Tag: fake recovery

The End of the Fake Recovery

The End of the Fake Recovery

This is going to be a relatively long post. But I think it’s important. I have been meaning to update my thinking about the “Fake Recovery” which I heralded in early 2009 as the economy in the US began to turn. My view is that without policy support this recovery is now on its last legs.

Here, I want to review how we got here in the context of the banking system and what that means about the banking crisis right now.

Mervyn King: “Systemic Insolvency Is Now The Problem”

Mervyn King: “Systemic Insolvency Is Now The Problem”

I want to take you through how we got from the financial system’s "systemic insolvency" to bailouts to record profits and bonuses again in the span of two years. From the WikiLeaks cables as published in the Guardian today regarding a meeting with the US Ambassador to the United Kingdom and the Bank of England Governor Mervyn King on 17 […]

Cecchini: U.S. Consumers in `Dire’ Credit Situation

Peter Cecchini, chief strategist at BGC Financial, talks to Pimm Fox about the U.S. economy and consumer credit on Bloomberg Television’s "Taking Stock." He says that the 122% percent household debt to GDP ratio is well above the pre-1980 average of 60-80%. Just to get back to a 100% to GDP ratio, we need an additional $2 trillion of deleveraging. […]

The next crisis is already under way

Wolfgang Munchau of the Financial Times wrote a very important comment piece in today’s Financial Times. In it he said that central banks are targeting asset prices to avoid the brunt of cyclical downturns. This policy is inducing asset bubbles and creating a more volatile real economy with unpredictable negative consequences. I want to expand upon his comments here because […]

The recession is over but the depression has just begun

For the last few months I have been casting around looking for bullish data points as counterfactuals to my more bearish long-term outlook. I have found some, but not enough. If you recall, early this year, I stated that we are in depression, making the case for the ongoing downturn as a depression with a small ‘d.’ Nevertheless, I was […]

Is economic boom around the corner?

This September 2009 post still describes my general view on the U.S. economy. If I wrote it today, I would be more bearish medium-term because it is obvious that in 2010 fiscal and monetary policy will become less supportive of recovery. Political pressures to remove fiscal and monetary stimulus are too much to bear. As a result, I give a double dip recession slightly better odds than a multi-year recovery now. But the analysis framing my thinking is largely the same.

Weak consumer spending will last for years

Weak consumer spending will last for years

It has been my thesis for some time that we are seeing a secular change in consumption patterns in the United States.  This will have grave implications for a world economy used to seeing the American consumer as an economic growth engine and consumer of first choice. Retail sales in the United States have fallen 10% since peaking in November […]

Looking beyond the fake recovery

I have been taking a bit of a break as my trip to the Ontario’s Lake Country winds down.  It’s a beautiful place.  But, as Marshall Auerback and I were lamenting, it has become the Hamptons of Canada as everyone from Toronto is up here for the summer holidays. But, it has been relaxing. Since I came here, I have […]