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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: bentway who wrote (436221)	11/22/2008 1:32:52 PM
From: tejek	Read Replies (1) \| Respond to of 1586777

While -10.4% sounds awful, nobody ever talks about the Great Depression of 1958. There was a depression in 1958??? People are starting to use the d word just a little too much. That's because the economy came roaring back later that year. This was in part a characteristic of the manufacturing-dominated economy of those days. GDP and employment would shrink precipitously one quarter as factories temporarily shut down to work off an inventory glut, then jump almost as much when they reopened. Things don't really work that way anymore — the jobs disappearing now aren't temporary layoffs, and the increased reliance on debt in the U.S. economy may bring self-reinforcing downward pressures that weren't an issue back in the relatively frugal 1950s. (When you've got lots of debt, like General Motors or your neighbor with an adjustable-rate mortgage, you're in a far worse position to weather a sudden reduction in income.) Everyone keeps forgetting how lean manu. investories [except for autos] are right now. The consumer comes back and manufacturers will have to up production fairly quickly. As a result, hardly anyone is expecting a big snapback in the first quarter of next year. Then again, nobody really knows what to expect. There's far less consensus among economists about the first quarter than about the one we're in now. Some (Merrill Lynch's David Rosenberg is an example) think it will be even worse than the current quarter. Others (the majority) think it will be better. But none of that means very much, given that economists are close to hopeless at predicting that far into the future in times as tumultuous as these. It's the performance of the economy next year that will determine whether this is a deep-but-manageable recession — worse than those of 2001 and 1990-91, but along the lines of those of 1981-82 and 1973-74 — or something altogether more historic and horrific. The key is the American consumer......one of the more resilient animals on the planet.