Is this really going to happen? RECESSION

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www.msn.com has posted a question regarding a recession.

Would you all please give me your thoughts concerning a recession and exactly what is a recession?

How bad will it get? I hear it all the time on the cable news channels.

My hubby works for Alcoa, and wondering also what Bush's new appt will do for Alcoa? According to my hubby and others who work for Alcoa, this guy is worthless.

Thoughts re: the above, please.

Does anyone remember living in recession? What was it like?

Thanks gang

-- Sumer (shh@aol.con), December 22, 2000

Answers

sumer,

Yes, a recession is going to happen. It is the inevitable happening of the business cycle.

A recession is the slowdown that inevitably follows the economic prosperity that preceded it. It entails business failures, layoffs, plant closings, etc.

Nobody knows how bad it will get. The old adage is that it is a recession if someone that you know loses their job; it is a depression if YOU lose your job.

I don't think that O'neill's appointment could hurt Alcoa, but I am not sure how much it will help, either. As I am not fully versed on this man's achievements or lack thereof, I can't comment on his worthlessness.

-- J (Y2J@home.comm), December 22, 2000.

yes

-- Uncle Bob (unclb0b@aol.com), December 22, 2000.

The last recession was in the 70's and part of the early 80's.

-- Tarzan the Ape Man (tarzan@swingingthroughthejunglewithouta.net), December 22, 2000.

Yes I read that, what I want is COMMENTS

Damn it everybody gets so intellectual on other stuff, WHY cant we discuss what I want to?

N O W!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Stomps foot and starts yelling.....Uncle bob come back here and explain.

-- sumer (shh@aol.con), December 22, 2000.


Does anyone remember living in recession? What was it like?

Go rent the movie "Roger & Me." It is an accurate account of what it was like living in Flint, MI during the recession. The city of Flint still hasn't recovered.

-- (raven@never.more), December 22, 2000.



I remember the late 1970's recession quite well. Brie prices skyrocketed. Camambert was nearly unaffordable. My family was forced to substitute domestic goat cheese for the then outrageously priced Greek Feta. There were days we had no Bleu Cheese to crumble onto our salads. It was an awful time to be alive. (Shudder)

-- Rich (howe9@shentel.net), December 22, 2000.

'sumer,

I'm the last person that should comment on this thread, but since you're beggin"...

With my usual fine sense of timing, I gave up on my Y2K expectations of problems about last Febuary. All I had heard for months was how unstoppable the market was. Lady's sewing clubs, teenagers, even my own smart aleck nephew were simply raking in the profits with absolutely no effort. Just buy a techno-stock and sit back - they will send a truck with your money!

So, of course, I closed my eyes and jumped. That would have been about the first of March. So far, in nine months I've lost about 80% of my investment. I don't know what it takes to be a depression, but it sure as hell is DEPRESSING!

Luckily, I didn't bet the rent, but still, it's frustrating to see the companies I'm in, reporting good news all the time, and yet their stock continues to suck buttermilk.

The one thing I've managed to learn about all this, is that if anybody really knows what's going to happen, they ain't saying.

----------------------------------------

-- Lon Frank (lgal@exp.net), December 22, 2000.


Lon-

In a market like this, the best thing you can do is diversify and be conservative. The overall trend of the market has been up for the last 100 years, but the downward trends can be long-lived. Eventually you'll make your money back and thensome, but it could take awhile. Be patient, be diverse, and don't bet the farm. Good luck!

-- Tarzan the Ape Man (tarzan@swingingthroughthejunglewithouta.net), December 22, 2000.


Thank you peeps....Lon, sorry to hear bout the misfortune.

I agee IF they know, and they do, THEY aint saying.

But I did chck out unc bob's new post on white house telling w to shut up. Scarey shit, imho.

I 'barely' remember the 70's stuff but from what i do remember the gas lines and I vaguely recall the need for my mom to get excited over toilet paper. I just am trying to understand what it will be like.

My hubby has a good job and i work part-time and I am not fretting like the y2k shit, but I do think I should start cutting back and saving mo money.

I remember going w/out food growing up and i NEVER want to go thru that again. Sorry if I shouted and pouted, I just wanted some serious discourse thats all, with a joke or two thrown in for good measure, right bingo?

-- sumer (shh@aol.con), December 22, 2000.


Sorry, sumer. Hard to take myself back into bad times right now. It's Friday, the plant is closed from 12/23-1/1, and I'm gonna shoot pool at lunch today. Best of all, I found a place to live come January 1st. Life is good. Life this morning is grand!

-- Rich (howe9@shentel.net), December 22, 2000.


I actually thought telling Bush to keep his yap closed was a good idea. Investors are like cattle- if they're already nervous, you don't want to do anything to spook 'em. I don't think Bush yet realizes that, as president-elect, people hang on his every word.

-- Tarzan the Ape Man (tarzan@swingingthroughthejunglewithouta.net), December 22, 2000.

Sumer, a recession is often defined as two consecutive quarters of decline in the Gross Domestic Product. Is one about to happen? I don't know, but the current expansion which began in 1991 is the longest one of the last 150 years.

The economy did slow significantly in 1995, but we had a soft landing in 1995 and not a recession. The current nine-year expansion may not last much longer.

How bad will it get? Households and corporations are deeply in debt right now, which might make the next recession a deep one. Then there's the matter of the stock market. Is the market fairly valued at the moment, or is it a bubble beginning to burst? Some say part of the reason why the stock market in the late 1990s had its biggest runup since the late 1920s is because people tend to put their retirement money now in stocks rather than in the bank.

Of course we all know about Nasdaq and IPO speculation that was happening at a feverish pace until March of this year.

When the last recession happened in 1990-91, the media was constantly filled with news about companies "downsizing." The 1973-75 and 1981- 82 were marked by heavy manufacturing layoffs. Many of those manufacturing jobs never came back after those recessions were over.

Bush's new appointment -- Paul O'Neill as treasury secretary -- has a lot of corporate economic experience. Some have reservations about O'Neill though because of a relative lack of experience in regards to Wall Street. An article I read the other day said...

Although Wall Street analysts praised O'Neill's experience in Washington, where he worked at the Office of Management and Budget in the 1960s and 1970s, they expressed concern that he lacked market experience.

``I would tend to think he doesn't bring the same type of market savvy or reputation to the foreign exchange arena as a Robert Rubin did,'' said Morgan Stanley Dean Witter economist Kevin Flanagan. Rubin received widespread praise for his work as Treasury secretary in the Clinton administration.

``Investors felt very comfortable with Rubin based on his previous experience on Wall Street,'' Flanagan said.

I hope that answers some of your questions, Sumer.

-- (Comments@for.Sumer), December 22, 2000.


Thank you comment for consumer. And for ALL the comments.

Bingo, I'm happy for you :) I'm glad things are beginning to go good for you.

No bingo, just pool eh? I played bingo last nite, and WON....yipee.

-- sumer (shh@aol.con), December 22, 2000.


Yes, there will be a recession. As with most consumers, you do not seem interested in the "why" or "how," but in the "what." Economic downturns can be divided into two broad categories... inflationary and deflationary. Inflation is the general increase of prices. We have enjoyed relative price stability during the past decade, partly due to abnormally low energy prices. Consumers don't like inflation because things cost more. It can be windfall for those in debt since one can pay loans with "inflated" dollars.

On the other hand, the Federal Reserve loathes inflation. The painful "cure" for inflation is increased interest rates. Consumer don't like higher interest rates because, unlike in earlier eras, much of our current debt is based on adjustable rates. If you lived through the Volcker era in the early 80s, you may have seen the 20%+ home mortgages.

If you think inflation is ugly, try deflation. On the surface, lower prices may seem like a good thing. What happens, however, when a person's $200,000 home (complete with mortgage) drops in worth to $100,000? What happens when companies cannot sell products at a profitable price? If you'd like an example, the Great Depression was a deflationary economic malaise.

Contrary to the Y2K doomsayers, we do have a much better grasp of the economy and on how to avoid another depression. The Great Depression was exacerbated by a series of truly bad policy decisions... I hope we have learned our lessons.

To "survive" a recession, the first rule is to have no debt. No credit cards, consumer debt, revolving loans, nada. If you have an adjustable rate mortgage, convert it to a fixed rate. (I'm locked in at around 6.5%) Examine your monthly expenses and make a budget. Then live by it. Cut the discretionary spending to sustainable levels. Have 6 months living expenses in a bank account... and just let it sit there for a rainy day. If you work, take advantage of any available retirement plans. Save, save and save.

The above paragraph can be found in any number of good books on personal finance. Contrary to what the doomsayers might predict, a recession (or even a depression) is more a matter of comfort than survival. Those who suffer the most are inevitably the poor and those living on the financial edge. The financially prudent can survive (and even profit) from an economic downturn, inflationary or deflationary.

Unfortunately, the necessary advice is dreadfully boring and sounds one sound a great deal like one's grandparents. Preparing for a social collapse is much more exciting and fun.

-- Ken Decker (kcdecker@att.net), December 22, 2000.


Tarzan,

The cattle-like investors are nervous already for a reason. This economy is sputtering. I don't believe that the stampede can be avoided, so if Bush has enough integrity to call it like he sees it, I applaud him. It is better than sticking his head in the sand and hoping that all will be well when the clouds that are rolling in look ominous. After all, it is the storm that stampedes the herd, not the cowboy who points out the storm.

-- J (Y2J@home.comm), December 22, 2000.


There may very well be a downturn on the horizon but from a retailers viewpoint as of today I wouldn't be able to see it.My numbers are up to their highest levels of the last 7 years,both on the year and the holiday benchmark.

I am trying to convince my boss that this is due primarily to my keen marketing and customer service skills or maybe it's just the calm before the storm.

BTW,good explanation Ken.

-- capnfun (capnfun1@excite.com), December 22, 2000.


Unfortunately, the necessary advice is dreadfully boring and sounds one sound a great deal like one's grandparents. Preparing for a social collapse is much more exciting and fun.

I dont think it is boring, but prudent. I used to love to read, hardly do so now, but the advice provided Ken was common sense (slaps forhead) and that is what I was looking for in a response I guess.

I do have debt......bad me!!!! I have fixed mortgage 7 and 1/2 and one variable credit card not maxed but others which are.

I dont want to be caught with my pants off, so to speak. I did recently join an IRA here at work and hubby is in 401K at work. I gotta work on the 6 months of saved income though.

Keeping in mind, I have a son who is ill and will need my help at some point.

Thanks for the good advice ken.

-- sumer (shh@aol.con), December 22, 2000.


Have no trouble with what Ken said. Looks like we have come out on the positive side this year [conservat ive investments].

I'm not an expert in this field but I noted Ken's statement:

On the surface, lower prices may seem like a good thing. What happens, however, when a person's $200,000 home (complete with mortgage) drops in worth to $100,000?

There is a lot of wealth tied-up in real estate across the country. It looks to me like a bubble in real estate values. We have commericial property, here, selling by the square foot now [no this is not San Hose]. Home costs have increased beyond inherent value over the last decade [hell over the last few years]. If those start to drop there will be real hurt. I watch the cost of dirt. Otherwise, things will be okay. IMHO.

Best Wishes,,,,

Z

-- Z1X4Y7 (Z1X4Y7@aol.com), December 22, 2000.


I knew that if I just listened to yoy guys, I would get well. I just checked my stodks, and all but one is up! Y'all are really great - and fast!

No foolin', the market is just so frustrating to watch. One day EDS will announce 2 bazillion in new contracts, and their stock will go down. The next day, INKT will be downgraded, and the stock will rise 16% (today).

But thanks, all, for the advice, and for the attempt at education. I'm almost debt-free, and my little company grew by 40% this year, so things ain't all bad on the homefront. I'll never understand economics on this scale. But I do know that when the casinos take your money, they at least give you a free drink.

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-- Lon Frank (lgal@exp.net), December 22, 2000.


But I do know that when the casinos take your money, they at least give you a free drink.

------------------------------------------------------

-- Lon Frank (lgal@exp.net), December 22, 2000.

and sumer says....yep at LEAST a free drink.

Is it time to grab our ankles yet? :-)

-- sumer (shh@aol.con), December 22, 2000.


Some good advice for individuals on how to cope with a recession...

"Facing Down the Downturn"

http://abcnews.go.com/sections/business/DailyNews/CopingWithDownturn_0 10110.html

-- (Pr@ctical.advice), January 11, 2001.


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