2012 recession process in motion

Lakshman Acuthan, Economic Cycle Research Institute, says a recession could begin by the middle of 2012. “It takes six months after a recession begins for people even to recognize [it],” he tells “Squawk Box.”  Here is a direct link.

This clip is a wonderful study (albeit embarrassing to watch) of how infantile the mainstream CNBC-esque understanding is of market cycles. Joe Kernan and company are representative of almost all business commentator/hosts today. They understand next to nothing and yet they are looked to as “experts” in this field. They rail against the idea that we are entering the next recession because they think of recessions as unfortunate anomalies–like a 100-year flood. In fact recessions are a normal part of a full business cycle and during secular bear periods, recessions come on average every 3 years. We are now due for the next one.

The truth is that the seeds of the incoming cyclical recession were sown in the reckless excess of the stock boom period of the 90’s, and the credit orgy to 2006 (to 2011 in Canada). The economy is not about to blow up. It already did. We are now just moving through the rationalization, deflation and clean up phase. Central banks may continue to intervene, but the weight of the downturn has a gravity born of the dizzying heights of the bubbles before it. No governments or central banks can stop the process of mean reversion. And that is a good thing. The next organic secular boom period can only start after asset prices have been fully wrung out and capital can be efficiently redeployed in productive business ventures rather than extractive financial shell games. Wise investors will get out of harm’s way and let this process unfold in its due course.

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8 Responses to 2012 recession process in motion

  1. aliencaffeine says:

    I concur. The Great Bear is ready for another mouthful. The Great Recession never ended. It only subsided enough for the spenders to keep spending what they don’t have.

    I wish everyone’s mother well on this coming Sunday but you needent give her anything but love. Forget the gifts. They can’t remember last years anyway. Boycott the retailers with their Sunday flyers trying to get you to buy stuff you shouldn’t.


  2. I wish that host would just SHUT UP and let his guest speak.

  3. Well, there’s ten minutes of my life I’ll never get back.

    See, this is why I don’t watch CNBC. I find your typical episode of TeleTubbies more intellectually stimulating. It’s like discussing macro economics with kindergarten students: “See the pretty chart? See the wiggly red line? Hmmm? Isn’t it soooo pretty!?”

    It scares me that millions of people actually watch these programs believing these people actually know anything. For your own financial health, please call Rogers and have them block CNBC from your cable reception.

    One day, when the era of finacialization finally passes and people concentrate on working, saving, and investing (rather than speculative trading) programs such as these will be remembered similarly to how we today remember Gilligan’s Island: quaint, mildly amusing, and a bit, uh, embarrassing, actually.

  4. Barry says:

    Ironically enough one of the last words spoken were “As the World Turns” which was a 54 year long TV Soap Opera. I’m glad you posted this segment since I would never watch CNBC all day long just to finally hear an intelligent guest who is unafraid to speak the truth even if it means losing clients.

  5. Attila Balazs says:

    A Scary Chart Says A Global Bear Market Is Underway!


  6. MG says:

    How many times has Mr. Acuthan been on the show and the hosts still don’t have the respect/professionalism to get his name right? I can’t stand watching the CNBC-US. I prefer watching the European Squawkbox where they treat their guests a little better and ask better questions. Too much cheerleading from CNBC-US.

  7. aliencaffeine says:

    On Sunday we drove to see my wifes mother who lives in Del Webb’s Sun City near Chicago. On the way, we took the farm country road route instead of the insanely expensive tollway system and frankly enjoyed the drive thru rolling farm country.

    We stopped at a wonderful landscape center as we usually do and to make the story short, the nice husband and wife team told us that this would be their last year in the garden center portion of the business. They just can’t make a go of it, and its a shame. “No one has any money” for this kind of stuff. Fortunately, the 1% keeps the landscape construction portion afloat, but just barely.

    These kind of stories are becoming more and more commonplace. And it sickens me to think the root cause is this Zero Interest plan that is approaching 4 years now. And it sickens me that JPMorgan can play in the markets and lose ‘billions’ screwing around while the Little People get slowly squeezed to pieces.

    I really do smell seeds of revolution in the air. I know its coming.

  8. There might be a revolution but it would probably be even more disorganized by the Occupy Wallstreet movement, and involve a lot of guns.

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