Global Recession really over?
 

Ok

The other night I was attending a meeting with my mum at Upper Hutt Cossie club which was arranged by her manager who is in charge of Mitre 10 Mega Upper Hutt.At the meeting,it was discussed that the shop might close due to declining business and also my dad who works with KiwiRail which is owned by the New Zealand Government at the Hutt Workshops that around 180 - 400 staff may face the sack.Really is the recession over?

It's over for the rich people, they all got bailout money.

But us poor folks have got a long way to go. :damn:

Magic

The recession is most certainly not over. The market is currently being fueled by speculation as wealthy investors struggle to find some kind of stability in the commercial freefall.

The Dow is over 10,000 again, and it may even reach 12,000, but it will collapse without the economic structure to support it. The most recent stimulus package in the US has virtually guaranteed a collapse. There is absolutely no way that the US economy will be able to outpace the rapid influx of currency. As the currency supply expands, the value of the dollar and all foreign invesmtents in the dollar will plummet, leaving only real production values and a vastly inflated currency. The result will be a depression.

Stimulus packages from nations around the globe will provide temporary relief, to some extent, but only until the market catches up. Injection of currency only works if there is a matching increase in production or demand. Thus far, we have seen very little of either. The US, in particular, is going to suffer from the effects of an artificial "green" industry with no buyers.

I swear to God, there couldn't be a worse time to introduce "green" protocols. Is a world in the midst of recession likely to buy more expensive products that use experimental technologies? Of course not! People will be looking for the cheapest stuff they can buy, and they will readily opppose tax-funded subsidies. After all, we have to provide for our families and dependants, do we not?

If anything, this unprecedented amount of global "stimulus" will ultimately bring the world economy to a lower state. They will simply expand the currency supply whilst encouraging very little production, resulting in inflation. The limited measures taken thus far have done very little to relieve the crisis, are we to expect more from further "currency injections"?

I think not.

An economic stimulus program must encourage production. That means making production more profitable and therefore viable, which means cutting taxes and legal restrictions. If goods are cheaper more people will buy them and the industries which produce them will require more employees who then have more purchasing power etc... etc...

The mechanisms of supply, demand, and incentive are relatively apparent here. I'm just shocked by how few people seem to comprehend them. Most people seem incensed by the idea of " I lost crap, I want the state to give it back to me, using rich people's money, even though those people gave me my job. " It's utter madness.

Nope. The numbers just aren't there. While they're are a very very small improvement from "Run for the hills!", they do not at all indicate the downturn is over.

Short the market if you have the balls to be in it now.

PD

One lesson learned by the great depression that was not really learned by the masses is this, you have to spend your way out of a depression not save your way out of it.

Money spent in hard times guarantee's jobs that would otherwise be lost due to closings. In fact despite all the buzz about the recession being over more and more company's are closing their doors. Not a good sign for the near future I say.

Australia doesn't seem to be doing to bad at the moment. We have had a downturn, and an increase in jobless, but it hasn't been as bad as everyone had expected. We just got lucky that demand from India and China has get the economy going here.
Are we out of the woods? Heck NO! A lot of what caused it is still there and it can happen again.

The recession is definitely not over. In my state, layoffs and jobless rates are increasing at rediculous rates. It's getting to a point here that you're competing with at least six other people even for menial low paying jobs now according to the news earlier this week.
Heck, My wife has a masters degree. She got laid off and now it's been two years and no one wants to hire her for anything other than temp work (She keeps hearing "Overqualified" a lot but I think "Overqualified" actually meand "We aren't hireing and we're just humoring you.").
She's now working as pretty much a minimum wage temp, in the same job she got laid off from, doing the same thing she was doing when she wasn't a temp. She says that 90% of her office is now temps. Oh.. and that means that she has no benefits, no health insurance, and we barely make enough money to even scrape by and we're having trouble even affording the tiny apartment we live in and it's pretty damn cheap for rent. The next step lower would be a homeless shelter. And god forbid something should happen where she needs to be hospitalized. I could use this time to rant about how much we need universal healthcare because we are EXACTLY the kind of people that it would help, but I won't.

or an economic stimulus program must encourage demand. There are two schools of thought here.

1. Increased production will result in increased demand = increase in the economy
2. Increased demand will result in increased production = increase in the economy

There is no clear one is always right and the other is always wrong. Depending on the circumstances one may work while the other may not. This is why economics is more an art than a science in my opinion.

Personally, I favour option 2, but there are many who favour option 1. And that's what makes the economic world go around.

Sorry to hear that

That really sucks when corporations use Temps as a way to get cheap labour without having to pay benefits. So much for loyalty from corporations huh?

Very sorry to read about this. We have been very lucky. Both of us are in pretty secure positions (knock on wood). With the prices the way they are here in Virginia, I don't think we could survive on one paycheck for very long (one of the many reasons I can't wait to move out of VA)

This kind of crap is RAMPANT right now. Several of my friends work in the insurance industry or have office jobs and their offices are all turning more and more into temps very VERY quickly.

Out of that entire post, you pick that one sentence to quote?:DL The whole point of the post, and the rest of the paragraph you quoted, was to suggest that trying to legislate artificial demand is a futile effort. Why take it out of context like that?

Perhaps I wasn't being clear. What I intended to say was that state interference in the form of monetary injections and atempts to create production that is without demand is a recipe for failure. When I said that a stimulus program must encourage demand I meant that the business environment must be made more favourable.

Like you, I am more in favor of option 2, but.........

...there are a lot more than two schools of thought when it comes to economics. I see what you are saying here, and you are correct to some degree (marketing professionals deal with these principles all the time), but a general positive trend in economic activity can only be brought about by leaving the market alone. There is no amount of state finance or manufactured demand that can significanty affect the free market in anything but a detrimental fashion.

Economics is neither a science nor an art. Economies consisting of millions or billions of individual transactions with an untold number of motives do not lend themselves to categorization or artistic interpretation as a whole.

The market cannot ever really be controlled. It can be hindered, and it can be stifled, but it cannot be stopped or directed with any certainty. It is human nature itself, expressed in the forms of competition and mutually beneficial transactions. We can attempt to control it with the intent of supporting an ovveriding purpose, but we will not be successful. All we will ever really achieve is to drive the market underground, which results in a black market and the associated criminal activity.

Our best bet is to just leave it alone. Beneficial enterprises will take root and prosper, and bad ones will die. Smart consumers will benefit, and dumb consumers will have to rethink their behaviour. One way or the other, the economy will reach a kind of homeostasis.

The worst thing we could do is to entrust economic policy to economic "scientists" or politicians. Talk about having the fox guard the henhouse:nope:

On a related note, maybe...
I'm doing technical market analysis for a living these days. I'm kinda new to it so I'm no expert, but I find it interesting that at the moment most of the indicators are saying "sell everything" and they've been doing that for six months now. That's very unusual. It's almost as if the indicators see the current (upward) market trend as false. :hmmm:

They say that the docks are the indicator of how the country is going . I would say in australia it is not going to get any better any time soon .

I dunno, I think government can help stimulate the economy and bring a country out of a depression. But its not by bailing out the large corporations and banks (who frankly should be let to die out if they mismanaged themselves).

One of the most effective programs launched during the great depression was the US government starting massive public works jobs. One of the big ones was rebuilding the infrastructure of the country (roads and the like). This did a lot of good things for the country at the time. It put money in average people's pockets so they could spend again (and afford to eat), and it greatly improved the US's infrastructure which it was in need of at the time.

Ironically some parts of US infrastructure are in real need of repair/improvement right now, and if things continue it would be a very good idea for the US gov to implement such programs.


On another note I really don't think the western world is going to return so quickly to their excessive spending ways. Demand has been vastly over inflated in the west by marketing, particularly when it comes to technology. People were convinced by marketing that they needed all this new crap, that they needed a brand new state of the art cell phone every 6 months, that they need to spend 1000$ on computer video cards every year. Large numbers of rather foolish people were getting heavily into debt trying to keep up with the trends and technology. On top of it we have the "i am entitled to everything I want" generations who see no difference between borrowed money and money in hand.