Well, we’ve managed to actually post enough this week to have a formal “Past Week” column!
Money has been on my mind as I unwound a few positions in the stock market this week as things are stalling before what might be a plunge. This is quite a relief…my stress level dropped immediately! These were mostly mutual funds we bought 10+ years ago, so we still came out ahead in spite of the huge drop in March.
However, we have to be vigilant about the future. Preservation of what we all have, hedging against inflation and a collapsing dollar…you know the drill!
So here are a couple of things on the subject of the economy that I came across this week. The first is by Robert Reich; next is a video from Bloomberg.com.
If you’re wondering what Robert Reich is thinking lately, check out his personal blog. (Reich is a staunch supporter of a public healthcare option and urges supporters to get active to get Obama to “do the right things” in a recent post titled “What Can I Do?“).
Here’s his latest post about the state of the economy:
The so-called “green shoots” of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape.
The reason is asset values at bottom are so low that investor confidence returns only gradually.
That’s where the more sober U-shapers come in. They predict a more gradual recovery, as investors slowly tiptoe back into the market.
But Reich doesn’t belong to either camp:
In a recession this deep, recovery doesn’t depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.
Reich forsees a “new economy”:
My prediction, then? Not a V, not a U. But an X. This economy can’t get back on track because the track we were on for years — featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere — simply cannot be sustained.
The X marks a brand new track — a new economy. What will it look like? Nobody knows. All we know is the current economy can’t “recover” because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.
Then there is this video from Bloomberg on the subject of “Where We are Now,” which features Robert Shiller (his website here), the economist’/housing forecaster from Yale and New York University’s Nouriel Roubini.
At Roubini’s site, RGE Monitor, there is also a link to the video and a breakdown of key sections with their time. The discussion is titled:
The key points I jotted down from Roubini are that in the short term (1.5 years) there will be deflation and by the end of 2010 we’ll be seeing inflation. Frankly, I thought the discussion was more pessimistic than the title suggests!
THE PAST WEEK
*By Kenosha Marge
Saturday, July 11, 2009: One Year Anniversary of “Peak Oil Day” Makes it a MUST to Watch “The Crash Course”
200,000 Hits!…Some of the Stories that Made it Happen: Obama’s Handwriting; Nation of Nincompoops, Obama’s Associates; Sharia Finance; The Fed; Reality Check from Chicago
Filed under: Current Politics | Tagged: "green shoots", Bloomberg.com, Chris Martenson, consumers, deflation, economic recovery, healthcare public option, inflation, New York University, Nouriel Roubini, RGEMonitor.com, Robert Reich, Robert Shiller, The Crash Course, the economy, V-shape recovery; U-Shape recovery, Yale University |