We now have the media and well known economists pondering, if not joining the consensus, that we are entering a double dip recession. I believe they are all wrong. From a practical standpoint, the previous recession was never completed, and I have stated this several times over through BoomBustBlog...
- July 2010: IMF Chief Sees Little Risk of Double Dip, but then again, he never saw the first dip coming, or any dip before that as well.
- December 2010: As Clearly Forecasted On BoomBustBlog, Housing Prices Commence Their Downward Price Movement In Search Of Equilibrium Scraping Depression Levels
- February 2011: The Coming Interest Rate Volatility, Sovereign Contagion, Geo-political Unrest & Double-Dip Recessions: Here’s The Answer To Valuing Global Real Estate Through This Mess.
As a matter of fact, I parsed the semantics with the esteemed Nouriel Roubini at a party in his home last may, reference The "American Realist" Says: Past as Prologue - Re-blown Bubble to Pop Before the Previous Bubble Finishes Popping!!!! Wednesday, 18 May 2011
In the Q&A he had with his clients, the topic of double dip recessions came up. In a nutshell, he felt that there was a possibility, but not assurance of a double dip. Let me add that I have an awful lot of respect for Nouriel. Outside of calling the housing crash accurately (as did I), he speaks his mind openly and does not mince his words. Coming from and independent guy such as myself, that trait is worth more than its weight in gold (that means worth more than 1,700 per troiy ounce, and counting). But after that comment, being the brash ass that I am, I interjected with the opinion that what was being labeled as a double dip was already a forgone conclusion, and in reality it wasn't a double dip at all, but really a continuation of the previous recession that was broken up by massive bubble blowing on a global scale. Nouriel countered that the difference between a double dip and what I espoused was a matter of semantics.
I respectfully disagreed with the esteemed doctor, for you see the difference is the economic sustainability of the alleged progress. If this was truly a double dip, then the economy actually grew, then stuttered. That's materially and significantly more positive than an economy which dramatically shrunk and then was literally pushed upwards by stimulus, and only stimulus, just to fall back IMMEDIATELY after said stimulus was ever so slightly slackened. What this means is that the economy was perpetually in free fall, and that fall was simply lessened by said stimulus. A stark difference from an economy that actually started growing on its own then petered out.
It has been my contention the Fed has spent a $1 for every $0.60 cents of recovery. Unsustainable! Unwise!
As detailed in "Who is Reggie Middleton!!!", my empirical approach allowed me to see the housing crash, CRE crash, collapse of GGP, Bear Stearns, Lehman, WaMu, Countrywide, municipal finances, regional banks, monoline insurers, the pan-European sovereign debt crisis as well as a whole host of other valuation faux pas, considerably ahead of sell side Wall Street, ratings agencies, most independent shops and the financial media.
I fear many may dismiss my viewpoints simply because they may have a bearish tinge to them. Trust me, I am not a pessimist. As a matter of fact, my actions throughout the first half of the first decade of the new millennium would have led many to believe that I was the ultimate real estate bull. Alas, it was not optimism, it was realism, just as what may appear to be pessimism now is nought but realism. To discount realism as pessimism, from a historical perspective, may not be wise. Every since 2006, my views on the asset and credit bubble bursting have been quite contrarian and thought of as pessimistic. All one had to do was fast-forward a year or two and realism easily replaces the term pessimism. Go to the 11:00 mark in this video from the Dutch Station/show VPRO Tegenlicht and listen for at least 45 seconds. It pretty much tells the tale...
Another viewpoint from March 2011: Do Black Swans Really Matter? Not As Much as the Circle of Life, The Circle Purposely Disrupted By Multiple Central Banks Worldwide!!!
I have always been of the contention that the 2008 market crash was cut short by the global machinations of a cadre of central bankers intent on somehow rewriting the rules of economics, investment physics and global finance. They became the buyers of last resort, then consequently the buyers of only resort while at the same time flooding the world with liquidity and guarantees. These central bankers and the countries they allegedly strive to serve took on the debt and nigh worthless assets of the private sector who threw prudence through the window during the "Peak" phase of the circle of economic life, and engaged in rampant speculation. Click to enlarge to print quality...
The result of this "Great Global Macro Experiment" is a market crash that never completed. BoomBustBlog subscribers should reference The Inevitability of Another Bank Crisis while non-subscribers should see Is Another Banking Crisis Inevitable? as well as The True Cause Of The 2008 Market Crash Looks Like Its About To Rear Its Ugly Head Again, With A Vengeance.
All four corners of the globe are currently "hobbling along on one leg", under the pretense of a "global recovery".
Simply sit back and look at the (supposed, none of these should truly be considered surprises) Black Swan Catalysts that we now face:
- US Housing, you know, the the thing that kicked this all of to begin with - The True Cause Of The 2008 Market Crash Looks Like Its About To Rear Its Ugly Head Again, With A Vengeance Friday, March 11th, 2011
- US and/or European Commercial Real Estate - Reggie Middleton ON CNBC’s Fast Money Discussing Hopium in Real Estate Friday, February 25th, 2011
- MENA, the Middle East & North Africa - Egypt’s Social Unrest As A Pan-European Economic and Financial Contagion? It Can Happen!!! Friday, January 28th, 2011 or First Tunisia, Then Egypt, Now Yemen: Will This Reach The Powder Keg That Is The EU & What Will Happen If It Does? Wednesday, February 2nd, 2011
- Japan - Can Contagion Be Avoided Considering The Magnitude Of Japan’s Woes? Tuesday, March 15th, 201
The list can go on.