Tag: recession

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America Economy

US Economy entering recession soon?

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(Update 11-12-2025) Lower-Income Individuals ‘Already in Recession,’ Says Atwater

(Original) It seems the US economy is increasingly two sided or two tiered: the haves and the have-nots. But now, it seems the haves may have some trouble too.

(NBC News) From fast food to beverage giants, brands see rising income inequality among customers with subtile “Consumer brands are adjusting to a two-tiered economy as the new normal. Yet there are signs that even high-income customers are under pressure.” And may I quote one line there – “This suggests that even a well-paying job is no longer a reliable source of financial stability compared with owning assets like stocks and real estate.”

I recall Warren Buffett or Charlie Munger once said: if you don’t make money when you sleep, you will work until you die. That quote is applicable here.

Yahoo Finance has an article – ‘A little concerning’: 2 crucial consumer groups under pressure are a warning sign for US economy that echos the two tiered economy.

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Master Series

Peter is the guy

Reading Time: < 1 minutePeter Schiff (wiki) is the manager of Euro Pacific Capital. He seems correctly called the recession. But don’t just follow his advice and buy gold (ETF: GLD).

Yahoo Tech-ticker: Is this a stock picker’s market?

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Categories
Economy

De-leveraging, moral hazard, friends and recession

Reading Time: 2 minutesI heard a lot of buzz words in this Bear Stearns crisis, $100 oil, Spitzer scandal, global housing bust…world. Just list some new words I found interesting:

De-leveraging
This one is easy for me (because I don’t have much to leverage on). I was a little astonished by the leverage ratio of investment banks such as Goldman Sachs (see the GS balance sheet here) and Bear Stears. As of Nov 2007, Bear Stears has (in thousand dollars)

Total Liabilities 383,569,000
Total Stockholder Equity 11,793,000 (Net Tangible Assets $11,793,000)

Debt/Equity ratio is 32.5, in other words, they control $32.5 of asset while they have $1 to back it up. If they lose 3% in their assets (due to investment loss), all their equities are gone. Because Bear is heavily invested in mortgage back securities (MBS) and MBS pretty much went to trash can lately, I think a 3% loss is easy to achieve. (Therefore the bailout and fire sale of Bear in the weekend).

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