Finance Minister says US is in "deep shit"

Norway also has the 2nd or 3rd largest sovereign wealth funds in the world. Coincidence? I don't think.

And yes, the entire interview was in Norwegian, except for the "in deep shit" remark, which I guess she didn't feel translated as nicely into Norwegian as she would have liked. I'm surprised these comments haven't made their way around the financial papers yet. Norway may be a small country, but the National Pension Fund is one of the largest in the world.

Fandango

-------------------- "It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879) "Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel

Not only is the US already in recession but it is on the brink of a great depression. You should get used to not being a superpower...

Not sure if that "you" was aimed at me, but just thought that I'd clarify - I'm a Scandi based in the UK.

Fandango

-------------------- "It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879) "Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel

You guys are idiots.  Great Depression?  First, "Great Depression" isn't an economic term... DEPRESSION is... GREAT depression refers to a single occurance in the 1930's.  John Mack, which mind you is a very American name, ... I am sure my county in rural iowa can take over your entire country so quiet down.

Also, not sure if you are ignorant or just being stupid, but a depression would require our GDP to drop more then 10% (mind you that is probably triple the size of your country's GDP), which just is not plausable in the modern world.  Our last "Depression" was in 1937.  So if you don't like the U.S., you can go to a site that isn't named after a street in New York.  Thank you. 

John Mack you are very stupid. If the U.S. catches a cold, the rest of the world catches pneumonia.

Why so aggressive PublicEquity1? It’s not a pissing contest, I am merely stating my prediction of what is to come. If you cannot remain dispassionate in your analysis then perhaps you should consider a career outside of finance.

Let’s see in ten years time what history chooses to call this period before we start playing with semantics, eh? The Great Depression was so called because it was of a magnitude not seen before in US history. If an economic shock of a similar magnitude is experienced then there will be two of them – hence it will “a Great Depression” (or maybe “Great Depression 2”).

I am somewhat bewildered at the “county in rural iowa” comment. What point are you trying to make here? Are you suggesting that I am not allowed to have an opinion on something that has serious implications for the world because my country may (or may not) be smaller than your county? So your argument boils down to “I’m bigger than you, therefore I’m right”? (Oh, and well done for shooting me down on my username – that’ll definitely shut me up).

If you are going to accuse me of ignorance or stupidity then it is not a good idea to demonstrate naivity and gullibility in your own comments.

Yes, my comment was inflammatory – in order to stimulate some debate on a forum that is dedicated to finance. Your response unfortunately appears to be emblematic of a generation.

Ps Not aimed at you Fandango – just thought I’d get some chat going.

I think the economy will recover. The US is not in "deep shit".

JMack, didn't think so. Just making sure we were all up for a nice friendly chat/debate.

I'm still rather surprised that the Minister in charge of the world's second (?) largest sovereign wealth fund can say that the US economy is "in deep shit" without any repercussions. I don't mean that the markets should move (she's not that important), but surely there must be some political implications from such comments.

She implied that the US must allow investment from foreign governments or suffer further economic downturn. How strictly does the US control foreign investment into the country? Why are they "protecting" themselves from one of the most pro-American countries in the world (a very strong NATO ally, especially with regard to the war in Afghanistan) if it wants to invest its $billions into the US economy?

Fandango

-------------------- "It is a fine thing to be out on the hills alone. A man can hardly be a beast or a fool alone on a great mountain." - Francis Kilvert (1840-1879) "Ce serait bien plus beau si je pouvais le dire à quelqu'un." - Samivel

We are not in a recession, not yet at least.

By definition, a recession requires two consecutive quarters of negative GDP growth.

amen Smugguy.  nor are we on the brink of a depression or anything close to the 30s or the late 80s for that matter.  Unemployment is at 5%.  Unemployment in the 30s was at 25% while it was at 11% in the late 80s.  The latest contraction in 2002 is just a blip on the gdp graph, and people havent even begun the same rhetoric as back then.  remember when fed fund rate was at 1%?  we're still only at 3.5.

wintonheights are you Jim Cramer by any chance?

This isnt a scenario in a textbook or a simulation kid - this is the real world. You obviously cant be working on the street, otherwise you would see the writing on the wall. Do yourself a favor. Go pick up a newspaper. Go turn on the television. Or better yet take a walk down the street and talk to your neighbors. And if you want extra credit, I just spoke facts go look them up. Dont come back on here until youre finished and youve learned something.

I'd rather not talk to my neighbors or watch CNBC for investment advice.

that youre a little green, aachimp. And you know what? Thats fine. We were all there once. I was a little harsh. You get a pass.

I can't follow this thread. How did John Mack get called an idiot before he posts? and whyd he get called an idiot for basically agreeing with I-bankers initial post?  Edit much?

winston, you are a bit overboard.  shouldn't you at least be trying to sell this hype.

Is it a tough time for the US?  Absolutely!  I don't disagree at all.  However, 5% unemployment is not the end of the world.  Also, while things are tough we are not in a "recession"

Smuguy - although what you said is correct.  A recession is technically 2 consecutive quarters of negative REAL GDP growth.  Real GDP is all that really matters, but I'm just clarifying.

I think what aachimp was referring to as a "blip in the graph" was the 2002 recession, not the one that may or may not be coming.  Comparatively and historically, the last recession we had was much milder and shorter than it's predecessors.  Much of this had to do with the fact that Bush inherited a projected 5 trillion (over the course of 2 terms) budget surplus, and loose fiscal policy by Greenspan & Co., as well as tax cuts, 15% capital gains tax, etc.  The war and irresponsible spending has turned that surplus into a giant deficit.

Things definitely are looking grim for 2008 and 2009.  Macro economic indicators such as housing have been slowing down for quite some time, but what worries me is consumer spending, which has been carrying us through the latter part of 2007.  Comp store sales have generally been down over the holidays and through the last few weeks of early 2008.  The lack of liquidity in the credit markets is preventing even strategic buyers the ability to make sensical acquisitions, and the private equity market won't begin to claw it's way back until the backlog from all the major banks clears itself out.  I can't say for sure we're heading for a recession, but it will take alot of things to go right to avoid one.

So I may have lambasted the earlier posters and headed up the ramp on a rant. Ill admit that, but hear this vandeja1 - I didnt exaggerate the facts, I just strung them together. And if a cooler head is necessary to prevail and present the argument to those reading, then Game Theory just nailed it.

good first post wintonheights, if a little vitriolic, and I agree with most everything that you wrote.

The main point I would want to make is that, if it was a consensus view, then the market would not be in the hard landing phase that it is in. The recession at the start of the decade was relatively mild because of actions taken by various parties - and those chickens are about to come home to roost.

Old hands in the market, never mind kids that are two years out of college, have not seen the market or environmental conditions that we are seeing now. Any future expectation is based upon conjecture, not experience. I/We may be right, or we may be wrong, but our conclusions are based on analysis. What are the bull arguments? I'm afraid "we've always come through the rough times smelling of roses" just isn't going to cut it.

I'm not about to doubt the possibility that we are entering a recession, but real growth in Q3'07 was 4.9% (nominal growth was 6.0%).

Agreed that the BEA could use a more aggressive proxy for inflation, but no logical adjustment puts the figure below 0.

No really? Bernanke keeps denying it, but we certainly are in a recession. The market correction, recession, depression, deep shit, whatever will happen no matter what you call it.

"We are lawyers! We sue people! Occasionally, we get aggressive and garnish wages, but WE DO NOT ABDUCT!" -Boston Legal-

I feel like market commentators say things like this all the time. Who had seen the tech bubble before? No one. Things happen in the market all the time that old hands have "never seen before."

wintonheights: I think it's fairly easy to spot the trend, but it is significantly more difficult to spot the catalyst that will reverse it. What do you think will be the catalyst that will reverse the current trend? When should we go long equities?

i have a huge dick

So with 5 months of hindsight, who would we say was correct? Wasn't the poster arguing that we weren't in a recession correct? As far as I can tell, that's still the case, right?

I work with top guys at Freddie and they think times are tough and will be tough, but they are absolutely confident that we'll recover and move on. I don't think this is an epic collapse like the Great Depression. We still have relatively low unemployment, historically low interest rates, and still aren't in negative GDP territory, in spite of high oil prices and a bursting housing bubble. In fact, I'm impressed with the resiliency of the economy. Times certainly aren't great, but I don't think this is the end of the line for the United States. The hyperbole probably needs to be ratcheted down a little. Market economies have cycles. Five years from now, people will probably be foolishly predicting the end of the EU.

I tend to agree with VTech 4ever. Keep in mind, however, GDP is a trailing indicator that describes what has happened, not what is happening.

are you all still happy with your assessments? Hank says without the bailout bill it's the end of the world as we know it...

i forgot about this thread....

f9-update. i just noticed your post. its easier to spot the trend when its obvious to you. whether its on the way up or the way down. it was obvious to me on the way down. but clearly not to the majority at the time. to be honest, i have no idea what will be the catalyst on the way back up other than the obvious economic indicators. i really actually havent even thought about it cause im so concerned w/ the mess we have in front of us.

on your second question, if youre talking investing long term id say with the exception of the financial industry, the same fundamentals apply - you should be long equities for the long haul. look for companies that have a strong fundamentals (solid assets, fluent cashflow, low leverage certainly key, etc) and a secure competitive edge and ride them out (easier said than done, i know). i would love to buy GS and ms at these prices but its still a too little murky in finance to trust fundamentals imo. i still think theyre in a good amount of irrational danger. i dont have the stomach for it. in fact, i would say liquidate most financials and go long assets that tend to do well/ok in bear markets (defense, certain commodities, health, etc). at some point youll have to rebalance. but so what. youll be lucky to time anything right, the odds are against you. if youre like me, you wont mind getting back into to finance well after its clear that theyre ok. it just depends on your risk profile.

if youre asking about short term equity trading. i cant help you other than to say find a way to go long vol.

I see the risk in the world moving to a more appropriate level of pricing (ie up) and therefore do not want to own any equities at the moment - even if they meet numbers they will be brought down with the rest of the market.

The exception to this is takeover targets but they're hard to spot in this environment and there are no slam-dunkers.

btw, if you want long vol I have a friend who could sell you a nice bit of gamma.

the new marking rules are bad bad news

Laying the smack down.

On a seperate note, reminds me of the Entourage episode when Ari "b***h slaps" the other agent.

another couple of hundred points off the S&P since this thread was discontinued. Anybody feel like buying yet?

publicequity/ibanker2007/aachimp, still not ready to call this "GD2" yet?

Hindsight is a bitch isn't it?

Just to make you feel better, I'll go public and say I will forego my bonus this year....

I AM AN AMERICAN.I LOVE AMERICA FROM DEEP DOWN BUT: My predictions on the u.s economy are grim.

THERE WILL BE A DEPRESSION. A VERY SEVERE DEPRESSION. IT WILL BE SO BAD THAT GARBAGE WILL NOT BE COLLECTED REGULARLY DUE TO THE GOVT BEING SO BROKE. ALL THE PARKS IN NEW YORK WILL LOOK LIKE DUMPS .IT WILL ALL OCCUR WHEN THE DOW FALLS TO 6200. I DONT KNOW WHEN IT WILL OCCUR BUT I THINK IT WILL. GOD BLESS AMERICA AND MAY MY PREDICTIONS BE WRONG.

HOWEVER, WE WILL PULL OUT OF THIS DEPRESSION AND AMERICA WILL ONCE AGAIN FLOURISH. THE WHOLE FINANCIAL SYSTEM WILL CHANGE. THERE WILL BE THIS "NEW" ERA OF FINANCE.BELIEVE IT OR NOT IT WILL DERIVE FROM THE ISLAMIC PRINCIPALS OF FINANCE(NO,IM NOT A MUSLIM) AND IT WILL WORK BETTER THAN EVER...AND YES AMERICA SNEEZES AND THE WORLD CATCHES PNEMONIA SO FIGURE OUT HOW OTHERS MINUS THE MIDDLE EAST AND SOME ASIAN COUNTRIES WILL BE.......................

no shit

We're about to enter a Great Depression. Don't you want a president who's already dressed for it?