pk estimates in august 06
"If you look at the most leading of the indicators on housing, stuff like new home sales and applications for permits, they’re off more than 20 percent from a year ago. If that translates into an equivalent fall in residential investment, we’re talking about a fall from 6 percent of the G.D.P. to 4.8 percent. And this may be only the beginning;"
" I wouldn’t be surprised to see housing investment drop below its pre-bubble norm of 4 percent of G.D.P., at least for a while."
what really happened ?
it dropped to slightly above 2% of gdp ....
and has stayed there ....
"Add to this the likely effect of a housing bust on consumer spending and you’ve got a direct hit to G.D.P. of, say, 2.5 percent or more."
" That’s bigger than the slump in business investment that led to the 2001 recession."
real hit to gdp ? prolly more like 6% if you strip off the stablizing injections
"And the main reason the 2001 recession wasn’t as deep as some feared was that the Fed was able to engineer… a housing boom. What will the Fed do this time?"
he got that right this time the fed could engineer no more then a mid air catch of a free falling credit system
build a recovery ??
forget about it !!!!
notice pk doesn't seem to be entertaining huge fiscal deficits ...yet
"Maybe rising business investment and a declining trade deficit will soften the blow."
But it’s remarkably easy, playing with the numbers, to come up with scenarios in which the unemployment rate rises above 6 percent by the end of 2007. "
real UE in dec 07 ? the crank off hadn't happen yet
the great job hack came far slower only a gentle rise over the september 06 to dec 07 period
but then
well 6% looks like a NAIRU number now !
"That’s not a prediction, but it’s well within the range of possibility."
u bet paul u bet ...
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not many
non professional doomcasters
saw the hi fi crisis coming at them
not one with such immense hi fi institutional core
imploding potential
who knew the risk concentration was that huge
who knew there were default insurance policies
issued in the billions
that could not possibly be honored
the story of this peak level elite hi fi er "wilding"
in magisterial hands
will make for a great popular narative some day
however
the underlying structural ugliness out there already in august 06
out in the "real economy "
that's what made for the stag
the yellow flag time
the two track global recovery
low wages
high debt loads
collapsing collateral
negatives of a size...well
it was the 75-100 year flood time
and no one in a position to do anything
had prepared for even a 35 year flood
in particular
not the bulk of the cutting edge nk 's
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here pk notes the set back to housing construction
and to credit fueled household spending
but the ramifications on wall street ??
ie a prophetic vision of september two years later ?
not in pk here
i've not found that yet anywhere
in a sane elite non charlatan head
creepy snap eh ??
