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August 05, 2002
Doom-Gloom from Stanley Roach
More sobering analysis from Morgan Stanley's Stephen Roach on why we shouldn't expect a quick recovery. He argues that most economists are comparing this business cycle to post-World War II recessions, when the more pertinent comparison is to 19th century recessions:
This business cycle has little in common with those of the recent past. Unfortunately, it does have a lot in common with the pre-World War II boom-bust cycles triggered by speculative bubbles in financial markets. History tells us that the 19 peacetime cycles from 1854 to 1945 had recessions with an average duration of 21 months -- essentially double the 11-month duration of post-1945 recessions. Post-bubble shakeouts are long and painful. Why should this one, following on the heels of the mother of all bubbles, be any different?I tend to favor Roach's 19th century view of the economy -- the rule of corrupt Robber Barons sure feels right.
Posted by Nathan at August 5, 2002 09:51 AM
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