It's Official - We Have Recession!

Well it certainly took them long enough, but the NBER has now announced that we are officially in a recession and have been since December of last year. You may note we have not had two back-to-back quarters of contracting GDP (yet), but that is not essential to the call and is but one factor they consider. It may have taken them a year to call it, but at least this time they made the call before it was over. So much for all the political pundits who during the summer said all is fine. I guess you could say that the folks at NBER are just a bunch of whiners, but those Ivy League types don't take such talk kindly.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWOWWB3VGDCg&refer=home

So you know it is a tough day when a 9% drop in the market is just a drop in the bucket. What do you expect after five straight days of advances? The good news is that we only lost half of last week's gains. The bad news is that we lost half of last week's gains. And if you were gutsy enough to invest in financials, that index was down 17% today alone. Ouch, that's gonna leave a bruise!

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5GTywWoSgHQ&refer=home

So why such a big drop? Could be the official recession announcement, but I doubt it. Everyone knew it already. Could be that manufacturing shrank the most in the U.S. last month since 1982. That probably had a bit to do with it but it was mostly expected. Could be Meredith Witney's latest doom and gloom forecast for U.S. consumers. She forecast credit lines for consumers will shrink 45%, i.e. over $2 trillion, over the next 18 months. Now that would put a damper on things, wouldn't it. Then again, in the long run, less credit is a good thing. It was the overflow of cheap credit that got us here in the first place. Still, not what the market was expecting. And then you have another respected name banging that doom and gloom gong rather loudly. Paul Krugman did not have nice things to say in an interview on CNBC, but then again he is selling his new Depression oriented book, so who can blame - or believe - him. Nonetheless, basically boils down to bad getting worse. And with this major negative vibe happening, no wonder people decided to take some of last week's gains off the table.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a1KBBJn8ORc4&refer=home

http://www.nakedcapitalism.com/2008/12/paul-krugman-says-economy-in-steep.html

http://www.nakedcapitalism.com/2008/12/meredith-whitney-sounds-like-nouriel.html

While all these may explain the drop (in part) my favorite pick is Big Ben giving a speech. Seems that whenever Ben or Henry open their yap the market does not like what comes out. Probably because they are always talking about new ways to waste our money trying to stop the Sun from rising. I am not saying the government has no ability to help the situation, just that most of what they have done so far is good money after bad.

http://globaleconomicanalysis.blogspot.com/2008/12/helicopter-ben-pulls-out-bazooka.html

Tanta - So Long

For those who have been following me, I have repeatedly referred to Calculated Risk as my favorite site on following the real estate market meltdown and the following carnage. It also always had the best charts. Its one author, Dorris Dungey, otherwise known as Tanta, passed away yesterday from ovarian cancer. She will be sorely missed. If you question how good of a job she did, I have seen at least three or four blogs this evening singing her praise. She had a big following, including some leading economists.

Holiday Shopping

Tired of watching your stock lose value, then put it to use. CNBC has some nice helpful tables on what your shares can purchase. Of course, this is based on last Friday's close, so after today you may need a few more shares to fill your shopping cart.

http://www.cnbc.com/id/27888369