"This time it's different". How many times have we heard that before? Usually spouted by investors sitting right at the peak of what we later identify as a Bubble of epic proportions.
Here in the Recession of 2008, the statement may actually hold true.
We are certainly seeing world economic conditions never seen before ... and it really may be different this time. Sort of feels like a game of Recession Ping Pong. Here's what I mean...
In past Recessions...
it was the Economy that went in the crapper first. General economic conditions ... oversupply and manufacturing downturns, rising unemployment and such ... were what threw threw us into a Recession. AND the Economic Recession would THEN affect the Financial Sector with rising default rates and such.
This time ...
the Financial Sector is taking the lead. The over-leveraged, easy credit blowup of lending on all levels has thrown the Economy off the cliff and into the pit of doom. And now that we are in a general Economic Recession ... the economic downturn is reverberating back in a feedback loop to drive the Financial Sector down even further.
Imagine if this were a game of Table Tennis ... Ping Pong
In the old days it went something like this
This time it may be different
All I can say is ... if this really was a Ping Pong game I am hoping for a mercifully short rally.
Then you add in several flavors of "Special Sauce" and it really, honestly may be "Different this Time".
- Oil over $120/barrel
- Worldwide Commodity prices at record levels
- Worldwide food inflation and shortages due to diversion of crops for bio fuels
- The underlying demographic of the emergence of a middle class in India and China
- The Weakness of the US Dollar
- An historically significant drop in US Home values and its negative "Wealth Effect"
- US Consumer and US Government debt at record highs
Now I am not predicting the "Economic Sky is Falling", but I think anyone who is saying the US and world economy will snap out of this recession in just a quarter or two has their head buried in the sand. And I just start laughing when I think about Bush and the $600 checks that are supposed to make a difference. BTW, someone talk to me about Republicans and Fiscal Conservatism... please.
It would seem to me that the most appropriate attitude at the moment is one of watchful anticipation. As the various markets begin to understand and adapt to the changes taking place on a daily basis ... it may turn out that we do snap out out of this recession quickly. AND it could also be that "this time it is different" and we are in for a ride the likes of which we haven't seen before.
My advice ...
Save money, work on finding new customers and newer ways to make them happy in your business, invest in stable cash flow (like apartments in selected markets) and read the WSJ and John Mauldin's Blog to keep in the information flow.
Here in the Recession of 2008, the statement may actually hold true.
We are certainly seeing world economic conditions never seen before ... and it really may be different this time. Sort of feels like a game of Recession Ping Pong. Here's what I mean...
In past Recessions...
it was the Economy that went in the crapper first. General economic conditions ... oversupply and manufacturing downturns, rising unemployment and such ... were what threw threw us into a Recession. AND the Economic Recession would THEN affect the Financial Sector with rising default rates and such.
This time ...
the Financial Sector is taking the lead. The over-leveraged, easy credit blowup of lending on all levels has thrown the Economy off the cliff and into the pit of doom. And now that we are in a general Economic Recession ... the economic downturn is reverberating back in a feedback loop to drive the Financial Sector down even further.
Imagine if this were a game of Table Tennis ... Ping Pong
In the old days it went something like this
- Economy Down - Ping
- Financial Sector down with it - Pong
- Both recover together
This time it may be different
- Financial Sector down - Ping
- Economy down - Pong
- Driving Financial Sector down further - Ping
- Driving Economy down further - Pong
All I can say is ... if this really was a Ping Pong game I am hoping for a mercifully short rally.
Then you add in several flavors of "Special Sauce" and it really, honestly may be "Different this Time".
- Oil over $120/barrel
- Worldwide Commodity prices at record levels
- Worldwide food inflation and shortages due to diversion of crops for bio fuels
- The underlying demographic of the emergence of a middle class in India and China
- The Weakness of the US Dollar
- An historically significant drop in US Home values and its negative "Wealth Effect"
- US Consumer and US Government debt at record highs
Now I am not predicting the "Economic Sky is Falling", but I think anyone who is saying the US and world economy will snap out of this recession in just a quarter or two has their head buried in the sand. And I just start laughing when I think about Bush and the $600 checks that are supposed to make a difference. BTW, someone talk to me about Republicans and Fiscal Conservatism... please.
It would seem to me that the most appropriate attitude at the moment is one of watchful anticipation. As the various markets begin to understand and adapt to the changes taking place on a daily basis ... it may turn out that we do snap out out of this recession quickly. AND it could also be that "this time it is different" and we are in for a ride the likes of which we haven't seen before.
My advice ...
Save money, work on finding new customers and newer ways to make them happy in your business, invest in stable cash flow (like apartments in selected markets) and read the WSJ and John Mauldin's Blog to keep in the information flow.
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