The experts clearly need a better forecast for the economy
By Daniel at 20 April, 2009, 12:10 am
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Have people already forgotten that the “recession” was only declared in December 2008? When this journalist writes: “Businesses have been shrinking for a year”… um, excuse me? No one was talking recession until October 2008. Talk about revisionist history. People were worried about problems in the future, but I don’t remember hearing a single company talking about layoffs, etc, until the market blew up.
So all this talk about this being a regular inventory correction is hogwash. This market and economy had a HEART ATTACK. Everything stopped from September until November. This type of shock, much like the earthquake in Indian Ocean in 2004, has had and will continue to have ripple effects. This isn’t just an ordinary inventory correction phase. This is far worse. Our financial system is in for a beating, and guess what, we still haven’t gotten hit by the Alt-A and prime foreclosures yet. This is the one-two punch to our economy that I predicted back in December, and this second punch will occur sometime before September.
The only people who can afford to buy homes are simply the rich people who have their 20% in CASH. Everyone else had their downpayment in the market, and now that they have lost 50% of that, they are shellshocked and scared and will put off buying homes until the economy starts to recover. The housing market is dead until then. Even people with homes right now, they can’t even use their home’s equity to trade up, because they can’t sell their house. This is a purely foreclosure-driven housing market with no real organic growth.
All the businesses stopped spending at once. What is going to happen is that there will be a lot of shake out of the weak companies, and it will continue back and forth like an echo until our economy gets itself off of the ground. This won’t happen until people start spending, which won’t happen until jobs get created.
This is not just an ordinary inventory correction, folks.
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