Bill Bonner writes:
We continue to live in a gray zone.
It is not as black as the Great Depression.
But it’s certainly not as bright as the go-go Bubble Era, either.
What is it, exactly?
Is it a correction?
What is it correcting?
We don’t know. Not exactly.
When will it be over?
We don’t know that either.
What will happen next?
Wish we could tell you.
Let’s keep it simple: will prices go up or down?
Hey, stop asking so many questions!
Look, we’re way ahead of most people. Most people – including most economists – think we are in a period of ‘fragile recovery.’ They think we had a recession. Now the economy is in recovery. If the recovery doesn’t seem much like other recoveries in the Post-War era, it doesn’t trouble them particularly...
So far, the economy gives no sign of normal ‘recovery.’ We’d be deeply concerned if it did. Because what it had before the crisis of ’07-’09 was not something to have again. It had the bubble heebie-jeebies, if you know what we mean.
Now, the economy gives every sign of being in a Great Correction…
…unemployment is not recovering. In fact, it seems to be getting worse. It would not be at all surprising to see the official unemployment rate go up to 12% in the next leg down…
…housing is not recovering. It has stabilized…but only tentatively. There is still a huge overhang of inventory and underwater mortgages to be resolved. And the latest figures show they’re not moving. Under these circumstances, you’d have to be one heckuva optimist to think prices would ‘recover’ anytime soon…
…credit is not recovering. Instead, it is shrinking… Last week’s figures show more contraction.
These things do not point to the end of the world. They point to the end of the credit expansion that ballooned up the economy from the first Reagan administration through the last administration of George W. Bush.
That expansion is over. Kaput. Finished. What’s coming next? We’ll see…
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