Ritholtz: we should expect the ongoing recovery to look like that of Japan's in 1992, Finland's in 1991, Sweden's in 1991, Norway's in 1987 and Spain's in 1977
One might think that after they /economists/ failed to anticipate the greatest financial crisis since the Great Depression, they learned to step back and look at the big picture.
Instead, we're seeing the same blind spot: a pre-crisis dependence on the wrong data set of post-World War II recessions, which led to the biggest blunder in economic history.
The proper frame of reference, as Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University explained in 2008, are debt-induced financial crises.
The defining characteristic of any recovery from a credit crisis is ongoing debt deleveraging, meaning that households, companies and governments are primarily using any economic gains in income or borrowing costs to reduce their debt.
Eventually, we will slog our way back to “normal” -- whatever that is. In the meantime, we should expect the ongoing recovery to look like that of Japan's in 1992, Finland's in 1991, Sweden's in 1991, Norway's in 1987 and Spain's in 1977 -- all of which were slower, weaker and less comfortable than the usual post-war recessions.
Barry Ritholtz, Bloomberg 1 August 2016
Instead, we're seeing the same blind spot: a pre-crisis dependence on the wrong data set of post-World War II recessions, which led to the biggest blunder in economic history.
The proper frame of reference, as Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University explained in 2008, are debt-induced financial crises.
The defining characteristic of any recovery from a credit crisis is ongoing debt deleveraging, meaning that households, companies and governments are primarily using any economic gains in income or borrowing costs to reduce their debt.
Eventually, we will slog our way back to “normal” -- whatever that is. In the meantime, we should expect the ongoing recovery to look like that of Japan's in 1992, Finland's in 1991, Sweden's in 1991, Norway's in 1987 and Spain's in 1977 -- all of which were slower, weaker and less comfortable than the usual post-war recessions.
Barry Ritholtz, Bloomberg 1 August 2016
Kommentarer