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http://blogs.wsj.com/marketbeat/2008/05/15/a-regular-recession-or-a-larger-disaster/?mod=WSJBlog
(Posted with comments)
May 15, 2008, 1:06 pm
A Regular Recession, or a Larger Disaster?
Posted by David Gaffen
How significant will the current downturn be? Economists at Morgan Stanley worry that it could rival what they call “the big five,” defined as large-scale financial crises that resulted in a long-term underperformance in the respective economies.
The long-term declines the firm looks at includes Spain in 1977 and Norway in 1987, and most recently Japan in 1992 – which they define as the worst, resulting in Japan’s so-called lost decade. Whether the current U.S. economic decline matches one of these situations, or looks more like the recent U.S. recessions “holds the key for risky asset prices,” they write.
Morgan Stanley economists say that in this instance, inflation may not automatically recede as U.S. growth recedes. They say as a result that bonds may sell off if growth recovers in the U.S. and monetary policy remains loose, fueling price gains. Stocks, on the other hand, may fare well — in the five major declines surveyed, equities started to recover “well before the recovery in growth in the Big Five or in the U.S.”
“We believe that the Fed’s focus on keeping the financial crisis from sending the economy down the path of the Big Five will succeed, but lower rates and surging money growth will spill over into inflation. Bond yields are likely to follow inflation higher,” they write.
Comments
Report offensive comments to marketbeat@wsj.com
Dear Morgan Stanley,
You must be brain dead… the current situation the US is in is going to destroy the US Tax Payer (working middle class) base for years and years to come. The president… that “Bush”, The US Fed and The US Treasury has set in motion along with the growing debt (International Trade) in The US Dollar by giving low interests (Free $Muck Money) to the Global Financial Banks and there partners in crime will lead this country into the largest and greatest… “Deflationary Depression”… this world has ever seen since the 20’s and 30’s! Mark these words well… no one really knows the size, scope and deceit that this Government has undertaken and is continuing to grow at a consistent downward spiral speed at which will not be reversible in the short term… you think!
Comment by You think... Yep... I do... and I know! - May 15, 2008 at 1:53 pm
Yup I all I know for certain is that the nuts are out. We have been hearing this doom and gloom for almost 10 years now. Still haven’t seen it.
Let’s see the proof! Put up or shutup!
Comment by Skeptic - May 15, 2008 at 2:15 pm
Our country was founded on biblical principles, honesty, integrity and it seems to be that the “BIG BOYS” running this country have forgotten about the important things in exchange for the almighty $$$
Comment by Jeff Clark - May 15, 2008 at 2:34 pm
We are facing the burst of super housing price bubble
on top of record oil, commodity price resulted
economic slowdown, inflationary recession.
Feds aggressive rate cuts,
massive cash injection into
money system and economic stimulus package barely avoided first half recession.
However, continue housing price slump, job cuts, plunging consumer confidence
will drag retails sales, economy into recession in the second half and further stock market correction in banking, finance, housing and retail sector.
We are moving from LTCM style crisis to 1990 Japan hosung bubble recession into 1980 double dip inflationary recession.
details on
www.osawh.com/Fedcrisab.htm
www.osawh.com/mortdefa.htm
www.osawh.com/riskm.html
Comment by Warren Huang - May 15, 2008 at 3:15 pm
(Posted with comments)
May 15, 2008, 1:06 pm
A Regular Recession, or a Larger Disaster?
Posted by David Gaffen
How significant will the current downturn be? Economists at Morgan Stanley worry that it could rival what they call “the big five,” defined as large-scale financial crises that resulted in a long-term underperformance in the respective economies.
The long-term declines the firm looks at includes Spain in 1977 and Norway in 1987, and most recently Japan in 1992 – which they define as the worst, resulting in Japan’s so-called lost decade. Whether the current U.S. economic decline matches one of these situations, or looks more like the recent U.S. recessions “holds the key for risky asset prices,” they write.
Morgan Stanley economists say that in this instance, inflation may not automatically recede as U.S. growth recedes. They say as a result that bonds may sell off if growth recovers in the U.S. and monetary policy remains loose, fueling price gains. Stocks, on the other hand, may fare well — in the five major declines surveyed, equities started to recover “well before the recovery in growth in the Big Five or in the U.S.”
“We believe that the Fed’s focus on keeping the financial crisis from sending the economy down the path of the Big Five will succeed, but lower rates and surging money growth will spill over into inflation. Bond yields are likely to follow inflation higher,” they write.
Comments
Report offensive comments to marketbeat@wsj.com
Dear Morgan Stanley,
You must be brain dead… the current situation the US is in is going to destroy the US Tax Payer (working middle class) base for years and years to come. The president… that “Bush”, The US Fed and The US Treasury has set in motion along with the growing debt (International Trade) in The US Dollar by giving low interests (Free $Muck Money) to the Global Financial Banks and there partners in crime will lead this country into the largest and greatest… “Deflationary Depression”… this world has ever seen since the 20’s and 30’s! Mark these words well… no one really knows the size, scope and deceit that this Government has undertaken and is continuing to grow at a consistent downward spiral speed at which will not be reversible in the short term… you think!
Comment by You think... Yep... I do... and I know! - May 15, 2008 at 1:53 pm
Yup I all I know for certain is that the nuts are out. We have been hearing this doom and gloom for almost 10 years now. Still haven’t seen it.
Let’s see the proof! Put up or shutup!
Comment by Skeptic - May 15, 2008 at 2:15 pm
Our country was founded on biblical principles, honesty, integrity and it seems to be that the “BIG BOYS” running this country have forgotten about the important things in exchange for the almighty $$$
Comment by Jeff Clark - May 15, 2008 at 2:34 pm
We are facing the burst of super housing price bubble
on top of record oil, commodity price resulted
economic slowdown, inflationary recession.
Feds aggressive rate cuts,
massive cash injection into
money system and economic stimulus package barely avoided first half recession.
However, continue housing price slump, job cuts, plunging consumer confidence
will drag retails sales, economy into recession in the second half and further stock market correction in banking, finance, housing and retail sector.
We are moving from LTCM style crisis to 1990 Japan hosung bubble recession into 1980 double dip inflationary recession.
details on
www.osawh.com/Fedcrisab.htm
www.osawh.com/mortdefa.htm
www.osawh.com/riskm.html
Comment by Warren Huang - May 15, 2008 at 3:15 pm
