing sector reports. The first revision for last quarter's GDP report will be released Friday.
Is that Krugman an idiot, or is that Krugman a liar?
More investment by corporations when capacity utilization is below 70% and profits have collapsed?
The emergence of a major technological innovation? Does he have one down his sleeve that we don't know of, to pronounce that the worst is over already?
Government moves on climate change? A "new regime on emissions" to force companies to invest? They'd sooner shut down even more factories! That is so idiotic that it should merit him another Prize on Economics by the central bank of Sweden. They've been certifying bad economists that way for decades now.
You mean investing in new factories doesn't make sense when over 30% lie dormant? Who would've thought...
Quality matters. Not more factories, better ones making better products.
Who will buy? With what money?
The one problem here is that consumer's income could not continue to support demand. Hidden by debt, the imbalance was allowed to grow until it became really unsustainable (people started defaulting on the debts they already had, despite interest being kept low). When debt stopped growing (massive defaults have yet to happen) the usual "growth" of the world economy suddenly halted.
It is a typical demand crisis, only this one is worldwide. And, even despite identifying the problem, Krugman absolutely fails to propose a solution to it. His economic framework doesn't allow for the problem to exist, much less for solutions. The only possible solution violates the "sanctity" of private property...
Yeah, private property is the problem.
Productivity improvements and things like renewable energy, which displace costly imports with a one time investment, frees up income for other consumption.
Here are the regional reports I promised:
Empire State Manufacturing Survey:
The Empire State Manufacturing Survey indicates that conditions for New York manufacturers worsened only modestly in May. Although negative, the general business conditions index rose 10 points to -4.6, its highest level since August of last year. The new orders index fell several points and remained below zero, while the shipments index inched into positive territory. The inventories index remained negative, but rose from last month’s record low. Price indexes also continued to be negative, with the prices received index falling 10 points to a record low. Employment indexes indicated further contraction in employment levels and in the average workweek. Future indexes improved substantially for a second consecutive month; the future general business conditions index rose 11 points to its highest level since September.
Philadelphia Business Outlook:
The region's manufacturing sector continued to show weakness in May, according to firms polled for this month's Business Outlook Survey. Although the indexes for general activity, shipments, and employment improved, the index for new orders declined slightly. Firms reported decreases in input prices and prices for their own manufactured goods; however, the corresponding price indexes rebounded slightly from their record lows last month. Most of the survey's broad indicators of future activity improved notably again this month, suggesting that the region's manufacturing executives are more optimistic that a recovery will occur over the next six months.
Dallas Fed Manufacturing Survey:
Texas factory activity remained weak and changed little from April to May, according to the business executives who responded to the Texas Manufacturing Outlook Survey. The manufacturing sector’s rate of decline stabilized over the past three months—a change from the accelerating contractions in the last quarter of 2008 and first two months of this year.
Most indicators of future activity continued to improve, suggesting manufacturers expect better conditions over the next six months. The future general business activity index—the survey’s broadest measure of Texas manufacturing trends—turned positive for the first time since September 2007. Indexes for future production, shipments, new orders and growth rate of orders rose markedly. More than a fourth of manufacturing executives foresee improvement in their firm’s outlook six months from now.
Although still negative, the overall business activity and company outlook indexes strengthened as the share of executives reporting improvements ticked up from April to May.
Richmond Fed Survey:
Manufacturing activity in the central Atlantic region rebounded sharply, according to the Richmond Fed's May survey. The index of overall activity expanded for the first time in 12 months behind strong increases in shipments and new orders. Other indicators were mixed, however. Employment, backlogs, and vendor delivery times contracted, though at a slower pace, while capacity utilization turned positive. In addition, manufacturers reported somewhat slower growth in inventories.
Looking ahead, the outlook for business prospects over the next six months was in line with last month's readings. Contacts at more firms anticipated steady growth in shipments, new orders, backlogs, and capacity utilization during the next six months. Despite a marked improvement from last month, expected capital expenditures remained virtually stagnant in May.
Chicago National Activity Index:
Latest CFNAI News Release
April economic activity shows improvement
The Chicago Fed National Activity Index was −2.06 in April, up from −3.36 in March. All four broad categories of indicators improved in April, but each continued to make a negative contribution to the index. The index's three-month moving average in April reached its highest level since October 2008.
On to the actual discussion -
Sadly, this is a highly legitimate question. Most recent recoveries have been driven by consumer spending and residential investment; for obvious reasons, those two sectors are not likely to rebound quickly this time around. The other big source of recovery, business investment, also looks weak with capacity utilization below 70%. Inventories are finally declining, but not quickly enough to justify large-scale expansion in investment.
It's tough to see where the recovery will come from.
I'll end off with the Home Price Release: link here (PDF, 4 pages).
Separate names with a comma.