Last night I appeared on Russia Today to talk about the state of the recovery. As it stands right now, with Fed policy looking to tighten up and reduce lending in the near future, we are likely to see a drop in economic growth. As it stands right now, lending isn’t that great, and cutting it even more is likely to keep a stranglehold on manufacturing and perpetuate the unemployment problem. But the Fed has to do it in order for the economy to hit is real bottom point and then begin a recovery that isn’t based on government supports. (Not to mention inflation concerns.) We should have done this a year ago, instead we have put off the fire we need to walk through.
In this interview I and Vince Veneziani of Business Insider discuss why the economy is in a terrible state at the moment, what the future could look like, and what this means on a global scale. Will it be a W-shaped recovery? V-shaped? Something else?
One last thing: since so much of what the recovery looks like depends on what the government does, no one can say with certainty what shape the recovery comes in. Any one who says otherwise is full of themselves. But the one thing we probably can say with certainty is that the “pain” of the recession is certainly a relative concept. The economic downturn hurts some more than others. Some are losing their jobs and homes. Some are doing quite well. But in either case, remember that we do not have the economic problems of Haiti. How we define poverty in America is oftentimes considered upper class in developing nations. And we should be able to tolerate a little more pain in trade for a bright prosperous future. (Too bad that is a pipe dream, since politicians rarely want to be the collateral damange on the right road to recovery.)