Daily Digest - Dec 10

Wednesday, December 10, 2008, 3:03 PM

Oracles of doom, consumer credit decreases, world's hungry near 1 billion, the financial "experts" speak, and hotels in for some rough sailing.


Oracles of Doom 

Gerald Celente
Trends Research Institute founder; owner of
Predicted 1987 crash, 1997 Asian currency crisis; said in 2007 that U.S. was headed for "economic 9/11" in 2008.
"Products are going to be cheaper to buy, but guess what? You're going to need more dollars to buy them because your dollar's going to be worth less. There is no fiscal or monetary policy that can save this. You cannot save it by printing more money."
Nouriel Roubini
NYU business professor; chairman of RGE Monitor
Predicted this year's crisis in 2006, pointing to a housing bust, oil shocks, and interest-rate increases.
"It's becoming a global recession. I expect it to be the worst U.S. recession of the last 50 years. I expect a cumulative fall in output from the peak of 4 percent and the unemployment rate going all the way to 9 percent."
Peter Schiff President of Euro Pacific Capital
Published Crash Proof: How to Profit From the Coming Economic Collapse in February 2007; star of YouTube video "Peter Schiff Was Right 2006-2007."
"I predicted that the economy would collapse. The bigger risk I saw was the government's attempt to solve the problem by doing exactly what they're now doing. They're going to create another Great Depression, but worse, because the cost of living will go through the roof."
Richard Russell
Founder of the Dow Theory Letters
Predicted bottom of 1974 bear market; exited market before crashes in 1987 and 2000.
"As long as we can hold the Dow above 7,470, I think the situation is hopeful. That's the halfway level from when the boom market started in 1982 and when it ended in 2007. My guess is that it will break that level. Most bear markets have wiped out more than 50 percent of a bull market."
Barry Ritholtz
CEO and equity-research director of Fusion IQ; blogger at the Big Picture

Predicted downturn last year.
"In March, the first-quarter numbers start coming out, and that's potentially a problem. It's just going to be an issue of dealing with the market. If earnings continue to drop and you end up with multiple contractions, that basically takes you to a really bad, ugly place, which is an S&P at 400 or 500. I don't think that's likely, but it's certainly possible."

Jeremy Grantham
Co-founder and chairman, GMO LLC
His 1998 ten-year forecast showed severe market declines in 2007 and 2008; warned of global bubble in April 2007.
"I would think, just to guess, that the period of heroic volatility will end pretty soon and will be replaced by a rather 1974-ish environment, where you quietly get bitterly resigned to your steady diet of bad news." 

Consumer Credit in U.S. Decreases by $3.5 Billion 

Consumer credit fell by $3.5 billion, or 1.6 percent at an annual rate, to $2.578 trillion, according to a Federal Reserve report released today in Washington. In September, credit increased by $6.7 billion, less than initially estimated. 

World's hungry ‘close to one billion' 

The food crisis has pushed the number of hungry people in the world to almost 1bn, in what the United Nations' Food and Agriculture Organisation described on Tuesday as a "serious setback" to global efforts to reduce mass starvation.

"The ongoing financial and economic crisis could tip even more people into hunger and poverty," the FAO added.

The Rome-based organisation said that a preliminary estimate showed the number of undernourished people rose this year by 40m to about 963m people, after rising 75m in 2007. Before the food crisis, there were about 848m chronically hungry people in 2003-05.

"High food prices are driving millions of people into food insecurity, worsening conditions for many who were already food-insecure, and threatening long-term global food security," the FAO said in its report The State of Food Insecurity in the World 2008.

Prices of agricultural commodities such as wheat, corn and rice jumped to record levels earlier this year, triggering food riots in countries ranging from Haiti to Egypt to Bangladesh and prompting appeals for food aid for more than 30 countries in sub-Saharan Africa.

Is America on a Downward Slope? 

Financial "Experts"
Alan Greenspan, October 2004:
"Improvements in lending practices driven by information technology have enabled lenders to reach out to households with previously unrecognized borrowing capacities. "

Alan Greenspan, 2005:
"There is a chance that housing prices could fall, but its effect on the economy will be "limited.

Alan Greenspan, May 2005:
"The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions .... Derivatives have permitted the unbundling of financial risks. "

Alan Greenspan, October 1, 2006:
"I suspect that we are coming to the end of the housing downturn, as applications for new mortgages, the most important series, have flattened out...I think that the worst of this may well be over. "

Henry Paulson, January 2007:
"The market impact of the U.S. subprime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades. "

Henry Paulson, April 20, 2007;
"All the signs I look at show the housing market is at or near the bottom. The U.S. economy is very healthy and robust. "

Henry Paulson, March 2, 2008:
"I'm not interested in bailing out investors, lenders and speculators."

Ben Bernanke during Congressional Testimony March 2007:
"At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. "

Ben Bernanke, May 5, 2007:
"We will follow developments in the subprime market closely. However, fundamental factors-including solid growth in incomes and relatively low mortgage rates-should ultimately support the demand for housing, and at this point, the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system. "

Ben Bernanke, October 15, 2007:
"It is not the responsibility of the Federal Reserve-nor would it be appropriate-to protect lenders and investors from the consequences of their financial decisions. "

Timothy Geithner, May 15, 2007:
"Changes in financial markets, including those that are the subject of your conference, have improved the efficiency of financial intermediation and improved our confidence in the ability of markets to absorb stress. In financial systems around the world, the capital positions of banks have improved and capital markets are becoming deeper and playing a larger role in financial intermediation. Financial innovation has improved the capacity to measure and manage risk. Risk is spread more broadly across countries and institutions.  "

PKF Forecasts 7.8 Percent RevPAR Decline in 2009 

ATLANTA, Dec 09, 2008 /PRNewswire via COMTEX/ -- U.S. hotels have entered the initial stages of one of the deepest and longest recessions in the history of the domestic lodging industry according to a new report issued today by PKF Hospitality Research (PKF-HR).

The 7.8 percent drop in RevPAR that the hospitality research firm is now forecasting for 2009 will be the fifth largest annual decline in this important measure since 1930. Further, PKF-HR is forecasting that the nation's hotels will not experience a year-over-year quarterly increase in RevPAR until the second quarter of 2010.

The projected seven consecutive quarters of declining RevPAR, beginning with the just reported third-quarter decline of 1.1 percent, according to data from Smith Travel Research (STR), marks the longest stretch of falling revenues endured by U.S. hotels since STR began tracking performance data in the late 1980s.
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