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Dave - It's apt you mention Limbo. Those talking up the "recovery" (no doubt so they can make another buck off the gullible) are performing a variant of the Limbo Dance. There's no knowing how low they'll stoop.


John D. Wheeler

Wow... Malanga thinks the government figures are too pessimistic... I'll have what he's having... it'd be nice to take a break from reality for a while.

I am reading about some positive trends in the housing market. One is that investors, rather than buying mortgages, are buying distressed properties directly and renting them out. Another is that the prices on the very high end of the market (7+ figure) are starting to appreciate. So for those who have money, the housing market is not bad.

Of course, as soon as the artifically depressed interest rates start rising again, yeah, as you say, stagnation will look good.

Julian Bond

Seems strange to me that we're expecting that housing will fuel a genuine economic recovery in the USA. Rather than, oh I don't know, making stuff?


A rise in home prices wouldn't be the direct cause of another meltdown. It'd be a symptom of practices in the industry (more loans and lower interest rates can cause a rise in prices, but not necessarily a bubble, nor is one needed). The cause would be the coupling of a large number or percentage of crappy loans and any exterior factor that would cause a sufficient amount of defaults to overwhelm highly leveraged banks. These could be a rise in interest rates (extremely unlikely in the short term) or a significant enough rise in inflation (energy and food especially), among other factors. A sudden drop in stock prices or a government default, temporary shutdown, or dramatic cut in social spending could trigger these effects a well.

None of that is to be desired, and I wouldn't say it's certain in 2013. But crashes tend to come when they're least expected.


"We are stuck in the doldrums, in some weird kind of Limbo, where stagnation in the short term continues against a backdrop of longer-term decline."

No one could describe the current situation better than you did Dave. No one.

John D

How many more years of this are needed until the MSM stops using the term "The Recovery"? Drives me crazy.


You know, part of the problem is that we watch the GDP like a hawk, rejoicing over every bump, agonizing over every blip. In this case, the decline in GDP probably doesn't reflect a worsening economy relative to the previous quarter. That said, the rises in GDP since 2009 haven't reflected an improving economy. If GDP includes government spending, and government spending is predicated largely on borrowing, then who cares if GDP goes up a bit??? And if the Fed can print money to make dollars move around, who cares if GDP goes up? Does that reflect growth? If we lost 4 million middle-income jobs and replaced them with 4 million minimum wage temp jobs, then who cares about GDP? Not the temps!

This Economist article really sums up the insanity.


JohnWDB - The insanity is compounded by the pondlife-level comments below the Economist article.

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