Stagflationary Abyssal Part II - More Evidence and Suggestions for What to Do

What’s in a Name?

One of the more interesting responses to “Stagflationary Abyssal” was the debate on the grammatical correctness of the term. Part of that was my fault. The definition I provided from Dictionary.com was only of the adjective portion of its definition.  Abyssal is also used as a quasi-noun in nautical geography as in “Laurentian Abyssal” to define deep areas of the ocean floor. That is what gave me the inspiration for the use of the word in the way that I did. To my way of thinking, the ocean floor is already a low point, so an Abyssal is a low point of low points, a perfect analogy to the economic period I believe is coming. It’s the Capo di tutti Capi of economic bad times. OK, sure, its geeky/wonky/wonkish whatever you want to call it, but, hey, that’s me!

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I am interested in hearing from people who, in the face of all of the evidence I have cited in these two articles, still disagree with me and the idea that the economy is facing a downturn of historic proportions. I’ve read through a number of articles that suggest that the second half of this year will feature a recovery, but they all fall short in answering one basic question. Who is going to purchase the goods and services needed to fuel any kind of turnaround? We know that banks, the US Government, and US consumers can’t do it. If you were the CEO or on the board of a corporation and saw this economic landscape before you, would you try to make the argument that now was the time to increase the discretionary spending of your firm or to try to expand? Who has the wherewithal to buy your products or services? There will be some firms that do well in the bad economy that is coming, just like some firms survived and flourished in past down turns and even the great depression, but the majority will be lucky to get by. We know from the increasing layoffs that most board of directors and CEOs see it like I do. So, if you disagree with me, from where is this recovery that you predict coming?

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[1] New York Times, “81% in Poll Say Nation Is Headed on Wrong Track”    http://www.nytimes.com/2008/04/04/us/04poll.html

[2] AP (via Yahoo), “Bernanke says recession possible”  http://news.yahoo.com/s/ap/20080402/ap_on_bi_ge/bernanke_congress

[3] AP (via Yahoo), “Jobless claims highest since Sept. 2005”     http://news.yahoo.com/s/ap/20080403/ap_on_bi_go_ec_fi/economy

[4] New York Times, “Unemployment Rate Rises After 80,000 Jobs Cut“  http://www.nytimes.com/2008/04/04/business/04cnd-econ.html

[5] Reuters (via Yahoo), “Late payments on consumer loans at 16-year high” http://news.yahoo.com/s/nm/20080403/us_nm/consumers_debt_study_dc

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