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Thread: Will the US recession be U, V, W or L shaped?

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    Default Will the US recession be U, V, W or L shaped?

    Nouriel Roubini, Professor of Economics at Stern University, is essential reading on the current credit crises and has called it right from the outset.

    http://www.rgemonitor.com/blog/roubini/252460/

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    very interesting.
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    Pear-shaped?
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    Default Re: Will the US recession be U, V, W or L shaped?

    Quote Originally Posted by Closet leftie
    Nouriel Roubini, Professor of Economics at Stern University, is essential reading on the current credit crises and has called it right from the outset.

    http://www.rgemonitor.com/blog/roubini/252460/
    I don't find the article very well argued. Although it could be that he is keeping it simplistic to reach out to non-economist types.
    1. The US tax rebate is only a drop in the ocean and would not drag the economy out of recession.
    2. I find his dismissal of an L shaped scenario flawed. He overplays the role government intervention can play in bringing the economy out of recession. If the private sector, 75% of the US economy, cannot get access to credit with a broken financial system, it does not what government does because without a vibrant private sector it will not have the resources to make an impact.

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    Default Re: Will the US recession be U, V, W or L shaped?

    Quote Originally Posted by kerrynorth
    Quote Originally Posted by Closet leftie
    Nouriel Roubini, Professor of Economics at Stern University, is essential reading on the current credit crises and has called it right from the outset.

    http://www.rgemonitor.com/blog/roubini/252460/
    I don't find the article very well argued. Although it could be that he is keeping it simplistic to reach out to non-economist types.
    1. The US tax rebate is only a drop in the ocean and would not drag the economy out of recession.
    It doesn't say that it will, it says that at best it will cause a blip of growth, effectively the same as a U type.

    2. I find his dismissal of an L shaped scenario flawed. He overplays the role government intervention can play in bringing the economy out of recession. If the private sector, 75% of the US economy, cannot get access to credit with a broken financial system, it does not what government does because without a vibrant private sector it will not have the resources to make an impact.
    Well I'd have to agree with his end to that paragraph:
    Thus the risk of a decade-long economic stagnation is quite limited so far.
    I think that saying that the mere fact that intervention is happening means it will keep happening and therefore prevent such a long recession/depression, through attempts to fix the financial system, is logical. Especially when L means around 10 years.
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    W.

    The federal stimulus package, interest rate cuts and a sort of relief rally will see a recovery in the third and fourth quarter from the retrenchment being experienced today.

    This will then taper off into an early 2009 slump similar(if not stronger) than the current one.

    This will lay the foundations for a recovery in the latter half of 2009 and a year of strong growth in 2010.
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    L-shaped? Ridiculous as this presupposes a permanent decline. Permanent decline has never happend in economic history. Likely to be V shaped, but recovery will catch people by as mush surprise as the recession.

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    Quote Originally Posted by Supermanpolitician
    recovery will catch people by as mush surprise as the recession.
    On the note of a recovery, I was talking to someone I know last week who reckoned that an investment in property in the US could be the best investment of 2009. He believed that if the dollar maintained its current weak position and the US economy stagnated/declined for another while that property in the US would be a prime investment come 2009/2010.

    He reckons that with the dollar being so weak, and the current trend in the US economy, an investment in property over there around early to mid 2009 could be a winner on two fronts. One, you should be set for a decent return when the economy, and consequently the property market, picks up again. And two, the money you invested into the property in the form of a weakened dollar would also be strengthened by the time its comes to selling. Meaning you make a return on both fronts, the value of the property itself and the value of a strengthening dollar.

    I thought it was an interesting take on the situation from someone who has a background in investment banking. Though that said, I'm not an economist by any stretch of the imagination. Any thoughts from people with a bit more know-how than myself?
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    Quote Originally Posted by Supermanpolitician
    L-shaped? Ridiculous as this presupposes a permanent decline. Permanent decline has never happend in economic history. Likely to be V shaped, but recovery will catch people by as mush surprise as the recession.
    Japan currently, the World in the 1930s, etc.,
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    I'm trying to find information on the long term rather than just the current economic climate, and info that has some statistical substence rather than tacked to some shallow analysis.

    Most importantly, I want to know about the long term consequences of inflation. It is a point that is often skirted around at best or not mentioned at all. Afterall, from what I'm reading oil and gas may come down short term (1-5 years) but with the lack of infrastructural growth in the mid east and the tailing off from western supplies the fundamental prices levels of all commodities will eventually increase. Anyone have any good articles or studies they can point me to?
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