What I see is a recovery from an economic spider hole. What I don't see is any recovery that would make a dent in unemployment. As you know, my view is that we failed to make a decision in 2002 on what kind of economy to build--so instead we monetized the housing stock of the nation. Now that we've taken away that overshoot, in one sense that's a good thing. But, it begs the question: what does the country do to put 18% of working adults back to work, in addition to aggregating all the new workers coming into the labor force.
See, here's my new view: most observers always miss the issue of scale, in most problems such as these. They look out their window and they say "Well houses are selling at the low end in my neighborhood, and some finance guys I know are getting hired back."
We are in the same, exact place as we were 9 years ago: totally without a clue as to what to do, but, its worse because everyone is choked on debt. Oh and then there's this: if we thought the financial sector was a poor allocator of capital (and it was) then what happens now that DC is making those decisions?
As I have said, I am bullish on exports when the USD is fully down below .8000. And whoa, here we are. So we are getting confirmation now of aggie exports rising, and I expect light manufacturing to pick up.
How about those trade deficit numbers? Wow. Talk about the end of Dollar reserve building, eh? Maybe there's some truth to the conspiracy theory that Ben is monetizing additional USTs from offshore. :-) Because there is so little dollar trade going on, the deficits and funding needs of Treasury dwarf dollar flows.
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