The Recession Is Over — The Depression Just Beginning

From: Rense

In late 2009, former Merrill Lynch economist, now with the Canadian firm, Gluskin Sheff, said the following:

“The credit collapse and the accompanying deflation and overcapacity are going to drive the economy and financial markets in 2010. We have said this repeatedly that this recession is really a depression because the (post-WW II) recessions were merely small backward steps in an inventory cycle but in the context of expanding credit. Whereas now, we are in a prolonged period of credit contraction, especially as it relates to households and small businesses.”

Summarizing his 2010 outlook, Rosenberg highlighted asset deflation and credit contraction imploding “the largest balance sheet in the world – the US household sector” in the amount of “an epic $12 trillion of lost net worth, a degree of trauma we have never seen before,” even after the equity bear market rally and “tenuous” housing recovery likely to be short-lived and illusory with a true bottom many months away.

As a result, consumer spending will be severely impacted. “Frugality is the new fashion and likely to stay that way for years,” highlighting a secular shift toward prudence and conservatism because households are traumatized, tapped out, and mindful of a bleak outlook. It shows in new consumer credit data, contracting $17.5 billion in November, the largest monthly amount since 1943 record keeping began.

Surprisingly, only people over age 55 have experienced job growth.

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