Hillary drops the "R" word -- doesn't everybody?

At the Democratic debate in New Hampshire yesterday, Sen. Hillary Clinton dropped the "R" word, observing, "I think the economy is slipping toward a recession."

Partly, that's the partisanship speaking -- you can expect the eventual Democratic nominee to talk down the economy all the way until November, and blame it all on Republicans.

But it's also a reflection of shifting conventional wisdom. Calculated Risk, a smart blog about the economy, notes the discussion is shifting from whether there will be a recession to how severe it will be: "Many analysts gathered at the American Economic Association's two-day annual meeting spoke of a recession as almost a given but differed over how severe it will be."

This shift is bad news for the economy, of course. But it is also vindication for housing bubble bloggers and those who fill those blogs with comments -- your average bubble blogger saw this coming a long time ago, and said so. I'm not talking about myself -- I'm a little late to this party, as I only began writing this blog in April. But give credit where it is due: The bubble bloggers were right.

Your thoughts? Comments? Email story tips to peter.viles@latimes.com.
Photo Credit: L.A. Times

Comments

[SteveR]

Well, so we can give me credit next year: DJIA drops to 5000.

[Tombstone Realty]

Ohhh....."recession"...

For a second I thought she was bringing back the Rodham. Next she plans to reintroduce the "B" word - "buyout".

[Hugo Chavez]

Good, the economy of the empire is finally failing. This makes me have a sad prediction though: The bubble-blogger bubble will pop someday too....
Ay yay yay

[mbob]

One only has to view mid '60's studio films or read mid '60's newspaper headlines to realize that entrenched outfits are the last places on earth to get anything. Hey Peter, at least you have consistently noted that others have been sounding alarms.

The most teeth-chattering, knee-knocking factoid yet to get much bloviation or mainstream media coverage is this: FDR had a whole range of levers to pull and knobs to twist, economically speaking, when he inherited Hoovervilles (see the LA Times' recent coverage of San Bernardino's burgeoning tent city).

This time, it's different. Negative savings rate, most people have no clue about thrift in any form, etc. etc.

[der67]

Go Hillary!

[Laker]

Hillary sucks, GO Giuliani !

[Uncle Billy]

Let's all pat ourselves on the back. It's like predicting that we're all going to go over a cliff, without jumping off the wagon. Did we know what we had to do to avert it? What were the best suggestions on how to do this?

Can't shake the feeling that there are some folks kicking back in overstuffed chairs, smoking huge cigars, and laughing their heads off. To paraphrase Cheney (aka The Penguin), while we're all sitting around wondering what the hell happened, he's off on his next exploit. People who have no problem sending others to their deaths, most definitely wouldn't feel any remorse about junking a country for fun and profit. Impeach now. Get the infrastructure projects going now.

[unclesmrgol]

Well, if we get laid off, we can always go get a job at the Woodstock Museum.

[unclesmrgol]

Can't shake the feeling that there are some folks kicking back in overstuffed chairs, smoking huge cigars, and laughing their heads off while they advertise for interns. At the Hillary-funded Woodstock Museum in New York.

[Rich]

The one thing the taliking heads at CNBC don't get about recession is that it's a psychological phenomenon: if the majority of consumers alter their behavior because they believe something will happen, and if small business managers also do so, then the numbers the economists like to use will reflect those choices. In this respect the mortgage crisis (not the "subprime" crisis, we already know all classes of borrowers were involved) is the cause of the building recession because it is the one identifiable factor which has altered the perceptions of nearly every homeowner in the country who holds a mortgage, which is almost every homeowner. Millions of ordinary consumers have held anguished conversations over their dinner tables discussing what's happening to their home equity and have had to conclude that they should prepare for bad times: recessionionary behavior was sure to follow...

[Geek Seek]

How's this for more "politics of fear" : (from marketwatch.com)

"The recession is likely to be a serious one," said Dean Baker, co-director of the Center for Economic and Policy Research.
He estimated losses in prime mortgages will be two to three times the $160-$200 billion hit seen in the subprime sector. This, he said, will lead to large losses at banks and difficulty for Fannie Mae and Freddie Mac."

But, say others at the New Orleans conference, DOO-DA-DOO... here comes the cavalry; sovereign funds are ready to jump in and save us!

[srla]

I beleieve a recession is, unfortunately, unavoidable at this point. However, if this leads to more restrained consumption and a reduction in the trade deficit, I think it will be worth the pain.

California, along with FL, AZ, and NV, will likely suffer the most, given that real estate prices here and in these other states went up far more precipitously than elsewhere. In fact, in these bubble states, prices went off the charts after 2004.

Check out any decent LA County ZIP code on Zillow or a similar site, and you will see the same thing: housing prices rose at a steady rate from 1999-2004. Then, in about January of 2004, these already bubble-inflated prices SHOT up some 150-300% - in literally months in many areas, and this on top of 50-100% gains during the previous five years. So what we had, in effect, was a bubble on top of a bubble. This was not just historically unprecedented but also absurd. Only a very small percentage of home owners bought or sold their homes during the past 4 years. Even so, when prices continue to decline, even if only to 2004 levels (which would still be way above historic norms and normal rent-to-ownership cost ratios), the psychological effect and perceived loss of wealth will no doubt have an impact on our local economy.

As a whole, despite recent downturns, LA County has gone up a mind-boggling 300% since 1998 - this on top of prices that were already far higher than the rest of the country. And this has happened during a period when local housing supply has actually INCREASED on a per-capita basis.

Given this increasing supply, the only possible explanation for the post-2004 price run-up was bubble psychology and a belief in continual price escalation. People only stretched to get into a $1.5 million 3 bed/one bath because they believed that in 5 more years, it would be worth $2.5.

Now that prices are falling, the psychology will continue to reverse. Prices will decline until they reach some sort of stasis with the rental market. And until then, this area is in for a whole lot of hurt. (But also a whole lot of opportunity, for anyone who was wise enough to stay out of debt!)

[Samurai Lover]

Hillary sucks! Go Ron Paul! Everyone wake up! The media is censoring him. Check the facts yourself on prisonplanet.com.

[Gerrrg]

And you know the Bush Administration will try to create a stimulus package....for the rich.

BTW, the 'B' word is Bush, the 'A' word is Accepts, the 'R' word is Responsibility....

of which you will never ever hear.

ever.

[Michael Snyder]

Hillary must be panicked or she would never speak the truth.
We've been in a recession since last summer and this administration will do/say anything to avoid owning their own mess. Idiotic underwriting standards fueled this mess and food & fuel costs are pushing it over the edge. When credit card defaults pile up this summer it's gonna get real ugly.
Meanwhile; back on the campaign trail; Hillary will continue to melt down as her position as "Heir Apparent" to the Presidency is denied by an increasingly aware electorate and we bloggers will continue to write in the hope that somebody's listening.

[National Bubble]

Well, it was not that difficult to see that during the 2003-06 period, the economy was sustained by speculation in real estate and not by solid economic fundamentals. All the forces that helped to build the bubble are now working against it. The so-called "economic recovery" the US experienced after 2002 was based on borrowing and not on exports.
I can just go out and use my credit card and buy all kinds of stuff. That doesn't make me any richer, I''ll have to pay for it someday in the future. This country has done the same thing over the last few years and we are now paying the price.

http://www.NationalBubble.com

[RichW]

Hillary ? Giuliani ? heh... At least Ron Paul has a clue about the real reason behind our devalued dollar, its the fact our currency has no backing and the government keeps printing more of it than is needed for general distribution.

Of course the problem with politics is that most of the sheeple will listen to the loudmouth partisans backed by the special interests looking to profit from their election. Just imagine the election results if there was an I.Q. requirement over 150 to vote. Then again we'd no longer have fair representation if that was done.

[MyLessThanPrimeBeef]

Thank God the 'R' word was not re-count. She wasn't even close in Iowa.

[Cal]

"After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary," Paulson said.

http://news.yahoo.com/s/ap/20080107/ap_on_bi_ge/
paulson_housing_9

[bailmeout]

Is Hillary really responsible for this mess? Or is it the guy you voted for in 2004?

[alan]

As someone who has been reading calcuated risk, the bubble blogs for some time, I can tell you that there is no satisfaction to being vindicated.

What this demonstrates is not "how good" the blog reporting was but how abysmal the traditional media is. The "media", of which the LA Times is part of, profit from telling stories the people want to hear or what their advertisers want them to say, e.g. the NAR's purported "economist" spewing nonsense.

That's way the LA Times lost me to NPR, the Wall Street Journal and the blogs a long time ago. Maybe this is a wakeup call to the media to get back to the job of "reporting" and stop "repeating".

[Ed]

The HillBilly Team will drop out of the race. Betcha.

[Laker]

Posted by: bailmeout "Is Hillary really responsible for this mess? Or is it the guy you voted for in 2004? "
YES. This whole mess would not have happened if you back to 1998 and the chance that was missed to wipe out Al qaida and Bin Laden. Hillary and Billy failed to do that. Then came 9/11 and damaged the economy in such a way that caused the reduction of interest rate. Then all the mess started to build up.

[Joseph...]

Stop crying Hillary...There is no recession for you!

Write a book on "How to become a Millionaire after leaving the white house".

I didn't know Michael Snyder is an "Economist"! I thought he was an attorney...

[Martin]

Some political perspectives I read here really discomfort me. It's like a new political segment with ultraliberal, leftiist leanings. Let's call it the Let's Pass The Buck To Whoever Is Handy party. Who wants to run for President on that ticket?

[bailmeout]

Run for your lives! Hillary's Black Copters are coming for ya!