Were we really going into a recession?

Question

or was that just another media scare. I have noticed that the price of gas and oil based products have fallen, the value of the dollar is rising rapidly and more houses are finally being sold. and people are spending more.

was this the work of the stimulus checks? or were we never going into a recession to begin with?

Answer 1

The price of oil and future commodities for oil have fallen because of the olympics, china has put 1 million cars off the road. People have a little bit of money and they are spending more (in the US). This should slow down once the olympics have stopped and those 1 million cars are back on the road plus industry that was shut down for the games also.

The term recession means two quaters of back to back negative growth. This has not occured. The reason why there was a shock to the US market surrounded these facts:

1) the loaning system, FACO, allowed poor credit rating people to borrow for housing

2) Interest rates increased shortly after by a few percentage and thus people couldnt pay

3) the federal reserve refused to back loan insurance to all banks that supported or held sub-loans.

Remember that banks insure with each other. If you take out a loan, that bank takes out insurance of that loan to another bank, including the federal reserve.

It is interesting to note that the US federal reserve is owned and run by private investors and bankers, the US government has no power or say over the money supply. Because the federal reserve refused to back loans and insurance and thus raised the interest rate, they multiplied the housing market scare.

They did this for a number or reasons, as seen in the great depression.

1) To buy up cheap houses

2) To buy up banks and lenders that could not cope

3) to sell those houses later on and take away the compeitition.

Whether you like it or not, the federal reserve loves recessions. They are able to buy up businesses for 1/10th the price as seen in teh great depression. In a way, they do this sometimes in small steps to gain more market share over banks.

I hope that helps

Answer 2

We are not out the woods yet, even though commodities have stopped their bullish run and the dollar has regained some momentum. Housing prices are still falling, people are just too afraid to jump back into the housing market until they are sure its bottomed out. Fannie Mae and Freddie Mac are basically almost the breaking point where government intervention is required. Their stocks are almost rated worthless and that only means they will even have a harder time raising capital. They hold back half of the nation's debt $12 trillion dollar debt.

So the answer is no we are still not out of the woods yet. It's probably going to take until 2010 for the global economy climb out of this slowdown. The stimulus check was a temporary solution it boosted numbers in the second quarter but not as much as expected and now they are over expect the economy to continue to struggle. Have you looked at the stocks of the financial sector recently? The only reason stocks are rising is because energy costs are falling from an absurd high  not because the economy is doing better.