July 19, 2024

Jack Malvey, chief global fixed income strategist at Lehman Brothers said: "The current U.S. credit crisis is worse than the crisis of confidence experienced after the Long-Term Capital Collapse in 1998". He also said, "This is the deepest correction we've ever seen in structured finance,"  "This is so dispersed, so interlocked… This is a painful lesson in financial engineering."

Lehman Brothers now says there is a 30% chance the U.S. economy falls into recession in 2008, and Malvey added the risks may be growing. With the massive collapse of the Bear Stearns hedge fund and the writedowns banks are taking, the turmoil in the financial sector has the potential to bring down the broader markets.  A few of our prior posts on a real estate induced recession are:
$100,000 Cuts on New Homes Nationwide!, Employment Report Negative Surprise . . . for Some, Surprise HUGE Drop in Pending Home Sales = Regional Recession?, U.S. Recession Forcast … It’s on The Way, New High for California Foreclosures, Real Estate and Construction Misery Dramatically Slows California’s Job Growth, Drop in Housing Values Could be the Factor that Leads Us Into Recession, Real Estate Bubble Bust … Be Worried … Be VERY Worried, Seven Year Low in New Home Sales!, Greenspan – Possible Recession This Year!, Bicoastal Housing Recession Forecast By UCSD Economist, It’s Always A Good Time To Buy Real Estate!, RECESSION?, Real Estate Recession Looming? [tags]housing recession, credit crisis, housing market, real estate bust[/tags]
San Diego real estate agents 

3 thoughts on “30% chance the U.S. economy falls into recession in 2008

  1. Consumer demand will drop. Unemployment will rise. The US will go into a recession at best, a depression at worst. Expect first stagflation (high inflation and high unemployment), both because of the increased price of imports and deliberate pump priming by the Fed, then deflation, as asset prices collapse so hard they take everything else with them. The other likely scenario is stagflation followed by hyperinflation. Formal inflation numbers put out will become not just a joke amongst market-watchers, but amongst the actual population. Same thing with unemployment numbers.

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  2. Stagflation is the problem going forward, not recession. If our gdp is 70% consumer spending, there is no value added to the society. The big muckimucks of wallstreet should consider how to invest in areas that increases value and not just consumer spending!! That is what will take out of stagflation.

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