What is this drivel and why should news media broadcast what he says?
Morgan Stanley COO warns of US economy double-dip
Tuesday October 29, 12:12 am ET
TOKYO, Oct 29 (Reuters) - U.S. investment bank Morgan Stanley (NYSE:MWD - News) President and COO Robert Scott on Tuesday cited worries about the possibility of the U.S. economy hitting a double-dip next year amid weakened consumer spending.
"At the current time, the growth in the U.S. economy is very slow and it has been totally a result of spending by consumers. I think there is a lot of concern that the consumers are running out of energy and stamina to continue to drive expansion in the United States," he said in a speech to a business forum in Tokyo.
Consumers running out of energy and stamina? This is a figure which represents what? He must mean that consumers are running out of money, i.e., running out of disposable income, but disposable income continues to rise and has reached an all time high!
He also said capacity utilisation in the United States is at record lows of well under 80 percent,
Utilization has been at current levels for 20 years! How did the "good times" of the '90s occur if utilization has any consequence?
well below the levels that would normally result in a significant amount of corporate capital spending -- another potential engine for growth.
Obviously low utilization didn't stop the capex boom during the '90s.
"We have a structural problem in the U.S. economy that the engine, the U.S. consumer, unfortunately may well stop supporting the growth of the economy, well before businesses resume spending for capital goods," he said.
Why?
"And that type of analysis is what leads some to think there is a potential for a double-dip in the U.S. economy and that we could see real weakness early next year.
Because consumers are uncertain. His reasoning goes, uncertainty leads to reduced spending which leads to increased uncertainty which leads to reduced spending,... ad infinitum. Therefore, the US must go into recession.
This is classic petitio principii: assert the truth of an assumption in the conclusion.
This guy spent a lot of time at the university to get to this level of skill. That's necessary to become COO of Morgan Stanley, the dreg house of the Street. |
