Moody's Economist Zandi say's America headed for worst downturn Since Depression (GlobeSt.com)
Link to Full story at GlobeSt.com
excerpt:
"We're going to suffer the worst downturn since the great depression," said Zandi, chief economist at Moody's Economy.com.
A year ago, Zandi, along with a few other noted economists, said the job market was operating at stall speed. In a wire report that appeared in the Dallas Morning News, Zandi forewarned ''either something is going to revive the economy quickly or we're going to get into an unraveling, vicious cycle of declining spending and even weaker job growth."
Fast forward 12 months to the ULI breakfast in Midtown, where Zandi, marveling at how rapidly his earlier prediction came true, said that in his 25 years as an economist, "it's about as bad as I've ever seen it." Attempting to lay blame, Zandi said house prices roughly doubled in the first half of the decade, then the process of mortgage securitization, the process of global investor dollars and turning those dollars into mortgages of US homeowners was all fundamentally flawed.
"No one in this process had the responsibility of making sure that the loans being made were good loans," he said. Zandi said one of the hallmarks of this particular recession is over-levered consumers who are struggling to manage debt loads and record delinquencies.
Just curious. For those who have managed to stay out of debt, are we totally screwed, or in the cat-bird's seat?
January 18, 2009 9:43 PM | Reply | Permalink
From what I can tell, a combination of both
January 18, 2009 10:19 PM | Reply | Permalink
Cville - thanks for posting something that has nothing to do with the original post but is just very self-centered. I guess you have no compassion for people who are in debt?
I was surprised you didn't blame Bush for everything that has happened to the economy.
January 19, 2009 10:56 AM | Reply | Permalink
De-regulation of the financial markets during the last eight years that led to further deterioration of government oversight, a sprinking of former traders on Wall Street some of which were from cultures like that encouraged in companies like Enron who basically had no problem inflating prices based purely on speculation.....the legacy of investment banks marketing (homeowners) people's debts that were sliced and diced, then sold......Most recently, Banks taking money from the government that was meant to jump start credit markets....the list goes on in "my opinion" as far as who to blame...but that would be my opinion and not anything to do with the sharing of the above story. In a nutshell, a culture of greed that was allowed to fester, that went un-checked by not only government, but journalists. Again, that's just an opinion.
January 19, 2009 2:54 PM | Reply | Permalink
Well those are probably ten separate blogs so it doesn't make sense to debate each one here.
I did post one new blog about the TARP (which you mention above) - because I believe that peoples' expectations were way too high about the TARP. And maybe that's Paulson's fault as a poor P/R person. But the TARP did help the banks continue to exist. And they have continued to lend (and some have lent more than before). But it wasn't going to all of a sudden encourage the banks (who still are undercapitalized) to start lending more to consumers who are already over-leveraged or let people get monster mortgages with barely any money down.
But anyways, the TARP goes in the "fixes" categories as opposed to in the "causes" bucket
January 19, 2009 4:55 PM | Reply | Permalink