Monday, November 13, 2006

 

Will the GOP blame this on Clinton, too?

Nouriel Roubini: 4Q growth 0-1% (less than 0 = recession, strong growth = 3) ISM manufacturing index 51.2 (less than 50 = recession) Intel, Wal-Mart, Amazon cutting capital spending Help Wanted Index decelerating Job growth in government, food service, low-end health care So, we already recession in housing and non-residential construction, recession in auto and manufacturing, sluggish or falling retail sales in spite of lower gasoline prices, lower capital spending by the corporate sector. It all amounts to a creeping recession that will be full fledged by Q1 or Q2 of next year. Now, this is an audacious call by Roubini. I can tell you that at least one major financial house is all but pledging there will be no recession. The market is happy with Democrats being in charge. The plunge in growth began months ago and reflects the universal view that there will be a reckoning for all the reckless overspending.
Comments:
Bush doesn't seem to me to be a "soft-landing" kind of guy, so I would guess there will be some rather severe market corrections in the not-so-distant future.

In the long term, I think debt management will be a major issue. While Bush is unlikely to allow a default on our debt to his Chinese and Saudi friends, he has shown a worrisome willingness to default on Social Security commitments.

That wouldn't look good.
 
Nouriel thinks the landing will be hard indeed. I tend to think it will be more of a slow, grinding, endless recession/stagflation.

The real problem is that the wealthy people, who should be our national leaders, have defaulted on their responsibilities. Bob Rubin gave a brilliant speech at Brookings, in which he pointed to growing inequality as the central problem of the American economy.

American families work harder and harder, but get nowhere. They are in effect being trained to give up, to become apathetic, to turn on one another, to let their communities and families decay.

This is the great failure of the overclass. They do not see that they have a duty arising from their privileges. Only a rare man, like Rubin or Clinton, sees and understands that the long-term consequence of this is the destruction of the economic prosperity of all.
 
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