2008 Word of the Year: CRECESSION?
A: How great would it be to coin a new term for how I would describe this period of economic activity: CRECESSION! Its not a recession (yet), its not a depression, its not stagflation (as long as wages aren't rising we have commodity inflation, not wage inflation or a growth in the money supply), its CREDIT DEFLATION that will lead to a credit based recession! A crecession - here's my first draft at a possible definition!
Cre - cess - ion [cre-session]
- noun
a period of economic activity where available credit is contracting and the cost of credit is rising, leading to a disruption in the credit markets and difficulties for businesses that borrow short and lend long. The result will likely be a period of asset deflation leading to a lack of growth, rising unemployment, and rising commodity inflation due to pressure on the dollar
{Origin: 2008; by UrbanDigs}
Now, who do I call to coin this term; given that the definition probably needs refining? Seriously though, we are a society that thrives on credit and right now it is the very platform of credit that is being tested. The destruction of credit out there in the shadow banking system is enormous right now, and we still don't know how deep the rabbit hole goes. Things will change and the world as we used to know it is likely to be very different in the next few years. We will soon find out what its like to have lived through a crecession!
Posted by Martha
Fri Jul 18th, 2008 03:16 PM
Time to start printing the "I survived the Crecession of 2008" t-shirts!
Posted by UrbanDigs
Fri Jul 18th, 2008 03:34 PM
Martha - just for you, re-check the article in five minutes!
Posted by anonymous
Fri Jul 18th, 2008 03:40 PM
cute! I like it
Posted by Query1
Fri Jul 18th, 2008 03:42 PM
This is very clever but also a useful help to keep a focus that may help in spotting the end of the whole process. I would revise for my purposes to have the definition be: That period of slowing economic activity where available credit is contracting and the cost of credit is rising, leading to a disruption in the credit markets and subsequent difficulties for businesses that borrow short and lend long or otherwise are highly leveraged. This stage of slowing economic growth will likely be marked by a period of asset deflation that contributes to the slower growth, rising unemployment caused by the slowing growth, but also rising asset inflation contributed to by monetary policy intended to keep the slowing growth from becoming a recession. Its end is highly unpredictable although some will claim to see it.
Posted by Martha
Fri Jul 18th, 2008 04:47 PM
Haha! Thanks, Noah... needed that chuckle today!
Posted by anon
Fri Jul 18th, 2008 04:56 PM
If we're talking about 2008, I would think we should call it a "precession".
As in, you ain't seen nothin' yet.
Posted by UrbanDigs
Fri Jul 18th, 2008 05:13 PM
ha, a precession! How would we define that?
a period of time before everyone is f*cked
Posted by UrbanDigs
Sat Jul 19th, 2008 08:37 AM
Query1 - excellent revision! Thanks.
Posted by Margaret
Sat Jul 19th, 2008 10:21 AM
Nice, but maybe it should be "crepression."
Posted by UrbanDigs
Sat Jul 19th, 2008 11:09 AM
or creconcession - credit/consumer recession
or creconpression
Posted by Westside Fred
Sat Jul 19th, 2008 12:10 PM
The problem with the term is that it doesn't get at the longer term nature of the pullback. I like to compare it to that scene in Misery where James Caan gets hobbled. Our best case is that our feet grow back, but our legs are simply going to be shorter. I am not sure how deep the cut is for real estate but i imagine substantial since the assets that will be penalized more will have less current income to offer. I am wondering if the multi family segment does not expand into single family? i mean if you can get the same or better yield on a portfolio of homes versus an apartment building, why not?
Posted by Brian
Mon Jul 21st, 2008 10:35 AM
Time to get into the SKF again?
Posted by UrbanDigs
Mon Jul 21st, 2008 11:33 AM
Brian - its a tough call. Personally, I'm holding out. I think shorts could get squeezed over the next few weeks if news comes in not as bad as expected and govt comes out with a plan for GSE's..
the end game is still in play for short trade. But I will look at SKF again, when it gets in the 100-110 range to open a new long position.
For now, I am more focused on where to take gains on my longs for this bounce. I took some already and holding about 70% still.
Posted by Danilo Bogdanovic
Mon Jul 21st, 2008 05:14 PM
Cool new word! You should add it to Urban Dictionary.
Posted by Danilo Bogdanovic
Mon Jul 21st, 2008 05:14 PM
Cool new word! You should add it to Urban Dictionary.
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Tue Jul 22nd, 2008 10:31 PM
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