Economic outlook "subprime," no recession: report (real estate, borrowing, pension)

[baystater]

Economic outlook "subprime," no recession: report - Yahoo! News (broken link)

The economy will likely avoid a formal recession, but its outlook through the end of next year is decidedly "subprime" with the deep housing downturn restraining growth to just above 1 percent, a UCLA Anderson Forecast report released on Wednesday said.

Meanwhile, net exports are on the upswing, adding less than 1 percent to real GDP growth, but just enough to stave off recession, the report said.

I said we do go into a recession even if export demand does hold strong. Now with the added pressure of Midwest flood and the possibility with the price of corn going way up. I don't see how we avoid a recession at all. This is one of those slow train wreck that going to take forever because of to much interference in the market by the government.

The unit's economists expect the remainder of this year and 2009 to resemble recoveries from recessions in 1990-91 and 2000-01, each spurred largely by asset price declines, in commercial real estate in the former and stock prices after the Internet bubble burst in the latter

So wait these economist are saying that we are not going to go into a recession BUT we are going to have recoveries like our past recessions. Where the hell did these economist get this idea from?

On a broader note the report said growth in consumer spending, financed by the collapse in savings and increased borrowing from abroad, may have peaked.

"The weaker exchange value of the dollar is signaling that the game may be up making it more difficult for the U.S economy to continue to consume more than it produces."

This is where I agree with the article. I think we are going to have no choice but to cut back on our current consumer habits. I think in the long run this will be a good thing for the country. We need to get back to basics and maybe just maybe we will be able to start actually producing some kinds of products that we can actually sell to the rest of the world. Actually This is going to sound very strange but I really hope China does really get hit by our slowdown. The reason I say that is that of current china's middle class is growing and is starting to consume products a "American" pace. Now I know that they probably make most of their own products for there own use so far. But I think eventually they will start to be like most economic giants and will need to import goods and products to satisfy there consumer demand. That might open the door for America to start manufacturing good again. Basically a role reversal. We will see.

UCLA Anderson forecasters also expect tighter regulation of the financial services in place next year after the Federal Reserve's sponsored rescue of Bear Stearns and its opening of its discount window to Wall Street investment banks.

Those moves "permanently changed the role of the Federal Reserve in the economy," the report said. "We suspect that just as after the Panic of 1907 led Congress to create a national monetary commission that in turn recommended the creation of the Federal Reserve System in 1913, a similar commission will come into being next year."

"By the time the process is completed, it is highly likely that large investment banks, hedge funds, mutual funds and pension funds will come under the umbrella of a new regulatory regime."

I know the FED Reserve is "Private" entity chartered by the government. But I don't feel very comforted in some the the action they have taken as of late. Always trying to control the markets is not always what is need to cure the problem. Now I understand that the fed as of current (at least I think) is trying to curb any panic in the markets so we don't have any 1929 panics. But I think there in the way a lot of the time from allowing the to correct it's self naturally. And yeah I know that sometimes correction can get really ugly but as I said earlier this in my opinion is a slow train wreck that is going to happen whether or not the FED get in the way.
Also I not very happy to heard that we may get another layer of government in another/new national monetary commission that will try to regulate and control a lot of our private investments. Look I know that people can get riped off by unsavory/stupid investment managers. But this is still America. Every time you invest you take a chance. Sometimes you win some times you lose that's just the way it is. There are law out there already laws out there that protect the consumers and they do need to be enforced. But that enforcement should be done in courts of laws not by a large cumbersome bureaucracies. At least this is how I feel about it.

[Wild Style]

Just to add to that article about trade, check this out

U.S. export sales totaled $155.5 billion in April, up 3.3 percent to an all-time high, reflecting big gains in sales of commercial aircraft, farm machinery, medical equipment and computers. But this increase was swamped by a 4.5 percent rise in imports, which also set a record at $216.4 billion. In addition to oil, there were huge gains in imports of autos and consumer goods.

link (broken link)