Venting on a WSJ Article

My significant other emailed me an article from the WSJ:


…and I just went off on a written tirade (not edited)

“interesting article, but I find flaws in the authors reasoning.  None of the post WWII recessions included a financial collapse of this magnitude (and we are not even done at this point..commercial real estate here we come), they were just a result of increasing interest rates that led to a curtailment of spending (an inventory bounce, just like the one we are seeing right now, usually pulled the country out).  Unfortunately we are at zero rates now and no one is spending (no end demand), not primarily because credit is contracting (that is a side effect) but because the consumers’ most important asset (his/her home) is losing value rapidly; that is peoples’ retirement that has been destroyed.  Unless they plan to put a bullet in their heads at the end of 10 years when they are 70, they can’t enjoy life and spend like they used to  (unfortunately our economy historically had the consumer make up 63%, now it is close to 70%)…this needs to come back down, and it will…a large amount of people are in debt and losing more everyday as house prices continue downward (worst, a huge portion of the increase in spending over the last 5 years has been from BABY BOOMERS…you know the ones that are next inline for retirement)….  All consumers are going to do with this "higher income" which goldman sachs says we have, is sock it for retirement — hint: look at the savings rates, look at the money velocity…..people are not spending the extra income…..

Also the author forgets to mention that our utilization usage of current capacity is at 68.5% just above the record low we set last month….businesses aren’t going to spend on capital expenditures if they already have too much capacity.  

it’s a simple concept; what we had over the last 5 years was fake demand (demand pulled in from the future due to credit cards) now that the future is here, we need to pay the bill instead…our economy grew to support this fake demand; demand is permanently reduced (for the next 5 yrs at least); job losses are permanent they are not coming back.  

to me, this is just another article that doesn’t look at the type of recession and the big picture….

That’s my two cents…..we’ll see who’s right in a few months…. (for your pleasure, a graph below of the "professional" economists’ forecasts.  That’s right the same ones that are in Goldman Sachs, BofA, Citi, Barclays, etc.)…tell me, does it seem they’ve seen the big picture in the past?

Second email:

Subject was: If things are getting better, why are we seeing this?

….The largest bank failure this year

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