Rupert Murdoch Sees Freshening Economy

I will let Rupert Murdoch say it. The global economy is ready to start rebuilding. We will have recovery everywhere that is fairly rapid except the USA. There the credit contraction removed many millions of Americans from the consumer market and since nothing has been done to restore those customers, it is not reasonable for American consumption to lead the way.

US banks will be zombies until the housing overhang is cleared. Since most of the overhang has yet to hit the market and the inventory present is not moving particularly well this may take a decade without a remedy. All during this period housing prices will tend downward stifling new building.

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The economy has contracted in the USA. Without a remedy, the consumer will be forced to abandon credit and use cash in hand to pay bills. This means an increase in demand for cash as consumers decide to abandon payment to their credit suppliers. Much of this is happening because the suppliers are seen gaming the system to max out the rate. At some point we get credit volt.

This means that a chap with a $40,000 credit card bill been dinged at 28% stops paying. In six months or much less he will be talking to a collection agent. That agent wants his large slice of the pie so is ready to negotiate immediately. He offers $10,000 for a letter of release as settlement. He likely settles for $15,000. The point here is that as long as one is willing to go without a credit line for a couple of years you can pocket a possible $25,000 gain. And if you are a good bank customer, it will be a lot sooner. Obviously, this all releases cash flow.

Rupert Murdoch: The Worst Is Over

The worst of the global recession could be over, predicts media tycoon Rupert Murdoch, owner of The Wall Street Journal.

The tide might be turning, said News Corp chairman Murdoch in an earnings call with analysts and reporters.

"I'm not an economist, but it is increasingly clear that the worst is over," Murdoch said in remarks reprinted by the Silicon Alley Insider.

"As you know I have been increasingly pessimistic. But there are emerging signs that the days of precipitous decline are done."

Murdoch said it appears that advertising is coming out of its slump. The marketplace is likely to see advertisers come back, he said, the Wall Street Journal reported.

"I think that everybody was in shock by the economy and all the business that was falling off a cliff in the last three months of last year, including me," he said.

"And we saw the disappearance of advertising and business in January and February. But now we're seeing people coming back into the advertising market, and spending."

San Francisco Federal Reserve Bank President Janet Yellen said she believes the economy will start turning around later in 2009, echoing Fed Chairman Ben Bernanke's sentiment, The Wall Street Journal reported.

Yellen said she believes the recession will start to wane and the country's gross domestic product will start to rebound in 2009. She made her remarks to a meeting of Australian Business Economists via satellite.

"It takes less than you might think for real GDP growth rates to turn positive," she said

Bernanke hinted at signs of optimism, stating that the economy could see a recovery in the near term with the housing market showing signs of improvement.

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