To: ild who wrote (142008 ) 1/7/2002 5:23:36 PM From: patron_anejo_por_favor Respond to Fantastic piece by Roach...as usual, he brings in the depth of analysis that's always missing in the mainstream press and BubbleVision. This chestnut sums it up succinctly:morganstanley.com Yogi Berra, an icon of American baseball, once quipped, "It ain't over till it's over." I have a great deal of sympathy with that astute observation. With all due respect to Dick Berner, I think the big macro call lurking out there for the US economy is the possibility of a double dip in 2002. I make that argument largely on the basis of what I believe is a compelling case for an imminent relapse on the demand front -- an outcome that would satisfy the second of the two pre-conditions for the double dip. There's no great mystery to the coming demand relapse. It seems especially likely in light of the extraordinary measures that businesses deployed in order to buy demand resilience in the final months of last year. The auto companies went to the limit, with their "zero-interest-rate" financing schemes. Pre- and post-holiday price concessions were unusually aggressive from America's retailers. In addition, the extraordinarily warm weather of November and early December provided an unusual boost to nationwide building activity. In a recession -- complete with rising layoffs and declining personal incomes -- all of these factors are temporary props to demand, at best. Apart from the beneficial impact of lower oil prices, rare is the recession that spontaneously creates new demand in a weakening income climate. Instead, aggressive pricing and weather-related distortions appear to have brought forward purchases and activity that would have otherwise occurred in the early months of 2002. And now it's payback time.
