NOLAND and my BBI and 1990 Recession

My "BBI" (Bear Market Bottom Indicator) currently stands at 54.90. 2 previous bottoms occurred in 1998 and 2002 between 20.0 and 21.00. I backtested it to 1990 the signal was 9.79 ( recession) FWIW.

*from Hussman
Evidence comes in stages and data gets revised. Initial GDP data showed growth in the first 3 months of 1990's recession, but then was later revised to show that the economy had stalled.
During those same three months in 1990, the S&P 500 declined by 20 percent. That is the crucial issue. An early recognition that the economy is heading into a recession, or has just entered one, is useful to stock investors because it's in these early stages where much of the damage to stock prices is often done. (Though the 2000-2002 bear market showed that stock prices can continue lower long after the economy begins to recover.)

ALSO ON 1990
http://www.referenceforbusiness.com/encyclopedia/Pro-Res/Recession.html

THE U.S. RECESSION OF 1990-91
Despite such measures, however, recessions still occur in the United States and worldwide. During the U.S. recession that lasted from July 1990 through March 1991, the economy showed the lowest growth rate since the Great Depression. U.S. News and World Report called the recession "unlike any the country has experienced in the post-World War II era, the result of years of profligacy and irresponsible government policies," and claimed it was responsible for the loss of 1.9 million jobs through early 1992. In fact, some analysts stated that this recession could have been as bad as the Great Depression if not for increased government spending—which represented 25 percent of GNP in 1991 as opposed to 3 percent in 1930—and federal deposit insurance for banks.
Still, economists disagreed on what caused the recession and the slow recovery, how long the recession officially lasted, and how a similar situation could best be prevented in the future. Some experts attributed the prolonged recession to industrial overcapacity, which led to falling asset values for many businesses. Others claimed that an overall decrease in consumption was responsible, whether in response to an increase in oil prices following the Persian Gulf War or because of a slowdown in the rate of population growth. Some analysts blamed technology, stating that the proliferation of electronically controlled credit cards led consumers to build up personal debt. Whatever the reasons for the recession, however, it seemed that businesses needed to be prepared for more downturns in the future.




http://prudentbear.com/index.php/CreditBubbleBulletinHome

Capital raising notwithstanding, the GSEs will now be indefinitely and severely equity capital constrained (at best). Their days of mortgage/MBS “buyers of first and last resort” will be drawing to a conclusion. Capital requirements for guaranteeing MBS are significantly less onerous, so Fannie and Freddie will have little alternative than to rein in balance sheet growth (MBS retention) while continuing to guarantee massive agency MBS issuance (“insurer of last resort”). This cannot be a comforting dynamic for those that have had been making a nice living leveraging in MBS. Meanwhile, the “private-label” MBS market is an unmitigated bust and even bank “prime” mortgage lending appears to have tightened meaningfully, further restraining mortgage Credit growth and placing ongoing downward pressure on home prices and the general economy.

This Credit bust dynamic greatly exacerbates GSE portfolio Credit risk, while leaving them with no alternative than to continue to aggressively expand their MBS guarantee business (to the tune of $600bn plus annually in the face of an escalating housing and economic bust). The GSEs are now trapped in a precarious riptide where they must swim incredibly hard to barely tread water. This is an extremely tenuous position for the conventional mortgage marketplace, not to mention the increasingly credit-starved U.S. Bubble economy.