Wednesday, January 16, 2008

Open Thread: Are We Facing Recession?

AP reports a sell-off in the Asian stock markets.



Asian Markets Plunge on Worries That US Is Sliding Into Recession; Hong Kong Sinks 5.4 Percent ... Asian markets plunged Wednesday on growing speculation the U.S. economy -- a vital export market -- is sliding into a recession that could lead to a global slowdown.

Investors dumped stocks after an overnight sell-off on Wall Street and on news that Citigroup Inc. had lost nearly $10 billion in the fourth quarter as it wrote down mountains of bad mortgage assets -- the latest fallout from the credit crisis. Weak U.S. retail sales figures added to the gloom.

"American financial mismanagement has brought us to this economic meltdown," said Francis Lun, a general manager at Fulbright Securities in Hong Kong. "Asian stock markets are all suffering; nobody has escaped."

In Hong Kong, the benchmark Hang Seng index sank 5.4 percent -- its biggest percentage drop since the Sept. 11, 2001, terrorist attacks -- to 24,450.85. Tokyo's Nikkei 225 index fell 3.4 percent to 13,504.51 points, its lowest in more than two years.

Or are we at the bottom, living in a moment of opportunity?

11 Comments:

Blogger Nooyawka said...

I am in no position to predict whether or not the US will go into recession [qualified economists disagree], but I do know that as a general rule Asian markets react to the US market. When the US market has a bad day, Asian markets often have a bad day too the next day. Once in a while, Asian markets lead the way. Usually the US market leads the way. If the US market has a good day today [I hope] Asian markets will correct the next day.

1/16/2008 06:34:00 AM  
Blogger Red River said...

Opportunity. I have a lot of cash set aside to buy stocks.

I was going to buy Countrywide when it hit $1, but Bank of America ruined my party when it hit 5$.

Did anyone buy American Airlines when it was less than 2$???

American and European stocks of firms with cash flows are a great deal when they crater!!!

1/16/2008 07:06:00 AM  
Blogger Pangloss said...

I collected a few articles about the subject yesterday here.

I don't know if we're in recession or depression yet, but the short-term future is troubling.

1/16/2008 08:12:00 AM  
Blogger eggplant said...

Pangloss said:

"I don't know if we're in recession or depression yet, but the short-term future is troubling."

I am very worried about the economy.

I grew up hearing stories about the Great Depression from my grandparents. My grandfather supported the family by plucking chickens in a slaughter house. He got around by riding freight trains like a common hobo. He couldn't bear watching the classic movie "Grapes of Wrath" staring Henry Fonda because it was too much like his own life story. I have two young children that I need to support and if necessary, I'll pluck chickens for a living (but I'd really prefer not to).

I am very worried about the economy.

1/16/2008 08:59:00 AM  
Blogger Bret said...

Hmmm. Reasonable manufacturing growth, good personal income growth, and many other good strong numbers. A few weak ones to be sure (household employment survey), but the bad is not pronounced enough yet to predict much of a recession (if any).

Too many worry warts.

1/16/2008 09:40:00 AM  
Blogger Soldier's Dad said...

It's a presidential election year.

Folks who are 'reasonably content' with their lives...vote for 'more of the same'.

Folks who have no job...or
are in fear of having no job vote for 'change'.

The panic mongers are in overdrive.

1/16/2008 10:04:00 AM  
Blogger Chavo said...

As a retailer I can certainly tell you that business is down. From my perspective the economy is fundamentally sound, i.e., unemployment is still historically low, interests rates are low, the GDP is growing at a nice rate. The housing market has really took the wind out of the consumers' sails.

That with the constant pessimisms that passes for economic news these days, it's no wonder people are freakin out.

I just hope I can hang tough through this period. I'm hoping things will turn the corner for the positive around June.

1/16/2008 10:31:00 AM  
Blogger eggplant said...

Bret said:

"Reasonable manufacturing growth, good personal income growth, and many other good strong numbers. A few weak ones to be sure (household employment survey), but the bad is not pronounced enough yet to predict much of a recession (if any)."

Amazing things area happening out here in California. Check out the link below:

http://www.patrick.net/housing/contrib/percent_in_foreclosure.html

Our state capital is Sacramento. If you look at the linked chart, 71.6% of the homes currently listed for sale in Sacramento are in foreclosure. The chart does not list the towns of Stockton and Tracy. I know that both towns are in serious trouble due to sub-prime mortgages.

1/16/2008 04:17:00 PM  
Blogger Dan said...

This being an election year is what worries me, how bad would the great depression have been without the political malpractice.

1/16/2008 10:09:00 PM  
Blogger Who Struck John said...

I think we are already in recession, starting in December 2007. There is a great deal of incorrectly priced risk that Wall Street is going to grudgingly and haltingly reprice. The consequence will be a credit crunch that saps the ability of US businesses to invest just when the US consumer can no longer afford (due to food and fuel prices and the closure of the housing equity ATM) to continue shopping. I think this will be a longer and deeper recession than most expect.

1/16/2008 10:10:00 PM  
Blogger KS said...

We are in a profit recession already. profits lead to earnings surprises, which on the downside turn into over-reaction, and long tails of overly cautious behavior. Those recently burned in 2000-2002 will be slow to come back...

1/21/2008 10:28:00 PM  

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