As a kid in the early 1960s, I would read the three stock exchanges - NYSE, American, and 'Over the Counter'. The last two are now called NASDAQ.

No, two consecutive quarters of negative GDP are the dictionary definition of recession. Here is the Wikipedia entry on "recession". The first sentence explains, A recession is usually defined in macroeconomics as a fall of a country's real Gross Domestic Product (GDP) in two or more successive quarters of a year.

The American Stock Exchange did not become NASDAQ - it never went away. OTC didn't have blue-chippers like Microsoft until NASDAQ boomed, tracking the tech bubble in the 90s.

Isn't buying houses or stocks betting that if your personal finances go to hell you can always sell either and at least break even? Confidence, even irrational exuberance, in the housing or stock market. :confused:

When that dictionary definition is met, then we were already entering recession years ago; when neo-classical economic numbers insisted the economy was booming.

We will not know if the recession is happening today (according to that definition) for many years. Years later, the GDP and unemployment numbers finally discover recession. Meanwhile, as that GDP number declares a recession, we may actually be back in a growing economy - as was the case in the early 1990s. They are lagging indicators because they measure things that occurred four and ten years previously.

Meanwhile, stock market currently says growth does not exist AND that numbers that define recession will say so years later. Common man's incoming has been falling for some years now. Using 'lagging indictors' only measure and report a recession years after the fact; years after the recession was created by a shortage of new and innovative products and created by 'money games'.

Irrelevant whether MSFT or INTC existed in NASDAQ or in a same stock exchange called 'Over the Counter'. NASDAQ pioneered trading by computers - not on a trading floor - even back in the 1960. That would be long before 1971.

The American Exchange is now part of NASDAQ when NASDAQ bought it. Back in the 60s, the OTC was the third exchange doing something radical - trading by computer. American Exchange that was #2 is now part of NASDAQ. But again, above provided as background information to demonstrate that "NASDAQ, which didn't even exist until 1971" is incorrect.

BTW, you can still buy products from RCA. And yet RCA has not existed for something like 20 years. AMEX is now part of NASDAQ that also existed long before 1971 - when AMEX was a larger and more respected exchange alongside NYSE.

Good points on all sides, honestly, and a reminder that any economic prediction is about as reliable as a weather forecast.

...actually, I trust the weather forecast a lot more, these days.

And in the same sense, when the economic numbers are booming, we were entering that boom when the economic numbers showed bust.

Since the boom - bust cycle appears to be inevitable, this is not a very useful observation.

A rather curious phenomena. Economics tends to have a cycle of about 10 years and another bigger cycle of about 30 years. Those thirty year cycles tend to be major changes. Take the 1970s. Add thirty years. A whole new breed of 'economic thinkers' trained in theory and little grasp of 1970s experience would only make same mistakes again. And so again, we are lying to the public how much we are spending in an illicit war, massive trade imbalances, interest rates climbing, commodity prices skyrocketing, inflation looming, rich getting richer while a middle class stagnates, government playing money games with spending and debts including emergency spending bills so that the actual fiscal mismanagement is not obvious, massive spending bills on coporate welfare such as the perscription drug plan to keep drug prices up and $8 billion to airlines with no stings attached, personal savings at an all time low, major institutions dealing with potential bankruptcy (ie GM, PBGC), and a population that does not have a positive economic attitude when economic statistics say otherwise. Welcome to the 1970s and to a event that traditionally occurs 30 years later - when economic leaders did not have personal experience from that history but plenty of training based in 'money game' theories (without grasp of the importance and nature of innovation).

Well, if you care to make a prediction, we can place it on the Cellar calendar and see whether it comes true. Give us a date for that downturn, it will be interesting in the future.

Because innovation takes four to ten years to occur, and since shortage of innovation is a primary source of recessions, then four years is a minimal number for economic data to measure what was actually happening within an economy. Within four years, we should know.

For the first time in 10 years, housing prices dropped this month. What makes it more interesting, those prices dropped by 2% in an economy that is now suffering a 2.8% inflation rate.

I'm a fiscal retard, can you give me the Cliff's notes interpretation of the implications of that fact?

Interpretation isn't the word I'm looking for, but there is an inchling who is distracting me.

I'm also economically challanged, but I'll take a stab at some of it.

If housing prices go down 2%, then the assesed value of my house should go down 2%, and my local government's real estate taxes should go down (HAH!) by 2%. So it's not such a bad thing, in my eyes.

Also, with housing prices going down, you will see fewer new housing starts. So the demand for building supplies should go down, and prices should go down a little too. You might be able to get a sheet of plywood for a reasonable price again. Good news if you are fixing up your own house.

Hmm. Our local assessment just went up nearly 50%. I think.

If it was 74,000 and is now 106,000 that is almost a 50% increase is it not?

Plywood is still pretty expensive but a bargain compared to copper or steel.

Has good news in this economy been based in productive activities? Well, incomes have been dropping for the past five years. So why the strong housing market? Was that housing market due to productive and necessary products - or just wild speculation?

With ridiculously low interest rates, then people were either buying houses they needed, or speculating. Unfortunately, this - the major driving force in the American economy - is traceable to Americans who could not otherwise buy homes, Americans who have combined low interest rates with dangerous balloon and variable rate mortgages, and the rich buying vacation homes. IOW the economic boom will not result in increased wealth four and more years later.

Well maybe homes would be a good investment. But housing prices are now starting to do what was long predicted. People will do anything to not let their house price fall - even delay a sale. But eventually the dam will break. And so this 2% drop is feared to be a dam breaking.

Those who otherwise could not afford the home and those who were only buying on speculation will suffer. Big part of the American economy that has been its 'engine' may collapse. That is the economic fear to a flurry of bankruptcies, a collapse of industries that kept the American economy looking good, and maybe a major recession.

Is your house assessment performed annually? Of course not. An assessment increases 50% because prices have inflated into a bubble. Housing prices have become that much excessive - and people just kept buying. Even worse are the many who took out equity loans on their house. A housing bubble that economic analysts fear because economics tends to take back easy money - vindictively.

Any one of three things may happen. Housing prices drop leaving massive debts for homeowners - maybe a house worth less than its mortgage. Rents skyrocket. Third is inflation resulting in much higher interest rates. We already see inflation jolting upward AND massive American dollars overseas waiting for what?

This economy has not been about America producing things. America's manufacturing economy is about 15% below what it once was - proportionally. Americans are becoming less technically able as indicated by college degrees (and skyrocketing numbers of student no longer finishing college), exportable products, and the number of immigrants who are now required for the more productive jobs. All this time, those problems are vague and looming because problems do not yet appear on spread sheets.

One need only look at how Home Depot and Lowes are changing their business models to appreciate what is expected. This 2% downturn is expected to increase in next 5+ years. People with houses worth less than they paid for or less than its mortgage.

Economic diseases are cured by recessions. Are you financially secure to weather a recession, loss of housing values, or massive rent increases? This is the question that a 2% drop in housing prices asks of you. After all, what other industry is ready to employ Americans when the housing industry drops by 50%. Toll Brothers has already seen a 50% drop in sales – therefore even resulting in a drop in house prices. What's in your wallet - or savings account? Were you foolish enough to take out a balloon mortgage or interest variable rate? Are your credit cards at $0 balance? That 2% drop in housing prices may be your last few warnings. Speculation and easy money is over. Satan demands his due.

That 2% drop in housing prices is considered a leading indicator of economics taking revenge on easy money. A problem only made worse by an $800billion trade deficient and a $100billion war that is being lost. Of massive dollars sitting overseas and not yet appearing on spread sheets either as the selling of America, devaluation of the dollar, or inflation. The American economy was so stable and reponsible in the 1990s. Major problems are looming. Maybe this time, we will not make mistakes - and instead increase interests significantly before damage occurs; avoid the 'guns and butter' mistakes by Nixon in late 1960s. We have major outstanding debts and we have an economy that looked good only as long as housing prices kept increasing.

it's all W's fault
 

The loss of good "auto-jobs" in the last few years in the Detroit area has a high number of people upside down on their homes.

Overall I see this as amusing but only because most of these people believed that they were smarter than God by buying more house than they could afford. Why put money down on a house? Mortgage it to the max. It'll only increase in value, right?

Now, someone with a relatively small chunk of CASH could roll into those areas and own what was recently a very nice home.

Oh yeah...all of this bad news is Bush's fault. We all know that.

George Jr's part in all this is massive spending because "Reagan proved that deficiets don't matter". That massive lump of American dollars overseas, a military now short of resources, a universally low American approval rating, quagmires in two wars that we cannot win, and the massive debt those wars are creating ... all are directly traceable to a president who then so fears Americans as to wiretap them - without judicial review.

We have yet to see how much George Jr will cost us. $100 million given away to build a hybrid. When that GM product did not appear 10 years later - GM still does not have a hybrid - then what does George Jr do? Nothing. Eventually more Detroit jobs lost as partioitic Americans buy the best - principles of a free market economy. The bastard even gave the airlines $8billion with no strings attached. Massive tariffs to protect an anti-American steel manufacturers industry.

Do you think corporate welfare is free? Do you really think economic forces do not come back four and ten years later to take revenge? That is the legacy of a president when god (rather than reality) talks to him. George Jr has successfully engineered an economy that is now growing less than the inflation rate. It is no accident that American wages have dropped during George Jr's tenure. Fiscal responsibility? He was a drunk and drug addict. He is an MBA. Where does that say anything about responsibility? Has he really changed - or just imposed his bad habits on us? We know he is a liar - no way around that reality.

That's right... because eventually a Democrat will get voted in and fix it for them. Until the next one comes along.