Wednesday, February 17, 2010

Kiss That V-Shaped Recovery Good-Bye: The U.S. "Worse Than Greece," Says Economist



Posted Feb 15, 2010 08:30am EST by Peter Gorenstein

There's been many letters and symbols used over the last year to describe the shape of the U.S. economic recovery. There's the strong V-shaped recovery; the square root shaped recovery to connote a strong recovery followed by a period of flat to no growth; and the W-shaped recovery favored by those believing in a double dip recession.

Tech Ticker guest Michael Pento has a new twist on the discussion. Pento, senior market strategist with Delta Global Advisors believes this is a tee-pee shaped recovery with the top of that tee-pee having already formed in the fourth quarter.

Pento is negative on America's near term economic prospects for three main reasons: too little bank lending, too few jobs and too much public and private debt. "I've never seen a v-shaped recovery occur when commercial bank lending was down 7% year over year. So, small business are not getting loans to create capital goods and to expand and hire individuals," he observes.

Exacerbating the problems at home, is what he describes, as a weak economy abroad. With China looking to clamp down on growth, the EuroZone struggling with its own debt problems, Pento asks, "Where is the growth going to come from in demand from overseas?

When he says "demand" he's referring not only to products and services but also to our growing debt burden. As the price of servicing our deficit grows, when the Federal Reserve tightens monetary policy, Pento is confident others will realize what he already does: the situation in the U.S. is "worse than Greece."

The way he sees it, there's a strong potential for a bond and dollar crisis when China starts selling Treasuries. "Tell me which shape recovery that will yield for the United States?"


Sheeple



The Black Sheep tries to warn its friends with the truth it has seen, unfortunately herd mentality kicks in for the Sheeple, and they run in fear from the black sheep and keep to the safety of their flock.

Having tried to no avail to awaken his peers, the Black Sheep have no other choice but to unite with each other and escape the impending doom.

What color Sheep are you?

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