Comments on: The long recession: 15 reasons why the U.S. economy faces a weak recovery http://blogs.reuters.com/james-pethokoukis/2009/08/05/the-long-recession-15-reasons-why-us-economy-faces-a-weak-recovery/ Politics and policy from inside Washington Sun, 07 Apr 2013 21:23:48 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Elizabeth http://blogs.reuters.com/james-pethokoukis/2009/08/05/the-long-recession-15-reasons-why-us-economy-faces-a-weak-recovery/comment-page-1/#comment-1388 Elizabeth Wed, 05 Aug 2009 18:20:14 +0000 http://blogs.reuters.com/james-pethokoukis/?p=1398#comment-1388 David Goldman's reason #2, "The rule of law has been severely weakened" absolutely does not get enough attention. I am a small (very very small) investor. Yet, this has definitely affected my confidence in corporate bonds going forward and makes me much less likely to invest. David Goldman’s reason #2, “The rule of law has been severely weakened” absolutely does not get enough attention. I am a small (very very small) investor. Yet, this has definitely affected my confidence in corporate bonds going forward and makes me much less likely to invest.

]]> By: jason http://blogs.reuters.com/james-pethokoukis/2009/08/05/the-long-recession-15-reasons-why-us-economy-faces-a-weak-recovery/comment-page-1/#comment-1381 jason Wed, 05 Aug 2009 17:45:14 +0000 http://blogs.reuters.com/james-pethokoukis/?p=1398#comment-1381 We are simply unconstitutional. We are simply unconstitutional.

]]> By: hariolor http://blogs.reuters.com/james-pethokoukis/2009/08/05/the-long-recession-15-reasons-why-us-economy-faces-a-weak-recovery/comment-page-1/#comment-1379 hariolor Wed, 05 Aug 2009 17:01:57 +0000 http://blogs.reuters.com/james-pethokoukis/?p=1398#comment-1379 Thanks for the great 3x5 summary of these salient points. The scariest point I think is actually Goldman's #5. The 'recovery' we are seeing is built on the back of profligate government spending, amplified by consumer leverage. Cash for clunkers would be great, if not for the fact that consumers are trading into new, efficient (and often more expensive)cars. This means more debt. The stimulus was initially a 'disappointment' because it was used by consumers to pay off debt. Now it is being lauded as the engine behind the recent uptick in spending. If spending is going up, savings is still anemic, and wages are going down - that means there must be more debt being created, no? Long story short, if investors are excited by the notion that we can spend our way out of this, then they'd better hope they get their money out before the whole thing pops again. Someday we'll figure out that we can't build leverage and call it 'wealth'. The higher standard of living and productivity that comes from an inflationary debt-driven economy only lasts until a link in the chain breaks. We've already seen a catastrophic breakage in the chain once in the past 24 months - do we really believe yanking harder is going to fix it? Thanks for the great 3×5 summary of these salient points. The scariest point I think is actually Goldman’s #5. The ‘recovery’ we are seeing is built on the back of profligate government spending, amplified by consumer leverage.

Cash for clunkers would be great, if not for the fact that consumers are trading into new, efficient (and often more expensive)cars. This means more debt.

The stimulus was initially a ‘disappointment’ because it was used by consumers to pay off debt. Now it is being lauded as the engine behind the recent uptick in spending. If spending is going up, savings is still anemic, and wages are going down – that means there must be more debt being created, no?

Long story short, if investors are excited by the notion that we can spend our way out of this, then they’d better hope they get their money out before the whole thing pops again.

Someday we’ll figure out that we can’t build leverage and call it ‘wealth’. The higher standard of living and productivity that comes from an inflationary debt-driven economy only lasts until a link in the chain breaks.

We’ve already seen a catastrophic breakage in the chain once in the past 24 months – do we really believe yanking harder is going to fix it?

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