Depression coming?

[fuji]

I've seen this speculation in no less than The Economist, among other papers. It seems pretty wild given that we aren't even technically in a recession yet--but we are experiencing the largest banking and financial crisis since the 1930's.

Thoughts?

 

[Mack Bolan]

The dollar is still a dollar in Canada. Buy Canadian!

 

[plyrs99]

Dr. Know, you put it very nicely, politically correct i may add.

i won't do that. there are people who are day to day with their finances, who cannot afford to wait weeks, even days, for these idiots holidays to be over, and get back to their well-paying jobs. sorry, but i just don't understand the mentality to honor their jewish holidays all the while, knowing their inactivity will cost people jobs and homes. i guess when you are set financially, why bother giving a flying fuck for those who indirectly pay for your salary.

bush needs to enact severe measures now, including recalling all members of the senate, to sit down and hammer something out, even if it means going 24/7 for a few days or weeks, until something is done. what does bush care anyways, he set himself up real nice and will be gone in short order anyways. let someone else clean up his mess.

Plyrs99

 

[Top Northerner]

I sure hope that our neighbor to the south gets his house in order, and pretty dam quickly!

Our house is in no better shape. We are a nation of debtors. Further, we are in a recession in Ontario, take a look around you. If it weren't for resources we would be in a deep U recession. Trust me, our banks are as seized as the US ones, there is NO liquidity out there, Companies will start dropping here too.

 

[chiller_boy]

We are in an economic slow down for one simple reason. Our politicians have failed us in Ontario by not creating a climate that promotes our manufacturing sector. That sector loses jobs daily... good paying jobs. Like the Americans we suffer from a lack of political vision and leadership. Ask a politician to identify and provide the solutions for the problems confronting the nation and see the response that you get. They consult the polls to see what the voters are feeling and then identify those concerns and offer to throw money at it. No details, just platitudes! We don't need politicians, we need leaders. Unfortunately all we seem to get are politicians.

I've been listening to this argument for some time now and I really think it is overblown. We have certainly gone overboard trying to lure fresh jobs in the auto sector to Ontario. Manufacturing jobs in general are leaving high pay countries for low pay. Isn't that obvious? Perhaps we should lower the minimum wage?? Is that the kind of change that would bring manufacturing jobs back? Where were these complaints about manufacturing 'climate' a few years ago when things were booming.

I agree we need leaders not poll watchers. Of course that is what Dion tried to do with his Green Shift and you see the result(a good idea but the wrong proponent). Lowering interest rates would help(only if it lowers the Loonie) and strenthening Medicare would help.

Canada needs a soverign wealth fund.

 

[nottyboi]

Canada needs a soverign wealth fund.

we have one, it is called CPP and it's HUGE!!!

 

[nottyboi]

We are in an economic slow down for one simple reason. Our politicians have failed us in Ontario by not creating a climate that promotes our manufacturing sector. That sector loses jobs daily... good paying jobs. Like the Americans we suffer from a lack of political vision and leadership. Ask a politician to identify and provide the solutions for the problems confronting the nation and see the response that you get. They consult the polls to see what the voters are feeling and then identify those concerns and offer to throw money at it. No details, just platitudes! We don't need politicians, we need leaders. Unfortunately all we seem to get are politicians.

We have a conservative Govt, that has constantly slammed ontario, and a finance minister that has publicly said Ontario is not a good place to invest. Yet Ontarians seem to want to put these guys in charge of our future poverty... seems quite irrational to me.

 

[sailorsix]

I get a daily email from a millionaire 80+ yr old who has watched stock markets for decades.

Here's his comments from last night:

September 29, 2008 -- "Shifting debt from the financials to the government won't bail out this stagnant supertanker, and I fear that will be the subsequent sentiment when the bailout bill is passed." Ned Davis of Ned Davis Research.

I watched the Obama-McCain debate. The two spent much of the time talking about how they were going to get rid of earmarks and about how they were going to cut way down on government spending. Neither of them get it, they just don't see the picture. Consumers are not going to be spending, they'll be cutting back. Just as corporations and businesses are cutting back on their overhead and on their spending where ever they can (much of it will be in the way of lay-offs).

If the economy is going to improve, it will be up to the government to do the spending. Governments all over the world will have to run up big deficits and increase their spending. After all, what got the US out of the Great Depression of the 1930s? It was the massive spending of World War II that finally turned the US economy to the upside. The giant war effort and related government spending put everybody to work, including millions of America's women. Jobs were plentiful. And now Obama and McCain are competing in promises to CUT government spending! Forget it. To get out of this recession, the US government will have to spend as it never has spent before, along with running trillion dollar deficits. The government will have to embark on a giant "rebuild America program." Our streets and freeways are shot, our bridges are tattered, the US government will have to engineer a massive "make work" program to rebuild America. Unfortunately, as I see it, Washington will be tempting to start another war.
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Is there anything more prescient and sophisticated than the stock market? Yes, there is, and it's the bond market. But how can we know what the bond market is thinking? There is a way -- it's called the Confidence Index (CI), which is a figure posted every week in Barron's. The CI is a ratio of the YIELDS on the highest-grade bonds and the YIELDS on medium-grade bonds. The bond market is obsessed with safety and the return of the money is considered more important than the return on their money. When the bond market feels confident, it moves toward the higher yields of the less-safe medium-grade bonds. When the bond market doesn't like what it sees ahead, it moves toward the safety and lower yields of the highest-grade bonds.

As bond buyers move to the safety of the highest-grade bonds, the CI declines. When bond buyers move to the higher and less-safe yields of medium-grade bonds, the CI rises.

Below are some CI numbers along with the dates. Many years ago the CI had a wide following. The old formula we used was that the CI projects the stock market trend two to four months into the future.

2007 --
May 25 - 87.1 -- A high CI number showing great confidence.
June 29 - 86.4 -- Confidence slipping.
July 27 - 82.8 -- Confidence still declining.
August 31 - 83.6
Sept. 28 - 85.0
Oct. 26 - 81.8 -- Getting worse.
Nov. 30 - 78.7 -- Dropping below 80, a bad sign.

2008 --
Jan. 25 - 76.1 -- The ominous declining trend of the CI continues.
Feb. 29 - 74.0
Mar. 28 - 72.3 -- New low in the CI.
April 23 - 73.8
May 20 - 75.0
June 22 - 72.6
July 25 - 71.6 -- Another low -- no comment needed; danger flashing.
Aug. 29 - 68.5 -- Under 70 often signals a recession.
Sept. 19 - 74.1 -- A slight improvement.
Sept. 26 - 69.3 -- This is the latest statistic, and it's an ominous new low. The bond market is still opting for the highest-grade bonds and thereby willing to sacrifice yields. On the latest numbers, the bond market is "saying" that the economy will be worse in the period of two to four months ahead. This is a caution signal for all buyers of stocks.


TODAY'S MARKET ACTION -- My PTI was down 6 to 5913. The Moving Average is 5927. My PTI is bearish by 14 points.

The Dow was down 777.68 to 10365.45.

Nov. crude was down 10.52 to 96.37.

Transports were down 247 to 4503.90

Utilities were down 21.50 423.60.

There were 199 advances on the NYSE and 3337 declines.

There were new 17 highs and 1055 new lows.

Total NYSE volume was 6.89 billion shares.

S&P was down 104.79 to 1108.22.

NASDAQ was down 199.61 to 1983.73.

My Big Money Breadth Index was down 10 to 770.

Dollar Index was up 0.59 to 77.74. Euro was down 1.73 to 144.48. Yen was up 1.88 to 96.91.

Bonds: Yield on the 10 year T-note was 3.626%. Yield on the long T-bond was 4.156%. Yield of the 91 day T-bill was 0.39.

CRB Commodity Index was down 21.41 to 454.92.

Dec. gold was up 23.20 to 911.70. Dec. silver was down 0.31 to 13.18. Oct. platinum was down 58 to 1075.40.

GDX was down 1.83 to 34.00. HUI was down 8.80 to 321.10.

ABX was up 1.68, AEM down 1.50, ASA down 1.35 and NEM down 1.50.

My Most Active Stocks Index was down 15 to 159..

The VIX was up 11.98 to 4672.


Late Notes (Written an hour before the close -- sorry, I had to leave for a doctor appointment) -- As I write the Dow is down 671 points, once again below the critical 10725 level of the 50% Principle. Previously, whenever the Dow approached 10725 the Dow went a bit "crazy." rallying back big time the next day. What the Dow does tomorrow will be most significant. I want to see if the Dow remains stubbornly under 10725 -- if it does that will be bearish.

On top of everything else, down volume, as I write is 94% of up + down volume, meaning that today could be another 90% down-day. Goldman is down over 18 points, Morgan is selling at 20.94, GM is selling at 8.99, all in all, a ghastly day. There's a hard rain a'comin'. Start cutting expenses and try to save.

Today's shocker, the house voted down the bailout bill 228-205. Now what? Paulson must regret that he ever took this job.

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I'm looking at a full page ad from GM. The ad is entitled, "GM's second century starts now -- And it promises to be electrifying! There's a picture in the ad of GM's new electric VOLT car that's due out in 2010. I couldn't believe it. These idiots at GM don't get it, the whole world is downsizing," the US will be downsizing. GM's new VOLT is a boring-looking full-sized car, and it will probably be too expensive for mass sales. Meanwhile, Mercedes and others (Honda, Toyota) will be coming out with small, inexpensive electric cars that will "eat GM's lunch". Mercedes will be bringing out a plug-in electric version of its tiny Smart Car. Is GM hopeless? My advice for GM -- fire your management, GM could be a bankruptcy within five years. The GM brass is living on Mars or some other planet.
...................................

I was going to vote for Ron Paul. But now I'm going to vote for Obama. Why? It's simply a vote AGAINST the McCain-Palin ticket. McCain knows absolutely nothing about economics, and Palin has turned into a cartoon, the ultimate arrogant know-nothing. Can you imagine Palin as US President? It would be symbolic of the decline of the US.
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The dollar situation has reached an amazing paradox. On the one hand, the nation's enormous level of debts requires dollars to carry the debts (remember my warning --"the huge level of debts amounts to a synthetic short against the dollar?) Thus this morning we see a higher US Dollar. Ironically the same time there are doubts about the very viability of the dollar (which is why gold is up against a stronger dollar). Meanwhile, the stock market sinks in the face of the Bernanke-Paulson plan for the government to buy up the toxic mortgages.
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Have you watched "Mad Men" (Madison Avenue advertising men) on TV (CDs are available)? This is hands-down the best-written and best-acted drama on TV or in the movies. It's the story of a 1960s ad agency and the men who work there. Do not miss this extraordinary drama, if you can afford it, buy the four CD's covering the first year of "Mad Men" the series is now in its second year on TV. "Mad Men" has won 27 Emmy awards, so far, for a change, the critics are correct.

 

[Never Compromised]

This downturn can be laid at the door of Ron and Margaret, who started the idea that markets were always good, government regulations always bad.

Things will be getting much worse before they get better, and it is going to be interesting to see just how the politicians address the fundamentals.

Harper is running around Ontario saying that our economy is better than the American. But he still seems to think that Ontario is not worth saving, except for a token amount during an election. Harper is also politely ignoring the economic reality of where our exports end up. And that the US will probably not be wanting to buy nearly as much of the dirty tar sands oil as Harper and Alberta would wish.

Dion is an fool, but Harper is running around like the emperor with no clothing.

 

[nottyboi]

Harper is running around Ontario saying that our economy is better than the American. But he still seems to think that Ontario is not worth saving, except for a token amount during an election. Harper is also politely ignoring the economic reality of where our exports end up. And that the US will probably not be wanting to buy nearly as much of the dirty tar sands oil as Harper and Alberta would wish.

Dion is an fool, but Harper is running around like the emperor with no clothing.

Dion is not a fool, but I think he is politically naive. I think he is smart, well intentioned, but too polite. The fools are Canadians. They think a govt. agreeing to never run a deficit is a good thing.. how STUPID. Would you rather starve and freeze then have the govt run a defict? No matter WHO we vote for, there WILL be deficits in the next 2 years. the GST cut was a dumb thing was inflationary and did nothing for consumers. At least the voters in Quebec give a damn about their own interests unlike Ontarian sheep. this could be baaaaaaaaad. lol

 

[train]

This downturn can be laid at the door of Ron and Margaret, who started the idea that markets were always good, government regulations always bad.

.

This is beyond idiotic. Government regulation and bureaucracy is not the path to long-term success.

You can't critisize politicians one moment and want to give them more power the next. How thick is that ?

The problem with Ontario is the rapid increase in the Canadian dollar and the lagging productivity of Canadian companies who relied on the low dollar for too long. McGuinty has no answers, never had. He has done nothing while 200,000 manufacturing jobs disappeared other than try to blame on someone else - namely the Feds. What has he tried - oh yeah he created a new Minister the other day - that's bound to make all the difference His perfomance is well behind that of Charest.

Harper is correct in that WE ARE better off than the US in the next year or so because of our natural resources. Why are you against trying to create a more positive attitude is beyond me. What he really needs to do now, that he has not been good at in the past, is to improve relations with China.

Flannigan has a point as well - why throw government money at a failing auto industry - you are better off giving it directly to the people. He may be a bit of an ass but I think he's right on this point. He can't force Ontario to lower their corporate tax rates or provide better incentives for R&D the way that Quebec has. Or even fix OPG for once and for all.

Outside investors will also not be anxious to invest in Ontario when provincial tax rates and incentives do not measure up to other Provinces much less some of the southern States.

 

[nottyboi]

T

Harper is correct in that WE ARE better off than the US in the next year or so because of our natural resources. We you are against trying to create a more positive attitude is beyond me. What he really needs to do now, that he has not been good at in the past, is to improve relations with China.

Flannigan has a point as well - why throw government money at a failing auto industry - you are better off giving it directly to the people. He may be a bit of an ass but I think he's right on this point. He can't force Ontario to lower their corporate tax rates or provide better incentives for R&D the way that Quebec has. Or even fix OPG for once and for all.

Where do you live? If you support Harpers points of view on this, read between the lines, his economic policy will be focused on resource extraction and NOT manufacturing, i.e it is a western agenda that we have already seen so much of.

 

[Cinema Face]

Talking about a depression is ridiculous.
There is a financial crisis but there is a whole lot of alarmism that isn’t justified.
Some people will get burned cuz of greed. The problems will get fixed. The economy will fall back and find its balance and then things will recover as they always do.

It doesn’t mean the sky is falling.

I knew it was coming but I figured it was another year away.

 

[futurelegend]

Dion is not a fool, but I think he is politically naive. I think he is smart, well intentioned, but too polite. The fools are Canadians. They think a govt. agreeing to never run a deficit is a good thing.. how STUPID. Would you rather starve and freeze then have the govt run a defict? No matter WHO we vote for, there WILL be deficits in the next 2 years. the GST cut was a dumb thing was inflationary and did nothing for consumers. At least the voters in Quebec give a damn about their own interests unlike Ontarian sheep. this could be baaaaaaaaad. lol

Where do YOU live? The difference in Dion's plans and the Liberal ideals is that they look at running the country in a constant surplus! They increase taxes from every angle, while cutting spending. They are looking to make a profit and for what? To line their pockets with higher salaries and bonuses for a job well done?

McGuinty has done nothing to try and balance out the manufacturing jobs that have been lost in Ontario. The problems in Ontario do not come from the Feds, as McGuinty would have you believe, but from his very own government and policies.

 

[shack]

Depression. Probably.

With the rate that I'm losing my retirement savings I'm damn sure gonna be depressed pretty soon.

 

[fuji]

Whether or not Ontario or Canada has properly funded manufacturing jobs or similar really has nothing to do with the upcoming downturn, and it's silly to say that it does.

The downturn is a global phenomena, not one specific to our local economy, therefore while our local decisions may worsen the impact to us, it is not of our making.

 

[train]

Where do you live? If you support Harpers points of view on this, read between the lines, his economic policy will be focused on resource extraction and NOT manufacturing, i.e it is a western agenda that we have already seen so much of.

I live in Ontario and I employ 350 people there, 400 people in Quebec and 100 people in the southern US.

If you would like Harper to do McSquint's job we, the people, would have to give him that authority. McSquint doesn't want Harpers interference - he just wants a Federal handout. Where do you think that money is going to come from ? There aren't that many alternatives - resources are a good one at the moment.

Most manufacturing triggers fall under Provincial jurisdiction such as labour laws, education for a skilled labour force, environmental laws, land and property taxes, health and safety, power generation, R&D incentives and tax costs. Of that list Harper can affect only the federal portion of taxes and to a lesser extent R&D. McQuinty is responsible for the rest.

 

[futurelegend]

Whether or not Ontario or Canada has properly funded manufacturing jobs or similar really has nothing to do with the upcoming downturn, and it's silly to say that it does.

The downturn is a global phenomena, not one specific to our local economy, therefore while our local decisions may worsen the impact to us, it is not of our making.

Absolutely correct. In our current global economy, we are all tied together. When an economic power like the US goes into a recession or "economic crisis", the rest of the world feels it too. All major banks are global players now and are affected by global markets.

If something similar happened in the UK that is happening in the US right now, we would feel the same kind of pinch.

 

[preciate it]

A bit off topic, but...

Regarding political leadership, in some ways I envy some of the less-developed countries that can at least set goals for years to come, because their goals are basic, definable, and achievable ones.

I remember ten years ago, Malaysia had a "Malaysia 2020 plan" which was quite simply to be a developed first world country by that date. The program involved spending on basic infrastructure and high tech infrastructure networks, tax breaks for key industries, introduction of higher quality social services, research facilities,etc. (Yes I understand that such a long range plan is made easier by having a one-party state, but still...)

The leaders of developed so-called first world countries, which already possess those basics of security, sanitation, welfare, regulation, and some job-creation) seem to have no further long-range vision for bettering the lives of their citizens.
Take our leaders. Dion seems to be too focused on "green industries" and a bit short on details. Harper seems to be pretty much for the status quo with added northern sovereignty and stronger forces, lowered taxes. Layton would just spend. How would each leader reply to the question, "What will Canada look like in 20 years, and how will your concrete policies help to get us there step by step over successive five programs?"

Nations sometimes need a "projet de societe" as the Quebecois say. "We will put a man on the moon by 1969". Remember that? Equal (civil) rights.
China: A man on the moon, and a car and a fridge in every home (okay that one has us headed toward disaster, but...you get the idea.)

What is Canada's projet de societe? "Um, we'll be nicer to people and um greener, okay, and um, yeah we'll build some bases in the north, okay and um...yeah it'll be like today only better, and like, um, people will like us more cuz we'll be important, and um, I don't know, why are you asking me this?"

This worries me more than any transient financial crisis.

 

[Never Compromised]

This is beyond idiotic. Government regulation and bureaucracy is not the path to long-term success.

You can't critisize politicians one moment and want to give them more power the next. How thick is that ?

There is no contradiction at all in my position. Empirical evidence has shown over the last 300 years that unfettered capitalism runs in cycles and that there is a tendency to crush the middle class. Economists know this, it is not a state secret.

The excesses of Big Government are well known. Despite many governments in the 50's through to the 70's paying lip service to Keynes, very few actually cut back on spending or paid off a deficit during the upswing in the business cycle. The system became unsustainable.

While you may think that government regulations are bad and not a plan for long term success, I have to disagree. Without government regulations, we could have cheaper housing, but without building or fire codes how many would have to die before people caught on that Builder Rattrap was a poor investment? Without government regulations, just how many kilograms of fecal matter would find its way into the food system? Without government regulations how many workers would die because companies would not invest in health and safety?

The current failure of the system in the US is an example of just why regulations can prevent us from the greed of ourselves and the greed of powerful groups. The Savings and Loan bailout, Enron, and the energy deregulation were all wake up calls that no one bothered to pay attention to.

Harper throwing money at the auto sector is not going to help us. Harper has shown a distain for conservative fiscal policy and has spent like a drunken sailor on shore leave. Dion's green shift is a delightful idea that is simply being presented at the wrong time to get any traction. Neither is talking about how much of our economy is based on the US, neither is offering a solution to the approaching storm.

Criticising individual politicians for their failure to have either a vision or to present a compelling economic blueprint is not the same as suggesting that there is no place for government regulation.

If you can't see that, I image that you need to take the time to read more, and to develop better critical reasoning skills.