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Wednesday, July 21, 2010

Double dip my recession

I don't wish to challenge the vacant aspiration that justifies the largest transfer of wealth via tax cuts that are being borrowed and raised through a GST rise to the top 2% while our Dear Leader Optimist Prime joyfully crushes Unions and laughs in the face of negativity while opening cycle lanes that were supposed to provide 3700 jobs but has only coughed up less than 200. I'd hate to sound realistic while the Emperor has no clothes on but it seems that attempting to adopt domestic neo-liberal free market low tax deregulated dogma to combat the global economic collapse caused by neo-liberal free market low tax deregulated dogma seems as insincere as a Steve Jobs apology.

Double-Dip Days
NEW YORK – The global economy, artificially boosted since the recession of 2008-2009 by massive monetary and fiscal stimulus and financial bailouts, is headed towards a sharp slowdown this year as the effect of these measures wanes. Worse yet, the fundamental excesses that fueled the crisis – too much debt and leverage in the private sector (households, banks and other financial institutions, and even much of the corporate sector) – have not been addressed.

Private-sector deleveraging has barely begun. Moreover, there is now massive re-leveraging of the public sector in advanced economies, with huge budget deficits and public-debt accumulation driven by automatic stabilizers, counter-cyclical Keynesian fiscal stimulus, and the immense costs of socializing the financial system’s losses.

Nouriel Roubini doesn't see the optimism John Key does and in fact seems spooked by Israel possibly attacking Iran...

And one cannot exclude the possibility of an Israeli military strike on Iran in the next 12 months. If that happens, oil prices could rapidly spike and, as in the summer of 2008, trigger a global recession.

...my God Israel can't be that stupid could they??? Roubini's final call hardly supports Key's medicated positivity...

So, as the optimists’ delusional hopes for a rapid V-shaped recovery evaporate, the advanced world will be at best in a long U-shaped recovery, which in some cases – the eurozone and Japan – may be long enough to stretch into an L-shaped near-depression. Avoiding double dip recession will be difficult.


At 21/7/10 8:55 am, Anonymous sdm said...

I was one of the people who thought we turned the corner last year. Now I believe that was wrong - my gut feeling, and what I am seeing at work etc, is that it is about to get worse.

The property market here recovered at the end of last year, and thru to about February. Well, its dropping again, and fast. I regually attend auctions, and put simply, stuff isnt moving (heck, many properties arent getting a bid). I know we have pulled our money out of the sector, because in our view, its too risky right now.

I have found myself very concerned about the next 12-18 months. And with the debt levels of a number of countries - the UK and US for instance, things could be about to get much worse.

At 21/7/10 12:16 pm, Anonymous Compassionate Conservative said...

Time to raise the retirement age, and sever the ridiculous and unwarranted gap between Public Sector and Private Sector retirement ages in many nations.

Ordinarily a capital gains tax on housing profits (within certain bounds) to draw the developer's sting out of house pricing would be a good idea.

But more downward pressure on house pricing is probably not a great idea at the moment, fight one fire at a time.

And anyway, given the state of the property market the extra revenue garnered from slow to sell houses is hardly likely to offset the added damage done to house prices, and as a result the increasing number of people forced to default, as they edge towards, or past negative equity.

The retirement age change addresses some of the issues around future government spending; without damaging current counter cyclical spending, or raising income taxation to further dampen down a struggling recovery.

We've already done our bit on expenditure taxation so no room to move there.

At 21/7/10 7:49 pm, Anonymous Anonymous said...

"...my God Israel can't be that stupid could they??? "

the Likud hawks have been gunning for this for a long time know. Soon they may just launch out on there own.

As for the Collapse, that is coming...soon



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