Skip to comments.Larry Kudlow: Don't Panic, This Isn't Remotely Like 2008
Posted on 08/09/2011 7:56:16 AM PDT by SeekAndFind
During a period like this, with stocks plunging almost on a daily basis, it's clear that fear and shock are ruling the roost. But fear can be overdone. As someone who has been around awhile and has seen many sell-offs, let me offer some advice: Do not panic. Market corrections come and go. They are not the end of the world. Most times they are actually healthy.
The S&P downgrade is a fiscal warning, not an economic event. And the growing fear of U.S. recession may not pan out. There are still plusses out there, believe it or not.
Our financial system is in vastly better shape than it was in September 2008. Vastly better shape.
The Federal Reserve is highly accommodative, as illustrated by the upward-sloping yield curve. Using the yield-curve measure alone, the chances of recession based on historical analysis are very low.
And energy prices are coming down, with oil moving toward $80 a barrel. Oil analyst Peter Beutel points out that gasoline prices in the last two weeks have fallen by 35 to 40 cents. Adding in other oil-related savings, the energy-price drop amounts to a $100 billion tax rebate for consumers.
Plus, corporate profits will continue to rise while business balance sheets are pristine and chock full of cash. Consider the combination of solid productivity, moderate wage rates, and falling commodity prices. These are all plusses for the economy and stocks.
So in light of all these factors, it seems to me that the economy can hold up. It's not the kind of rapid growth I'd like to see. But it's not the deep and dark recession that seems to be embodied in the stock market plunge.
(Excerpt) Read more at realclearmarkets.com ...
Larry....you’re wrong again you sorry sack of......
The most reliable indicator that a recession is on the way, is an inverted yield curve on govvie bonds(meaning, short-term rates are higher than long term rates). At this writing, the yield curve is pretty steep. Short term rates are very low, while long term rates are quite a bit higher by comparison.
There you go! :)
Where would that be?
We're stuck here same as a month ago.
dropped 9 cents over night here.
Market is up 230 right now.
Somone has to make the bull case, though I think he glossed over the gooberment failures a bit too easily. Zimbabwe and the Weimar had going companies all the while their respective governments cheated people out of their wealth even as their stock markets “soared.”
Because the economy is slowing down and demand for oil is lower Larry. This is more of Kudlows sunshine and lollypops BS he tries selling on a regular basis. I notice he totally avoided the trouble in the EU in talking away this "non event".
Don’t listen to him, whatever you do. What does he know? Panic! Sell everything and take a huge loss! Panic! Panic! The sky is falling!
Diesel here in SE Tennessee is $3.87/gallon. The price has been going UP lately, not down. Cost me $130 to fill my truck the other day.
Larry is the quintessential optimist. He could have been at Hiroshima Ground Zero and announced the house fire would soon be under control.
Companies & Consumers stop spending, unemployment goes up, and lack of demand drives gas prices down. Oil Prices are merely one indicator.
Might as well relate the weather to the price of gold.
Ah, but trust is the coin of the realm, Kudlow. And if there was any of that to be had a couple of years ago, there’s none now. The ruling class is flat busted. No, it’s not ‘08. It’s unimaginably worse.
I'm in the SE. I've seen gas prices go down maybe 10-15 cents in the past couple of weeks.
40? Not likely.
Back in 2008 we knew the financial scare was a pre-election scam set up by Obama backers.
The fundamentals were still fairly sound and we had not been through TARP, Stimulus I, QE-1, QE-2 and three years of Obama's insane wealth redistribution, so we had $2 or $3 trillion less debt.
And at that time we still believed that the crooked and inept politicians creating the problems were motivated by greed and a desire to push the liberal agenda, not by a desire to destroy the country.
Now, three years later, we know the economy is much worse than it was in 2008 and that the fundamentals are getting even weaker day by day.
And we now have a president who has clearly stated he wants to remake America.
To do that you have to un-make it first. That is exactly what he is doing.
Dow is up 230. Hussein better schedule another speech this afternoon to tank the market again and keep the evil rich people from regaining some of this market value.
Somebody tell Larry that corporations have a lot of cash but they are not hiring.
Spot prices for delivery next month have fallen that much, but it won’t show at the pump right away.
No matter. The US is pumping significantly less oil than BO (Before Obama). Prices are coming down because investors believe that the economy is going south. If it does as Kudlow predicts it will go right back up, and stay there until we start producing more energy. Which is NOT going to happen.
As someone else in this thread points out, he is acting if the situation in Europe is not a significant variable for us. We are already sending billions over there to prop up things. If it crashes there, we will be profoundly affected.
What we are seeing in London has only been prevented here because we have a Black man as President. Were he lily white, and worse, a Republican, our cities would be in flames.
Next stop? Libya...
Wrong as hell, but optimistic
must need his cocaine or FBI files....
I said no such thing on doom and gloom. My argument is that Larry is hyping the economy without citing certain things that hurt his argument. Oil prices tanking was just one blatant omission. I am a regular watching his evening CNBC program. No matter how bad things are, he consistently pushes that things are fine and everything in the economy is turning around. He even had to tap dance around the price of gold in his argument in this piece.
He is right. It isn’t like 08. We won’t allow Hussein’s cult to win this time.
It’s more like 1929...
It is interesting that they picked the day of signing the deficit increase bill to announce that they are forcing the insurance companies to pay for birth control and morning after pills.
This is one of the first mandates from Obamacare and any company that doesn't see the writing on the wall is delusional. No company will be safe from government takeover if this stays intact. The federal government can come up with a 'public good' argument to take over any industry or business.
No, Larry, it’s worse than 2008.
Haven’t seen a drop here in N. CA.
It is not the purpose of hiring to piss away your money.
You only hire if you think that you can make more by hiring than by not hiring.
Why, pray tell, is the Market up today? What has changed since yesterday? The answer is not nothing. What has changed since yesterday is that things are getting worse. Furthermore, they will continue to do so for as long as The Usurping Marxist Onada nd his band of angry commies continue control the levers of power.
“You only hire if you think that you can make more by hiring than by not hiring.”
Yeh thats my point. Things are not great just because Corporations have cash.
Larry Kudlow would barbecue live puppies over hot coals, if it would yank the indexes up half a percent for him and his day trader buddies.
I honestly haven’t looked, but are you saying there is no inverted yield curve right now ? If thats the case, that would be a major point for Kudlow, I haven’t actually seen what the curve is like, so I honestly don’t know.
The Treasury yield curve is a long way from inverted.
The curve is still quite steep: From short-term bills and notes, to long-term bonds.
I think Larry is right on target.
If the curve is very steep, does or doesn't that signal inflation ?
I'm kind of vague on this.
Do you know where I can see the curve ?
If oil is so low...why are the gas prices still over $3.50 a gallon? C’mon 0bama explain that to me will ya’?
Yes, oftentimes inflation accompanies this sort of curve. How much? Hard to say. But given rates as low as they are, and the Fed’’s remarkable utterance earlier this week that it plans to keep rates low until mid-2013, I can’t imagine there’s much inflation threat out there.
Bloomberg.com is where you can see the yield curve. Go to the home page, then click on “markets”, then click on “Rates & Bonds.” Then you’ll see old curve.
BTW, this yield curve biz has been one of the most accurate precursors of recession since the end of WW2.
Thank you kindly, much appreciated.