anyone calling for a V shaped recovery?

Forbes recently stated that a V shaped recovery is currently underway.

The only argument for a V shaped recovery is that no one expects it. And rarely are the crowds right on market/economic issues. I personally don’t see how the fundamentals would support it but everyone is entitled to his/her own opinion.

thanks Pres - I'll read the article. I agree with Village that its hard to see it happening based on the fundamentals, so it'll be interesting to see how they built their case.

V shaped recovery? Well, it all depends if humans are still greedy..hmmmm...hell yes! Fear on the slide down the V and greed on the way up the V.

http://www.forbes.com/2009/06/08/v-shaped-recovery-opinions-columnists-stock-panic-over.html

wow, couple of big bulls writing for forbes..."smile for the camera son, okay dad"

thx for the link prez...

Wesbury is an uber-positive bull that refused to believe we were even in a recession or that there was any sub-prime mess at all. I'm all for a V-shaped recovery, but I am not sure Wesbury is the most accurate guy to use to support this point.

that's pretty much my point - essentially you have no one calling for a V-shaped recovery. which means that if we start to see signs of it, we'll be in for a wild ride to the upside. makes me think that some deep out-of-the money calls are not a bad punt.

A v in the economy wouldn't surprise me.

An L for RE is a given.

nothing is a given

If by "recovery" you mean the economy, then we are certainly not going to have a V shaped recovery. There has been massive wealth destruction, continued unemployment, epic de-leveraging, ramped up savings on the part of the consumer "which represents approximately 70% of the economy, and severe credit contraction. All of these dynamics will lead to GDP below 2.5% for the next several years, which is not even enough growth to get unemployment (the government number not the real number) below 10% (See Bernanke's comment during this weekend's town hall meeting).
However, if by "recovery" you mean an upward move by the stock market, then clearly that is possible, and has in fact occurred in a big way since March. However, you can't confuse the market with the economy..and at some point in time, economic realities will be reflected in equity prices, so if there is in fact no appreciable growth to speak of, I suspect we will see stock prices appreciably lower than they are now at some point during the next 18 months. The only sectore I am bullish on is Pharma, and certain consumer stocks that will cater to what will probably be a decade long alteration in consumer behavior (e.g. WMT, MCD, TUP)

Times has changed.

What used to take 5-6 business day to send a letter now takes 1 second (email). Most localized small shop business can be international presence with the emergence of the internet (ebay, etc.). To think that the housing market recovery will mirror that of the past is just too simple minded. Wealth is not created by looking in the past, but understanding what lies ahead.
As i have said back in the spring, a lot of people will get left behind in this recovery....

"if by "recovery" you mean an upward move by the stock market, then clearly that is possible, "

Have you been hiding in the cave over the past 4 months? Possible? Sorry my friend, but a 45% move UPWARDS have already been achieved. There are times in history where a 45% upward move would take years...we got it in 4 month.

Yeah, but not 1932-33.

everybody, roll their respective penises back into their pants and zip her back up. The girl (the "real" economy) hasn't even gazed your way and you think you're gonna score tonite....

What "lies ahead" that will increase productive capacity and/or wealth for the United States? The dynamic that gave way to the appearance of "wealth" over the last several years was a housing bubble and easy credit, which gave consumers the comfort not to save, and thus actually have a negative savings rate. The housing bubble has burst, loose credit is over, unemployment is rising, and real savings may crest over 10%. To be sure there will be pockets of the economy that will flourish, and I just listed what I thought they were, but surely you cannot completely discount the aforementioned wealth destruction and credit contraction and their impact on our economy.

"Yeah, but not 1932-33."

Stop comparing what has happened today with the Great Depression. We are no where near those levels.

"everybody, roll their respective penises back into their pants and zip her back up. The girl (the "real" economy) hasn't even gazed your way and you think you're gonna score tonite...."

If you like...i can get someone to 'sling' the penis your way. You feeling lucky?

mh23 - you are parroting conventional wisdom on the recovery. that is my whole point. NO ONE (except, apparently the 2 perma-bulls from the Forbes article) are even admitting that it is possible to have a V-shaped recovery. which means that it is not remotely priced in to the market (stocks or real estate), so if we see it, it will take EVERYONE by surprise and the reaction will be a brutal move to the upside. i am not suggesting it is likely, but for a risk/reward trade it seems very enticing to place a small wager on it.
one catalyst i see for it is that the health care reform bill dies. given the enormous political capital that Obama/Pelosi/Reid have put into it, we would likely see the collapse of their cap-and-trade plan as well, and a move towards focussing on deficit-reduction - almost a re-play of the Clinton years. and given the massive collapse in consumer spending that we have seen (for instance, auto sales going from 16mm+ to <10mm, new home construction at 25+ year lows), particularly on large capital goods, and the drastic labor force reductions, we don't have to go back to bubble levels to see a massive V-shaped rebound. again, not saying it is likely, but it is conceivable, and its not priced in at all

sorry - that got cut off. auto sales from 16mm+ to <10mm, new home construction at 25+ yr lows, greatest ever reduction in # of people employed, it means that we don't have to see a return all the way to bubble levels to see the V-shaped rebound

weird - keeps aborting my posts.

"What "lies ahead" that will increase productive capacity and/or wealth for the United States?"

It's no longer about us. There's BILLIONS of people in Asia and Southern America ready to make the
leap. Think about it...instead of 200 million tooth brushes, you're looking at 2 billion....instead of 200 million Big Macs..you're now looking at 2 billion Big Macs..

alanhart makes a relevant analogy. Even though we may not be replicating the Great Depression, the fact remains that the market can have huge moves up during secular bear markets. And even if you are correct that the economy will have a V shaped recovery, how much more of that has the market already priced in?
Do you think earnings are going to replicate what they were in 2005 and 2006...I don't. I agree with Gross and AL Arian that we will have to get used to a "new normal" that reflects the realities that I have already laid out. In that environment, I would be very reluctant to pile on to this rally.

"Even though we may not be replicating the Great Depression, the fact remains that the market can have huge moves up during secular bear markets."

One major difference. Money supply was shrinking while the market went up. Money supply is now exploding around the world. And how bout that Dow Theory Buy Signal?

ericho - "Stop comparing what has happened today with the Great Depression"

now I never called for a depression, and only referred to TGD as the last bout of debt deflation that was similar to what we experienced. But how can you say that when even Ben Bernanke blatantly admitted that he took unprecedented action and liquidity measures so that he would not be the fed president that resided over the 2nd great depression? even the fed chief admitted that was how bad things got.

http://online.wsj.com/article/SB124865498517982625.html

"Federal Reserve Chairman Ben Bernanke on Sunday said he engineered the central bank's controversial actions over the past year because "I was not going to be the Federal Reserve chairman who presided over the second Great Depression."

it goes to show that you dont know much about the shadow banking system, securitization, credit boom gone bust, mbs/cmbs, off balance sheet vehicles, gses, what happened, and how this episode of debt deflation was last seen during the great depression. There is a difference in calling/predicting a depression and acknowledging that the only period of time to compare what we just went through to, was in fact TGD!

Printer, I agree with your analysis regarding that salutary effects of Obama's agenda being thwarted. That is one of the reasons I like Pharma. In addition, I also believe that it is possible for the market to continue to rally farther and longer than anyone expects. However, even if Obama's agenda is shelved I still don't see the economy at large recovering to what it was in say 2006. That does not mean that I am opposed to owning or trading stocks, I am not. I am simply saying that the economy is going to take years to recover in a meaningful way, regardless of what the stock market does.

UD,
Read that again...he took steps to make sure he won't be the guy that presided to the 2nd great depression. Has this collapse been officially categorized as a depression? Were we even in one? My point was that, we are NOT or were ever in a depression over the past 2 years. If that's the case, you can't compare a depressionless environment to the one in the late 1920s.

ugh, you just dont get it

Trust me...i get it.
It's you that don't get it.

ok

So ericho, where on this chart would you say is analogous to where we are today: http://stockcharts.com/charts/historical/djia19201940.html

If this is the matrix than dow at 15000 next year no problem.

UD, don't bother. He thinks a stock market rally is tantamount to economic recovery.

"So ericho, where on this chart would you say is analogous to where we are today: http://stockcharts.com/charts/historical/djia19201940.html"

1945-1946 when we took out 196 on the Dow.

printer... no one is talking about an exploding sun, therefore... it's gonna happen right?

ericho75, let me ask my wife if it's okay. It's a "depression" for anyone that wasn't around in 1933 and are used to 16 salad shooters.

Like the NYC RE mkt, only time will tell.

Anybody remember that movie with the glow in the dark condoms? For the life of me, I can't think of the name....

"V" is half of "W"

"time has changed" Yep, like a second ago... it was a second ago....

More end of RECESSION talk...

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaWJRspXIplA

"July 28 (Bloomberg) -- Federal Reserve Bank of San Francisco President Janet Yellen said the U.S. economy is showing the “first solid signs” of emerging from the recession and should resume growth later this year. "

"He thinks a stock market rally is tantamount to economic recovery."

Not just me...YELLEN from the FED thinks the same way...

"Yellen’s remarks echo the view of Fed Chairman Ben S. Bernanke, who told Congress last week the economy is showing “tentative signs of stabilization.” Those indications include a rising stock market, slowing declines in housing prices and a waning pace of job losses, the regional bank president said. "

Yes! economic recovery and RISING STOCK MARKET are correlated...oh my!

i guess stocks are always right then...and has nothing to do with fiscal/monetary stimulus which we all know is what healthy economies get and is sustainable; in the bizzaro world.

stocks were very right at 13,500 in DEC 2007 and at 13,000 in May...but who cares how much we fell right? What only matters is that we are at 9,000 now, UP 2,500 points from the lows where everybody bought in for the first time and are experiencing wonderful gains without any prior losses!

So, when the Dow was at 14,000, that must have meant that 2008 was going to be an explosive year for the economy...Look, ericho, I like the fact that you area an optimist, but please, and I am not being a wise-ass, do not invest in the stock market based upon your own theories or understanding of how the economy and the stock market inter-relate. The stock market is an irrational place that reacts to, among other things, sentiments and hope, such as yours. As such, it can go up even when news is bad and go down when news is good. Yes, every so often the market correlates to the economy, but not as often as you think. If you are a value investor who wants to pile into quality dividend paying stocks and hold them for years, be my guest, you will probably be okay, so long as you sell them at some point, and don't just wait until the next crash.

NYT, August 1932:

http://select.nytimes.com/mem/archive/pdf?res=F10714FA355A13738DDDAE0894D0405B828FF1D3

UD,
You're a REIT guy obviously and your lack of understanding of the market should be forgiven.
The market wasn't wrong...it acted early and correctly swiftly.
The market topped out in the Fall of 2007. Bear sterns collapsed in the first quarter of 2008. Companies had record earnings in Q4 of 2007, but yet the market continued it's fall. There were warning signs everywhere, those who fail to see it got burned. The same is happening now on the way up.

"As such, it can go up even when news is bad and go down when news is good"

I don't trade on news.

who said I was a REIT guy - are you ever right?

Price is the only thing that matters. News help to confirm my earlier projections.
Thanks for the kind words though mh23.

w67th - that's not what i said. the more analogous statement would be 'no one is talking about an exploding sun' - therefore we are utterly unprepared should it happen, and the consequences would be dire. so maybe buying an 'exploding sun-proof shelter' at this point in time would be a smart purchase, because if people do think that it might happen, the price of such shelter would skyrocket.

Hey UD, I got scared with my SH position yesterday, so I dumped it for a small loss. However, after reading what Grantham wrote I am starting to think that FXP might be a nice trade.

putting stocks aside for a moment, i love this line: "Money supply is now exploding around the world"

ericho, do you get what is happening here and why and in response to what? The shadow banking system had losses totaling near a trillion dollars so far, destruction of securitized assets and whole loans held on accrual books. to stop the madness, the FASB tweaked accounting for off balance conduits and M2M accounting rules, and the fed responded in an unprecedented way. You do know rates are at ZERO, right? Of course you will see a stimulus induced bounce after the destruction. of course! Absolutely! Its impossible not to. But is this what you want? Even the great depression saw a 50% bounce before the world realized the structural problems would take years to iron out. Im sure they believed it was over too on that bounce. Stocks are not rational, yet you make the claim they are.

You do get that excess reserves are sitting idle at around 800Bln right? Why would that be? the money is NOT being lent out and multiplied the way our fractional reserve banking system is designed to do, and the fed claims to have a strategy to exit their policies without lending going beserk causing uncontrollable inflation. The velocity of money has plunged and the M1 multiplier is reflecting this. In addition, you just assume that the assets held on the books are performing, marked properly, and not deteriorating. That is not the case, and every measure is being taken to mask losses so that banks can earn their way back to health with the feds help of course.

you continiously think I wish for a depression, and I wrote about all this crap as it was happening since mid 2007, heck even warning about it in FEB 2007 and warning about an adjustment in stocks in OCT 2007 because of what was happening in credit markets that were not reflected in stocks. But, we are at now now, the destruction happened, the fed is putting the pedal to the medal, wall street was dismantled, investment banks are now commercial bank holding companies, unemployment is highest in decades, housing collapsed, credit collapsed, debts remain, and you are sounding the all clear alarm.

who the hell are you? You started posting 4 months ago with markets down 60% after you bought real estate. you have no prior credibility at all and have shown yourself to have a bias.

ericho...sounds good to me. Just for clarification, by "news" I meant facts. Such as, for example, when a company beats estimates yet the stock sells-off because the news was"baked in". Or when one company crushes top line growth and the stock stays flat, while another stock loses 20 billion, but analysts expected 20.1 billion and the stock shoots up...

mh23 - funny you say that, i hit stop losses on FXP and EEV many weeks ago and in fact I just bought back in FXP at 9.80 and EEV at 17 with entry size positions. they are both broken and momentum is up no matter how you slice it. waiting for some technical buy signals or another dip down to buy a bit more. Just wanted to start following both again after the destruction

"However, after reading what Grantham wrote I am starting to think that FXP might be a nice trade. "

I would becareful with ultra short ETFs. UBS recently just pulled the plug on all their ultra short ETF. New positions are no longer allowed.

w67th - The movie is Skin Deep.

Also, needless to say that stock "price" reflects, among other things, all of the information currently available about the stock, and since new information can come out at any time on any subject pertaining to the stock, the "price" is largely impacted by information.

etfs have a constant decay factor that usually surprise many traders. its probably better to short the inverse etf than to go long the etf you want to make a bet with. of course, shorting any etf many would find quite scary

Sorry to interject but there is not much substance here for a V shaped recovery. We will have that when the layoffs finally end and people feel more secure. Today we had lousy sentiment readings, yesterday VZ announced 8000 job cuts, and Case Schiller reported that the rate at which housing prices are falling is somewhere around 16% per annum and not 18%. Whoooooppppie!

America enjoyed years and years of excess and it was all driven on debt. That is the fundamental game changer - and when you take the leverage vehicles away, along with the dilution in equities and manipulation of the indexes (GM is no longer part of the Dow correct??), I would suggest that Dow 14,000 would be synonomous with today's Down 10,000.

If you ask me shorting the stock market is an easy game. Because when those unemployment benefits stop rolling, this market is going to get steamrolled to 5,500.

I just picked up some FXP. Yesterday I bought some long positions in ABT, AZN and LLY, I still have a some PFE from way back in October, which I will continue to pare down if it continues to rise. What I like about Pharma is, on the one hand they are pushing hard for Obama's plan, which means they have been taken care of to assure their support. On the other hand, if the plan gets shelved or severely modified, they are covered then as well.

"America enjoyed years and years of excess and it was all driven on debt. That is the fundamental game changer - and when you take the leverage vehicles away, along with the dilution in equities and manipulation of the indexes (GM is no longer part of the Dow correct??), I would suggest that Dow 14,000 would be synonomous with today's Down 10,000. "

just an excellent point.

The tooth fairy

leprechans

They're carpenters. Magic carpenters. Not everybody Irish is a leprechaun.

wonder wheel

but we don't need to go back to bubble level consumption to see a sharp rebound in large capital goods - auto, housing, etc. are so far below trend lines that a reversion to the mean, if it happened over a short time period, would result in explosive growth. a more normalised rate for auto sales is closer to 15mm, and we've been around 10mm - that's a 50% increase in one of the most important sectors of the economy. i don't know the numbers for housing, but we are similarly at decades-low levels of production.

SLUMP IS ENDING, DECLARES KLEIN; Assistant Secretary in a Radio Talk Tells How Statistics Will Avert Cycles. GUESSING CAUSED TROUBLE Nation's Leading Business Food

http://select.nytimes.com/mem/archive/pdf?res=F60F15FA385F11738DDDAE0A94DF405B818FF1D3

Buffet says that people make things so complex when it is all so simple, Noah I give you a standing ovation for your grasping of such high-end financial vocabulary.

Anyhow, here is what happened: (1) subprime people who bought homes shouldn't have(not manhattan) (2) bank stock prices became inflated due to those "extra" earnings (3) those bad subprime loans naturally defaulted (4) p&ls and balance sheets had to take big losses. (5) stock prices adjusted to reflect those losses(panic sell off) (6) here we are now with the equity market recognizing the easy credit starting to ignite the economy.

SO THIS EPISODE IS OVER and we've learned another economic lesson, soon to be repeated in 2020 :)

> nothing is a given

You are right... Manhattan RE is either an L shape, or further declines.

"Buffet says that people make things so complex when it is all so simple, Noah I give you a standing ovation for your grasping of such high-end financial vocabulary."

Is SteveF really trying to argue with Noah?

I bet if Buffett showed on the board, SteveF would say he is "biased", too...

true but what about off balance sheet vehicles used to hide assets and the fact that the problem is spreading to higher quality debt classes. that is what concerns me. banks have enjoyed nice earnings over past few quarters from fed interest rate engineering, which is great + they raised lots of capital in private markets, which is also great. So, they have a nice cushion which is good to deal with potential loan losses from prime, jumbo, helocs, cre, lbos, credit cards, etc..

but its what is hiding behind that curtain amid a rising unemployment environment that concerns me. nothing more. if we get out of this, and look back in say 3-5 years and there was NOT a 2nd wave from what I just noted, i will be wonderfully surprised

Printer, the point is, where is the "wealth" going to come from to buy the cars? Unemployment rising, wages declining, credit contracting, savings increasing, home values eroding.

now what I dont know is how the banks used leverage to finance some of these SIVs, VIEs, QSPEs, etc..I know citi used a ton, + whether these conduits were unwound or marked down OR if they are being used to mask losses.

that is the million dollar question I would love to know more about

http://www.housingwire.com/2009/07/23/150bn-of-assets-may-return-to-bofas-balance-sheet-in-2010/

lets not forget, enron used these vehicles to hide losses. let us at least ask the right questions and not just assume we are being told the whole truth. nobody wants to get hurt again.

Noah, I can't believe with the govt stress tests and everyone looking to castrate Wall Street that anything is 'hidden" on any of the financials.
However, your 2nd Wave concern is respectfully noted.

aha, exactly why I must bring up the question. what we know is that there are in fact hundreds of billions worth of assets sitting off balance sheet. That we know. What we dont know is the quality, the performance, the marks, the financing for the conduits, the leverage used, etc..

did you happen to catch that the fed assumption for the ADVERSE scenario in the stress test was a U3 unemployment rate of 9.6% by end of 2009 - that prediction was made in May with the release of the stress tests. Well, we hit 9.5% a few weeks ago, with 5 more months to go, so right there the adverse scenario was missed by our fed. So what to do, well, the fed raised their 2009 year end forecast to 10%.

http://finance.yahoo.com/news/US-unemployment-will-top-10-apf-4086488230.html?x=0

so, we simply have to ask ourselves how assets sitting on and off balance sheet on the banks may or may not perform if past predictions on unemployment turn out to be too optimistic. Again, we must ask the right questions and not take things for granted or assume that all is well. That is a setup for problems, as we found out when we deregulated our banks at their request so they can lever up and make billions for, well, themselves. Our banking system and our fed is yet to earn any trust from me.

I would like to see the fed's books audited, but we all know that will never happen

mh23 - the same way it always rebounds - those with jobs feel more comfortable spending. to greatly simplify, if 15mm is a normal rate at 95% employment, and we bottom at 89% employment, then we still have demand for 14mm vehicles.

Everyone, this is one of the best threads I've seen in a while. Thanks for brightening my day.

Noah, I think you've summed up my recent confusion about the market perfectly: "if we get out of this, and look back in say 3-5 years and there was NOT a 2nd wave from what I just noted, i will be wonderfully surprised."

I used to be convinced there would be a W shaped recession. These days I lean more towards the L scenario. Printer's point about a V recovery is really interesting too, in that the crowd usually guesses wrong. Given where I thought things were going last fall, an L shaped recovery wouldn't be a bad scenario by any means. Not a great one, but not awful, either.

steveF - btw, its a pleasure to have a civil conversation with you

don't you realize how scared how many people are? for every million unemployed, there are probably 5-6 million still employed but living paycheck to paycheck and realizing for the first time how close to the edge they are. as i have noted before, the obvious metaphor is the medical scare that finally gets someone to stop smoking, stop eating crap, etc.

people have discovered that they can make do as w67th has also noted with no more new salad shooters. and, with the exception of food, most of the crap that we buy is just another variation of his infamous salad shooters. the bmw buyer looks with new enthusiasm at a honda which he discovers is also a car that costs half of what is also a car.

the honda owner with 80,000 miles says hey you know what this baby can probably go another 30-40,000 miles.

and on and on.

http://www.bloomberg.com/apps/news?pid=20601087&sid=awQm77H2oGoQ

so your right, the fed DID take into account off balance sheet conduits in their stress test. The question is, how detailed were those investigations and how much did the examiners understand the complexities of some of these off balance sheet vehicles.

What we are told from here, is that banks have around $900,000,000,000.00 in off balance sheet assets that will likely have to be brought back onto the balance sheet in 2010, as part of the FASB rule change.

so if they're overvalued at a mere 25%, that's a hit to capital of $225 billion?

CC - whats even crazier is the lifestyle in Europe, in particular Czech Republic as my wife is from Prague. They live their lives, work way less, start drinking at Noon, and for many live pay check to pay check without much worry. They dont really use debt the way we did, or at least I dont think they do and if they do, its likely a much more recent phenomenon.

I recall on my honeymoon, a 16 day unplanned trip through Italy, one SAT afternoon on the gorgeous island of Capri, we wanted to take a bus to the beach where there was a restauarant to eat/drink and hang out. It was 85 and perfectly sunny, with a light breeze. Yet there was no buses. They shut the restaurant because it was simply too nice to work!

Printer. You are grossly over simplifying the situation. The 15 million number reflects a time when profligate credit practices and a housing bubble encouraged people to buy more than they needed so that a family would have two or three cars. Surely you acknowledge that spending habits have changed for those who have money, and for those who do not, they clearly cannot buy. To put it another way, is it not more likely that people will hold on to their existing cars as long as they can before buying a new car, or do you think that we will simply go back to spending as we did in say 2005?

printer, we are CURRENTLY reverting to the mean. what happened the last 6-10 years was so far outside the mean, this decrease barely touches it. find some charts that show the mean for various areas. then realize that for the last few years, without home equity withdrawal, GDP would have been negative most quarters. that is what kept GDP positive, HEW. that's not even counting other forms of easy credit.

To clarify, the 15 mil number you rely on reflects automobile consumption during the zenith of the greatest credit boom in our nations' history. Where is the money coming from to replace the trillions of dollars in lost wages, housing value, and credit. If you cannot answer that, then it seems odd that you think consumption can revert back to anything close to the aforementioned levels. now, if you see some new technology or industry on the horizon that will create high paying jobs, efficiencies, and wealth, I am all ears.

ironically, there is but it would take an unprecedented amount of cooperation to create the investment pool to make it happen. and we are not good at cooperating.

cc, sadly, i agree. what a waste.

UD - sorry to awaken you from your dream, but the Czech republic has had some very serious debt problems - not only have people taken to borrowing, but a lot of it was in euros, not the domestic currency.
and of course its a 'recent phenomenon' - they were communist until 15/20 yrs ago, after all.

i'm so sick of people impugning americans, as if we are the only consumer driven economy. spain, the UK, Iceland, Australia, Ireland, to name just a few, had huge housing bubbles, and their banking systems were just as, or more, f'd up.

columbia - until that honda owner realises that it will cost him $1500 a yr to maintain the old car as it needs new brakes, etc, but he can lease a brand new accord for $199/month. Each recession (2001/2002 excluded - and that was so shallow it hardly even counts as a recession), is full of stories about 'simplification' and a 'return to the basics, etc.' but people like new things - they always have, and they always will. again, we don't need to go all the way back to 06/07 consumption levels to see a very sharp rebound.

As an aside, there is an interesting piece in the journal on the speculative bubble in the Chinese Stock markets. I highly recommend the book Devil Take the Hindmost, by Edward Chancellor for a history of speculative bubbles.

"they always have, and they always will"...until they don't. and $2,400 is 60% more than $1,500. a couple of years ago, i agree no one cared. chump change.

that $900 a year keeps your cable coming as opposed to shutting it off for the new honda. we are not talking about people with 6 figure or even high 5 figure incomes. if you're making $50 K, $900 is real money to you.

SteveF: "Noah, I can't believe with the govt stress tests and everyone looking to castrate Wall Street that anything is 'hidden" on any of the financials."

Sorry, were you being serious? I'm really curious.

mh23 - you wrote 'To clarify, the 15 mil number you rely on reflects automobile consumption during the zenith of the greatest credit boom in our nations' history'

but you are, to put it simply, dead wrong. you should really check your facts before you write. 15mm was consistently reached as far back as the mid 80s. during the HEW fueled '00s the number was more like 17mm. by any measure (vehicle age, vehicles/registered drivers, vehicles/overall population), 15mm is an extremely realistic number.

ok columbia - so what is the rate of auto sales going to be going forward, in your new world order where we all live off the land, compost our sh*t, and sing kumbaya all night? is the current 10mm a sustainable number?

interesting how printer starts out by saying that he doesn't really see how the fundamentals could lead to a v-shape recovery, and then proceeds to argue vehemently in favor of such a possibility.

our car is five years old and has never been in the shop for anything other than routine maintenance. we'd be happy with it for at least another three years.

CC, while I more or less agree with you, I am not so sanguine that this recession marks a fundamental shift in most American's perceptions. A few? Sure! 5-6 million? I'll buy that. I'd bet my down payment we make a collective return to profligacy the instant the recession is in the rearview mirror, though.

UD - Europeans also have more of a social safety net, and value time off over stuffing their apartments with more junk. Ever been to the marches aux puces in Paris? The secondhand stuff really is mostly crap. In the US you can find practically new things at garage sales. Turns out we're willing to come up with a haphazard safety net in an emergency, we just collectively refuse to plan for emergencies.

Cc, ar, ud. What's a few zeros amongst friends. Is it me or is there an age line on this bull/bear debate. Anyone older than 30 seems to be in bear camp and anyone 17yo to 25yo seems to be in bull camp, listening to jonas brothers.

Me, I just don't get the the Jonas thing. -shrug-

$900 = 450 hits of crack

not if people can't (or think they can't) afford it. this is what you seem to not factor into your equation. can we at least agree that the "scared" factor is at a generational high?

Sure, cc. I can agree with that. For now. I just think the country will leap right back onto the debt hamster wheel that the earliest opportunity, that's all. Plus ca change.

agreed - i would even say that its at a multi-generational high, but i was very young during the early 80s recession.

"Cc, ar, ud. What's a few zeros amongst friends. Is it me or is there an age line on this bull/bear debate. Anyone older than 30 seems to be in bear camp and anyone 17yo to 25yo seems to be in bull camp, listening to jonas brothers."

Would actually be worth a poll to test that theory. Witness the recent Times article about recent college grads turning down jobs that they think are below them.

evnyc, nothing would surprise me, but i doubt the people will be given the rope to hang themselves so easily over the next few years. the number of people with ruined credit scores is astronomical, and a good percentage of the people with good credit scores maintained them because they are relatively prudent. you have to get the lease or the loan to buy the car.

also, some very interesting research being done on the opinions/views of the younger generation. w67th, i think we have some anomolies here, or they just missed the youth cutoff. purportedly the young are scared out of their f'ng minds, as well they ought to be since employment prospects are so bleak.

alanhart, for the poor among us who have simpler, more slowly destructive tastes, i prefer to do a dollar/thunderbird exchange.