A blog post today by Robert Reich (former U.S. Labor Secretary, currently a professor at University of California, Berkeley) titled ‘When Will The Recovery Begin? Never’ says “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 “the more sober U-shapers” who “predict a more gradual recovery, as investors slowly tiptoe back into the market”.  The message in Reich’s post is specific.  He accepts neither view and says “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”.

As readers of this blog know, Reich’s view has been my constant mantra for months now.  Reich’s prediction is that “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” and the right question to ask is:  “when and how the new economy will begin”.  I think Reich is directionally correct.  I don’t know what a ‘new economy’ means.  My fear is that it will mean an economy where North American lifestyles broadly are reduced from those enjoyed in past years, where medical care continually declines, where at least part of the societal infrastructure deteriorates, and where crime rates escalate.  That is my fear.  Optimistically I hope those declines are not severe but gentle over time in order to give the North American population an opportunity to adjust to change over time – but I have great difficulty thinking these and other negative changes as perceived by the general populace won’t take place.

Click here for Research on Oil & Gas Stocks.

See Blog Legal Disclaimer

Email this Post to a Friend.

Trackback URI | Comments RSS