Warren Buffett Says We're Already In A Recession

[crunchtastic]

Gee, we've lost 85,000 jobs since December, yet the unemployment rate has dropped from 5.0% to 4.8%. I wonder how that happened?

Hmmm, indeed. A picture is worth a thousand words, so for the unconvinced on how bad this trend looks, the chart here is a nice, easily accessible visual. Worst report in 5 years:

http://bigpicture.typepad.com/

[TheNiche]

Houston --for those that can't remember- is located in Texas which is located in the USA. While Houston might be doing okay, it IS a part of the larger economic picture.

I concur. According to a press release I received from Live Oak Capital, Houston alone accounts for 9.8% of the nation's job growth. Texas accounts for 29.1%.

[TheNiche]

If y'all keep talking about it we'll definely see a Recession. Consumer confidence is 2/3 of the economy.

Evidence that the Consumer Confidence Index is a reliable or valid leading indicator for the economy is mixed at best.

[TheNiche]

Gee, we've lost 85,000 jobs since December, yet the unemployment rate has dropped from 5.0% to 4.8%. I wonder how that happened?

I already provided you the link to BLS data that breaks down labor force participation by age group. Youth were dropping out, others are pretty stable.

[RedScare]

I already provided you the link to BLS data that breaks down labor force participation by age group. Youth were dropping out, others are pretty stable.

That's OLD data. It doesn't include 68,000 of the 85,000 in job losses.

Thank you for playing. Please try again later.

[houstonmacbro]

Hmmm, indeed. A picture is worth a thousand words, so for the unconvinced on how bad this trend looks, the chart here is a nice, easily accessible visual. Worst report in 5 years:

http://bigpicture.typepad.com/

So just how bad do you think this thing is gonna get? I have a bad feeling more shoes are about to drop.

[MidtownCoog]

You and your feelings. Quit worrying about your 401K.

You are in this for the long term.

[RedScare]

You and your feelings. Quit worrying about your 401K.

You are in this for the long term.

My feeling is that I will be rebuying some of the stock I sold soon.

[crunchtastic]

So just how bad do you think this thing is gonna get? I have a bad feeling more shoes are about to drop.

Not that my instinct is worth anything, but I believe we have at least another 2 quarters of job pain. Gas prices will go up and credit situation worsens incrementally throughout the year. Remember, some big companies have just posted their first write down from credit shenanigans just this month. And there's plenty more of that to go around. From a psychological perspective, we're on our way toward $4 gas and (gulp) gold is about 20 away from a $1,000 an ounce. And there's the question of how much worse the dollar can go. I don't know what people are saying about the possiblity of 1.75 (or even more) to the euro. I think we've already hit the worst dollar decline since the early 60s--could be off on that. Then of course there's the prospect of summer hurricanes, worsening drought, etc.

Overall, looks like Houston is a good place to be right now!

[TheNiche]

To help put this in better context:

http://data.bls.gov/PDQ/servlet/SurveyOutp...t_view=net_1mth

[crunchtastic]

I lik this chart (scroll down past the narrative) that overlays yearly on monthly. Good narrative too:

http://premium.econoday.com/reports/US/EN/...y/03/index.html

[TJones]

That's OLD data. It doesn't include 68,000 of the 85,000 in job losses.

Thank you for playing. Please try again later.

How come none of you alarmist crowed when there was over 4 straight years of job increases ? The largest increase in our country's history I might add. Then, after only 2 months of job losses you want to throw in the towel ?

I myself am changing jobs to get into a better market and keep me and my family afloat.

[RedScare]

I don't see anyone being alarmist. I'm not interested in ignoring it either. Like most intelligent consumers, when things start getting tight, I cut my spending. But, I am not alrmed about it.

BTW, you are correct. One of the bright spots in the jobs report was the increase in government jobs.

[BryanS]

So just how bad do you think this thing is gonna get? I have a bad feeling more shoes are about to drop.

Could be up to a 20 to 30% correction. Look at your large cap mutual fund performance in 2002. Mine was -21.27%. So 20% off DOW 14,000 => DOW 11,200 (and we're now in 11,000 territory). 30% and we could see DOW 9800. That would be a 5 year rollback to 2003. We're going back in time!

Don't panic though. Just buy more.

[TJones]

I don't see anyone being alarmist. I'm not interested in ignoring it either. Like most intelligent consumers, when things start getting tight, I cut my spending. But, I am not alrmed about it.

BTW, you are correct. One of the bright spots in the jobs report was the increase in government jobs.

You are right, DON'T ignore it, just keep an eye on it. I agree, it won't go away by ignoring it, if it indeed becomes a trend. Bush's speech today didn't give much light at the end of the tunnel except to "it will get better in the long-term." I don't know how many can wait for the "long-term" and I feel like alot of economists do that the recent tax kickback coming out in June will only go towards paying bills and not buying new products.

Ok, and you aren't an alarmist, I forgot that anarchists can't be alarmist, MY BAD ! Now, post the pic Red !!!

[Subdude]

I don't like Barnake at all. What do I give a hill a beans what Warren Buffett and his Billions have to say, HE ain't hurtin' for money. I understand that Greenspan is gone, but he does pop his head up from time to time. I can't blame him for being out of the game, too much pressure, and I think Andrea Mitchell told him to spend a little more time with her.

I think only certain businesses are going into a recession, not the economy as a whole. I.E. car business, housing market. Mark, you know as well as I that the oil business is BOOMING!!!

Coog, you got a link for Greenspan ?

I will be surprised if history looks favorably upon Greenspan ("Mr Bubble").

[sifuwong]

It doesn't take a Warren Buffett to tell me that we're in a recession of some sort.

[houstonmacbro]

I went out to eat the other night. The restaurant is usually jammed packed on a Friday night, but it was a very modest crowd. I think high gas prices are forcing some people to think twice before spending $40 on dinner when it costs that much or more to fill up their tanks every few days.

[BryanS]

I know we complain about putting high cost regular unleaded in our cars... but anyone notice the price of diesel? I was seeing 3.70 in some areas. That's why your food and restaurant bills are increasing so fast, because of diesel (moving goods to market by way of vehicles that use this fuel). Regular unleaded at $4/gallon will be one thing... but wait until diesel hits that mark...

I was reading today that the other problem with the sinking dollar (and high food prices) is that US wheat is cheap on the international market. China, India, and many others are hungry. So they buy our wheat at "cheap" prices. That only increases competition - for our own food supply. So the sinking dollar, foreign competition for our own food, and high fuel costs are working in ways that are really putting us in a bind. In fact, this may be the sleeper hold that finally pushes over the edge.

[musicman]

u must b from clr lake.

[houstonmacbro]

LOL

[crunchtastic]

I know we complain about putting high cost regular unleaded in our cars... but anyone notice the price of diesel? I was seeing 3.70 in some areas. That's why your food and restaurant bills are increasing so fast, because of diesel (moving goods to market by way of vehicles that use this fuel). Regular unleaded at $4/gallon will be one thing... but wait until diesel hits that mark...

I was reading today that the other problem with the sinking dollar (and high food prices) is that US wheat is cheap on the international market. China, India, and many others are hungry. So they buy our wheat at "cheap" prices. That only increases competition - for our own food supply. So the sinking dollar, foreign competition for our own food, and high fuel costs are working in ways that are really putting us in a bind. In fact, this may be the sleeper hold that finally pushes over the edge.

Hey Bryan, I saw diesel today at 3.79 one place. Holy cow. The days of super premium being more than diesel are over, I think. You're right about wheat. It's going through the roof. Commercial bakers are hurting already--and those costs are just starting to make it downstream to the grocery store.

[houstonmacbro]

Hey Bryan, I saw diesel today at 3.79 one place. Holy cow. The days of super premium being more than diesel are over, I think. You're right about wheat. It's going through the roof. Commercial bakers are hurting already--and those costs are just starting to make it downstream to the grocery store.

Yeah, it's just getting started. Not only are we gonna face higher gas prices, but everyday common groceries and necessities are gonna get more expensive.

I really see us returning to the days where we co-op shopped, stayed in more instead of going out (dinnner, movies, etc.), and really doing more group activities to make ends meet and still maintain a high standard of living.

[MidtownCoog]

You econmoics major should take some engineering classes:

Fuel Economy

Advantage: Diesel

Diesel fuel has a higher energy density than gasoline. One gallon of diesel contains approximately 147,000 BTUs of energy, while a gallon of gasoline only has 125,000 BTUs. This means it takes more gasoline to equal the power output of diesel, making diesel engines more efficient per gallon of fuel burned.

[RedScare]

You econmoics major should take some engineering classes:

Fuel Economy

Advantage: Diesel

Diesel fuel has a higher energy density than gasoline. One gallon of diesel contains approximately 147,000 BTUs of energy, while a gallon of gasoline only has 125,000 BTUs. This means it takes more gasoline to equal the power output of diesel, making diesel engines more efficient per gallon of fuel burned.

Diesel Price - $3.79

Price per 100,00 Btus - $2.58

Gasoline Price - $3.12

Price per 100,000 Btus - $2.49

You engineering majors should take some math classes...

[crunchtastic]

For a good lesson in economics, talk to a trucker:

http://www.truckertotrucker.com/trucker/1/...nt-Truckers.cfm

[houstonmacbro]

For a good lesson in economics, talk to a trucker:

http://www.truckertotrucker.com/trucker/1/...nt-Truckers.cfm

Yeah ... it's tough being an independent trucker. But the upside is you're not sitting at a desk all day!

[BryanS]

Can someone please explain to me... what the Fed did today (3/11/08)? And why is it a good thing? First it was Term Auction Facility (TAF) ... now it is Term Securities Lending Facility (TSLF)...

The basic concept, as I understand it, from reading:

Under the new Term Securities Lending Facility, the Fed will lend Treasuries for 28-day periods in return for debt including AAA rated mortgage securities sold by Fannie Mae, Freddie Mac and by banks. The weekly auctions begin March 27.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

In both the TAF and TSLF... we, as investors, still don't know which banks are in trouble, by the way these facilities work. Where is the transparency in all this? Why aren't banks pulling their Enron-style off-balance sheet losses out into the open where we can see them? They're using the TAF for cover, it appears. Does anyone know where to get this information?

I hear, "The Fed reached into the toolbox today and is now trying..." A.) What tools are in the toolbox (the Fed is just making stuff up as we go along)? and B.) Where are the problem banks? Don't you think we have a right to know?

...and here is something else... AAA-rated mortgage debt is supposed to be as good govt debt. Right? So if what you had is as good as what you're getting in return... isn't this a zero-sum game? And if that AAA-rated debt turns out to be less than that, and the Fed is left holding the bag, aren't we in for some trouble? As Karl Denninger would say, "people riding the short bus appear to be bidding up the DOW..."

It seems the Fed will go to the ends of the Earth to prop up the market. I'm looking for real value, not inflated value.

[RedScare]

Don't worry, it will only cost us $200 Billion....less than a year in Iraq. And, if the auctions go well, nobody dies.

[Subdude]

Can someone please explain to me... what the Fed did today (3/11/08)? And why is it a good thing? First it was Term Auction Facility (TAF) ... now it is Term Securities Lending Facility (TSLF)...

The basic concept, as I understand it, from reading:

Under the new Term Securities Lending Facility, the Fed will lend Treasuries for 28-day periods in return for debt including AAA rated mortgage securities sold by Fannie Mae, Freddie Mac and by banks. The weekly auctions begin March 27.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

In both the TAF and TSLF... we, as investors, still don't know which banks are in trouble, by the way these facilities work. Where is the transparency in all this? Why aren't banks pulling their Enron-style off-balance sheet losses out into the open where we can see them? They're using the TAF for cover, it appears. Does anyone know where to get this information?

I hear, "The Fed reached into the toolbox today and is now trying..." A.) What tools are in the toolbox (the Fed is just making stuff up as we go along)? and B.) Where are the problem banks? Don't you think we have a right to know?

...and here is something else... AAA-rated mortgage debt is supposed to be as good govt debt. Right? So if what you had is as good as what you're getting in return... isn't this a zero-sum game? And if that AAA-rated debt turns out to be less than that, and the Fed is left holding the bag, aren't we in for some trouble? As Karl Denninger would say, "people riding the short bus appear to be bidding up the DOW..."

It seems the Fed will go to the ends of the Earth to prop up the market. I'm looking for real value, not inflated value.

Well it's broader than propping up the market. The credit crunch is far more serious than a lot of people assume, and it is starting to lead to market panics. If the Fed hadn't stepped in Bear Stearns would have very likely failed soon due to a loss of funding. In fact, one theory is that the Fed's action was timed effectively as a bank bail-out for Bear, although countless other banks are going to be relieved not to have to take securities writedowns for the first quarter.

Basically what is happening is that the Fed is swapping AAA-rated treasuries for near-worthless asset-backs. The jury is still out as to whether $200b will actually be enough, or if it is just setting the stage for either very strong inflation or the next bubble. In the event, the stock market reaction was very favorable, the bond market less so. The bottom line is that the central bank has shown they are willing to do what it takes to stop a panic or recession. If it means bailing up the banks, well then so be it. It's a calculated risk.

BTW, the next time you hear someone is going on about the virtues of "free markets", remind them of this episode.