Tuesday, July 15, 2008

It's A Recession, Get Over It


Reading all the blogs you'd think it was the end times. It's a recession and it needn't even be deep or exceptionally long. Of course every single public action to date has made things worse but that's a different issue.

The latest problem that concerns me is small commercial lending. It may have stopped. That would be very, very bad. Lots of that debt is revolving credit and funds ongoing operations. We start seeing the smalls forced to chose between taxes and employee paychecks and the jobless rate goes parabolic. It already looks pretty bad in California but that's off a low level.

If that trend goes national later this year we may look back on Dow 9600 as the good old days.

6 comments:

Casey Serin said...

F I R S T... in the unemployment line, that is! ;-)

Agent #777 said...

The firsts have just run dry for me, even when staying up until nearly 2 AM...

Peripheral Visionary said...

I agree Rob, it's "just" a recession (for now,) but it could get worse. Cutting back in speculative lending has been nothing but good (even as it has caused pain for the financial companies,) cutting back in mortgage lending has been necessary, and cutting back in consumer lending is long overdue . . . but cutting back in investment/commercial lending would be a *serious* mistake.

Unfortunately, that may be the direction the banks go, as they are almost all severely capital constrained. But investment/commercial lending is not just the best form of lending, but also the most stable, as it allows for increased productivity (unlike lending for speculation and consumer lending.) Especially critical is funding for small companies, startups, entrepreneurs, who are the lifeblood of the American economy. Lending for purposes of (real, not financial) investment is what lending was meant to be, but that got lost in the speculative frenzy of recent years.

Jean ValJean said...

FIRST to call Bullshit on Casey being in an Unemployment Line.

That would mean he's LOOKING for work, and we all know he'll go to jail before he looks for honest work!

Lost Cause said...

Who would have imagined all the dead money in the stock market for the past eight years with a moron in the White House? I predict a net decline despite the efforts of plunge protection team.

Tav said...

I hope some of you EN Casey haterz can make it to tonight's talkcast, boyeee (7:00 PM Eastern July 16)

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