Good Abelson:
online.barrons.com
LEST YOU SHRUG OFF our concerns about the economy and the stock market as just another of our patented rants, we're enlisting the views of Jay and David Levy, proprietors of the Levy Forecasts, whose predictions of the decline and fall of the economy have been right as rain. Father and son, they've been at this game a lot of years, and while not infallible (a quality restricted to popes and financial journalists), they have a truly extraordinary record of being right.
In a nutshell, they think most people, from consumers to CEOs and investors to, yes, economists, are way too optimistic. Even many of those who have come to recognize how the credit crunch has hurt the economy, the Levys say, fail to grasp that the "damage to the economy will rapidly accelerate the financial crisis."
This is a major point that is completely missed by the consensus as far as I can tell. The financial crisis produced damage to the economy that we are seeing now. However, the damage to the economy will, in turn, produce damage to the financial markets. Its a reinforcing feedback loop. That is why financial trends run far longer and deeper than even the best prognosticators anticipate.
`BC |
