Recession: The Truth Hurts

It's official: Recession since Dec. '07
NEW YORK (CNNMoney.com) -- The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .

The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.

The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year.

Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.

The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures reached a peak between November 2007 and June 2008, the NBER said.

In addition, the NBER also considers the gross domestic product, which is the reading most typically associated with a recession in the general public.
Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining. That has yet to take place during this recession.
http://money.cnn.com/2008/12/01/news/economy/recession/?postversion=2008120115

It is staggeringly amusing that the "sudden" revelation that the US of A is indeed in the throes of a recession would cause a 700 point drop in the DOW. Staggeringly amusing! If you did not already realize that the US of A was, has been, and IS in a recession before today, you are either deaf, dumb, and blind OR you're a member of the soon to be defunct Bush II Administration. The Dow should have gone UP 700 points today on this "revelation". For heaven's sake, stocks have been tumbling ever downward in "fear" of a "coming" recession for months. LOL! It's been here all along!

I guess it's time to quit making fun of Europe and Japan now that we the [once great] US of A have now joined the ranks of the downtrodden economies in recession.

"Buy the Dollar, sell the Euro. Things are far worse in Europe than in the US of A."

Really? The US has now been confirmed to have been in a recession since December of 2007. Didn't the Eurozone just fall into recession last quarter? In my humble estimation, the whole world economy sucks, and the US of A is the leader of the pack. Let the race to the bottom begin! The issue of recession or not is now moot. The real question to ponder as we move forward is: Is the US of A in a depression?

President-elect Obama's transition team did not have an immediate comment on the recession announcement. But other top Democrats said this is further proof of the need for another economic stimulus package, which Obama has advocated.

"With rising costs of living, rising unemployment, record foreclosures and depleted savings, we must do more to help families make ends meet," said Senate Majority Leader Harry Reid in a statement. "With the cooperation of our Republican colleagues, we intend to send a plan to the White House as soon as possible following President-elect Obama's inauguration next month."

Oh, what a grand idea. What fool believes another government handout is going to solve or fix anything? Did the big handout in the Spring of this year make the "second-half better" as it was so repeatedly advertised to do? NO! Will another pile of money left on the doorsteps of America make the recession go away? NO! But, I could use the beer money, that's for sure.

No pain, no gain! Unless and/or until the clowns in Washington cease trying to "fiat-paper" over all of our financial problems, the crisis is not going to go away, it is only going to get worse. Bankruptcy, job loss, and financial pain are not pretty topics, but they are a necessary hardship we must all endure if we really want to fix the system. Perpetuating the Ponzi scheme that is our economy is not the answer. Giving people money so they can buy "stuff" made in China will hardly be beneficial to the US worker and homeowner. More government spending is the LAST thing this country needs. What this country really needs is a hatchet man in the White House that will CUT CUT CUT government spending. Unfortunately, the US public has chosen a man that will SPEND SPEND SPEND while he is in the White House because what they wanted was change...when in fact they are just going to get MORE of the same. The only change Americans are going to get is "from bad to worse".

Sorry, can't sugarcoat it peeps. Matter of fact, we probably haven't even seen "bad" yet, and it will probably be a couple more quarters before we can safely say "things are worse". But rest assured, the worst is yet to come.

Gold and other metal futures end sharply lower
NEW YORK (MarketWatch) -- Gold futures finished sharply lower Monday, pressured by tumbling oil prices and firmness in the U.S. dollar, as other metals also posted steep losses.

Gold for February delivery dropped $42.20 to end at $776.80 an ounce on the New York Mercantile Exchange. The contract hit an intraday low of $769 an ounce.

Gold fell "on sharply lower oil prices and the dollar remaining firm after strong gains at the end of last week," said Mark O'Byrne, executive director at Gold and Silver Investments Ltd.

"Renewed uncertainty and weakness in stock markets could result in short-term weakness in gold, but gold [should] continue to see a flight to safety in the medium and long term," he said in a morning note.
http://www.marketwatch.com/news/story/gold-drops-4-silver-falls/story.aspx?guid=%7B39AE7183%2D958E%2D4CE2%2D924C%2DCB33702D5FE1%7D&dist=msr_2

Gold was down today less on the "firm" Dollar than on the total crap out in Oil prices. Nothing revealed in today's "news and data" is really new to the markets. Oil has been dropping for weeks on "recession fears". The "fears" are now reality. There is no more reason to sell Oil today than there has been for the past three months. Today's market reaction in Oil was purely knee-jerk.

Consider. Oil's decline from it's highs near $150 began with the "threat" of "demand destruction" because of the high prices. When demand for Oil began to actually fall, Oil prices fell faster and further in a self fulfilling prophecy. Toss in some recession fears and viola, $50 Oil.

With gasoline prices at or near $4 a gallon this summer, consumers voted with their wallets, and bought less. Demand for Oil fell and the price fell with it. But now, gasoline is once again below $2 a gallon. Wouldn't it stand to reason that gasoline demand would rise if prices are lower? Won't Americans return to filling their tanks at the pump instead of just getting half a tank? My crystal ball tells me that come Spring, demand for Oil is going to be strong, and there's not gonna be enough Oil to meet the demand because of reduced production. Rising Oil and gasoline prices next summer are going to make this years look tame. Toss in a misbegotten windfall profits tax on the Oil companies, and the gas lines we'll see at the pumps next summer will be "shocking", but really should not be a surprise at all.

Back to Gold. Obviously Gold failed to get through resistance at 835, and we have revisited the 770s...760s after hours. No surprise really. The CRIMEX is open daily from 8:20AM est to 1:30PM est. Give these criminals and excuse to sell Gold, and they will. Paper Gold that is. I doubt few around the world actually sold any "real" Gold today. As a matter of fact, I bet a lot of "real" Gold was probably bought today.

Gold support lies between 755 and 764. A move back above 780 should put this knee jerk reaction to the recession "news we already knew" behind us quickly as Gold's status as a safe-haven continues to reassert itself. The Fed's incessant build in the monetary base all but assures this recession will be of the stagflation variety last seen in the 70s. A weak economy with rising prices equals stagflation. Most like morphing into hyper-stagflation by 2010. Signs of rising prices may be absent presently, but come the Spring of next year expect prices to begin rising like weeds in a fallow corn field.

Below 755 lies support at 738. Below that and we have to start all over again. Silver's losses today were ridiculous, but nothing in the Silver market should be shocking anymore. Heavy losses in Oil always lead to big losses in Silver. Blame the commodity indexes, and of course blame the CRIMEX.