Chance of a recession at 80%

[Value Buy]

Now they are saying the feared "double dip" is about to happen.

URL: www.cnbc.com/id/44278624/

[Value Buy]

In the article:
plunge in recent economic data puts the probability of a double-dip recession above 80 percent, according to modeling by Bank of America Merrill Lynch released Wednesday, reflecting the toll the U.S. debt downgrade, Europe’s woes and stock market volatility has taken on economic activity.



To be sure, the firm’s economic team warned more data is needed for it to raise its overall official prediction of a recession that high. Still, the recent dismal readings from the Philadelphia Federal Reserve and the University of Michigan were enough for Merrill to raise its overall probability of a contraction in the next year to 40 percent from 35 percent at the start of this month.

A survey of manufacturing in the Philadelphia region plunged to its lowest level since March 2009, according to the Fed last week. Consumer confidence is at its lowest level since May 1980, according to a Thomson Reuters/University Michigan survey released on August 12. A revision of this survey will be released Friday.




Well, it did not look like we would get it, but, the economy has been going south since spring.
Just absolutely no good news out there.

[Aman A.K.A. Ahamburger]

Personally I like to believe a guy that bought a railway when everyone thought that the world was going to end in 09. Isn't that why he said he bought the shares of BOA? Because everyone believes the world is going to end?

[Virgil Showlion]

Weren't Merrill execs at the head of the latest white paper calling for $1 trillion in QE3?

Paul Krugman, meanwhile, has gone off the deep end. More recession means more stimulus as far as he's concerned, and that's A-OK by him.

ETA: *lol* Speak of the devil.

[ModE98]

My crystal ball is far too murky to read properly, my tarot card deck has a missing card, and lost my rabbit's foot...... am totally "at sea".

[Value Buy]

Aug 26, 2011 1:36:05 GMT -5 @di said:

Thought Provoking to be sure.
And Before I proceed - I have no Issue with you.
But may I ask a Question ?
Just Trying to make sure I am on board - We are to without question supposed to Believe a Study By a Bank (BOA Merril Lynch And The FED) - But we are supposed to disbelieve anything said by a brokerage (like Fidelity) ?

I agree, but here are some more excerpts which are sither scary, or realistic.

The Philly Fed puts a recession probability at 85.7 percent, while the consumer survey puts contraction chances at 80 percent, according to Bank of America's probability model, which uses a so-called Bayesian technique that “tests if the economy is in a recession based on the interaction of variables that are associated with turns in the business cycle.”


According to their data, the Philly Fed has accurately forecast four of the last seven recessions. The older Michigan survey has accurately signaled three of the last eight recessions.

“It’s a 100 percent chance,” said Peter Schiff, CEO & Chief Global Strategist of Euro Pacific Capital. “In fact the recession might have already started.”

The Merrill economics team is less pessimistic than Schiff and is quick to point out that since 1990, the Philly Fed has signaled recessions six times that have never come to fruition. Therefore, a sudden drop of this magnitude is not unusual for this indicator.



So it looks like Merrill is the positive one, which is scary.

[Trongersoll]

Bah! Humbug!

[kadee79]

There is no "chance" of anything that is already a fait accompli. We have not left the recession that started in 2008.

I agree!

[Opti]

Aug 26, 2011 6:13:21 GMT -5 @toughtimes said:

There is no "chance" of anything that is already a fait accompli. We have not left the recession that started in 2008.

I realize the official definition may be the reason some are calling
recession #2. I agree with tough and so do many regular people. There is no new recession just the one that started in 2008 we've yet to emerge from.

[verrip1]

This whole ridiculous idea that a recession is a defined term has permeated all those who limit their thinking to things like 'data' and 'specifics' and are unable to properly conceptualize things. We all know what recession is when we feel it. It gets pretty tired hearing people pontificate about bizarre things such as consecutive quarters, negative, GDP, real and 2. After all, they are pretty much subjective when you get right down to it.

Fortunately, the chance of recession really is 100%. It's just a matter of when.

Now, enjoy!

[tyfighter3]

Statistics show that we have a recession around every 10 years, so the 100% chance is just a matter of time. So, how is this. I bet we have a 10% chance of a recession in the next 10 years, you can take the other 90% if you want to but you have to give me odds. LOL

[Aman A.K.A. Ahamburger]

This article, I think, sums it up.

These cities wonder: What jobs crisis?
bangordailynews.com/2011/08/28/business/these-cities-wonder-what-jobs-crisis/

Consumption stopped at 2006 levels in 2009, and has started to recover. Bi metal has a thread on MT that has an article that lays it out. Consumption didn't fall like it did in this last recessions, and there wasn't the housing depression, so the severity was much more extreme initially than in the past.

[bimetalaupt]

" Interesting, with that bit of knowledge - it is fascinating to me that we haven't seen More "flash crashes" or similar events. Given that these Statistical Probability Models (Above) seek to marginalise the effects of the generally Irrational and Illogical actions of Humans in the Investing equation."
D.I,
We are seeing huge gains potential from the Irrational shorting at this point . Stocks are very much over sold and bonds over bought.. Flash crash would be the end to "High speed trading" as we know it and the whole thing is about the long tail of risk.. so it is not the normal distribution you are thinking of ...

Gold is the wild card with the long shot 6.234% of going $ 2,500 with the extreme events of a major world market financial crash.. Remember the only liquid asset would be gold and that would be sold to cover the down side margin calls.

Their is enough M2 to cover a lot of the downside with the hoarded cash reserves of major banks and WELL healed investors. :Like yourself...and Frank (FTI).. GDP models are worth less then Market models as they tend to be more about the Suzzie Orman declaring a depression and the spending habits need to be reduced to buy only needs and not extras until we see the light at the end of the tunnel. Well most think the light is a train that will destroy all we have worked for so many investors go to risk free at the cost of return. . IE Worry about the long tail of risk!! Well the French like to invest in
the New report system for MMXII now has gold added..
Just a thought,
Bi Metal Au Pt

K4DI!!

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