"Great Recession" seen lasting 3 years, experts say

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SamLinder's picture
SamLinder
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"Great Recession" seen lasting 3 years, experts say

http://www.comcast.net/articles/finance/20090212/BUSINESS-US-DISTRESSEDD...

NEW YORK —
The current recession will last at least three years and possibly
longer absent a revival in credit markets, according to investors who
specialize in distressed debt and bankruptcy.

"This is going to
be a three- to four-year disaster," said Michael Psaros, managing
partner at KPS Capital Partners, at a restructuring conference in New
York.

The United States is going through a "Great Recession,"
which will provide investors in distressed assets with unprecedented
opportunities, he said.

"We are going to invest an awful lot of
money this year," Psaros said on Thursday. "There is an inexhaustible
supply of bad management out there."

KPS Capital, which manages
special situations funds and private equity funds with capital
exceeding $1.8 billion, largely sat on the sidelines last year. The
firm is ramping up its investments this year, he said.

"We're just very excited about this year and next," he said.

Holly
Etlin, a managing director at AlixPartners with 30 years of experience
in restructuring, said financial distress will last three to five years
due to a lack of liquidity in credit markets and lack of
debtor-in-possession financing, or DIP loans, used by bankrupt
companies to reorganize operations.

"Stuff has got to start
moving off the bank balance sheets," Etlin said. "I talk to colleagues
and friends who are just sitting on their money. Until banks start
clearing off their balance sheets, they aren't going to be in a
position to lend."

Etlin reported seeing very little bankruptcy
financing and asked the audience of 180 participants if anyone in the
room was doing any DIP loans. No one in the room rose their hand.

"That is not viable," Etlin said. "We see continued distress for three to five years."

Among
potential investment plays, Etlin said consolidation in the media
industry, particularly print media, may provide good investor returns.

Jonathan
Pertchik, chief restructuring officer at WCI Communities, also said the
ethanol industry as a burgeoning sector may provide some opportunities.

caroline_culbert's picture
caroline_culbert
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Posts: 624
Re: "Great Recession" seen lasting 3 years, experts say

I say 3 years from end of 2007.  My crystal ball tells me end of 2010.

But then again... maybe sooner.  Retail reported 1% gain for Jan.

SamLinder's picture
SamLinder
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Re: "Great Recession" seen lasting 3 years, experts say
caroline_culbert wrote:

I say 3 years from end of 2007.  My crystal ball tells me end of 2010.

But then again... maybe sooner.  Retail reported 1% gain for Jan.

Caroline,

You should clip your prediction and save it - then check back in December of 2010 and see how close you came. Smile

I myself would be afraid to even guess - everything that is happening is so alien to my experience that I don't even feel I can predict out to next month!

caroline_culbert's picture
caroline_culbert
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Posts: 624
Re: "Great Recession" seen lasting 3 years, experts say
SamLinder wrote:
caroline_culbert wrote:

I say 3 years from end of 2007.  My crystal ball tells me end of 2010.

But then again... maybe sooner.  Retail reported 1% gain for Jan.

Caroline,

You should clip your prediction and save it - then check back in December of 2010 and see how close you came. Smile

I myself would be afraid to even guess - everything that is happening is so alien to my experience that I don't even feel I can predict out to next month!

It would be interesting... I don't know if, by then, I'd even be able to afford internet.  :-)

SamLinder's picture
SamLinder
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Posts: 1499
Re: "Great Recession" seen lasting 3 years, experts say
caroline_culbert wrote:

I don't know if, by then, I'd even be able to afford internet.  :-)

L O L! Good point - same here!

joe2baba's picture
joe2baba
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Joined: Jun 17 2008
Posts: 807
Re: "Great Recession" seen lasting 3 years, experts say

my predictions are the sun will come up tomorrow. maybe

there will be weather if the sun comes up maybe.

it will rain somewhere tomorrow maybe

it will snow  somewhere maybe

the stock market will go up or down tomorrow maybe

the federal reserve will rule our lives tomorrow ...............no doubt about it

i am making a copy of my predictions and will report on how i did on saturday maybe.

the only one i am worried about is the market.................maybe it will break even

of course i am no expert so i rely on your slack.

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tom.
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Re: "Great Recession" seen lasting 3 years, experts say

Damnthematrix's picture
Damnthematrix
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Posts: 3998
Re: "Great Recession" seen lasting 3 years, experts say
caroline_culbert wrote:

I say 3 years from end of 2007. My crystal ball tells me end of 2010.

But then again... maybe sooner. Retail reported 1% gain for Jan.

Maybe so, BUT... 

 
Wholesale Inventories Rising Dramatically

http://econompicdata.blogspot.com/2009/02/wholesale-inventories-rising.html

In other words, even if final consumer demand picks up,
wholesalers won't necessarily be buying from producers as they already
have the inventory piling up.

SamLinder's picture
SamLinder
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Posts: 1499
Re: "Great Recession" seen lasting 3 years, experts say

joe2baba, Tom L.:

You guys are funny. Smile Humor is good - helps us make it through the day and, I predict, tomorrow! Wink

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