Barron’s Alan Abelson does a reality check regarding this recession/recovery cycle:
“But what most of the cheerleader crowd has missed is that this time the recovery really is different.
We’re in a post-bubble economy — not just any bubble, but the biggest one ever. And the deep dislocations and disjointments it caused never got a chance to right themselves with a bit of judicious fiscal and monetary help. Instead, the economy was dosed with massive amounts of stimulants and the result has been an artificial recovery in the grip of a high.
Not the least troublesome side effects of the voodoo medicine so promiscuously administered is the revival of the bubble mentality that set us up for the bear market and the recession and so exacerbated the doleful loss of jobs. Worse, it has not only resurrected the equity bubble but created an equally dangerous one in housing.
Just to reassure you, we’re not predicting the end of the world. Western civilization, maybe, but not the world. We do have no trouble envisioning a rather messy end to this odd and vaguely feverish recovery. Nor would we put too much faith in Alan Greenspan’s vaunted legerdemain to keep stocks aloft or even afloat. With Mr. G at the reins, the Fed has become a one-trick pony, and that trick is awfully, even dangerously, stale.”
Regular readers of this blog will no doubt recognize this chart, which Ableson included with his missive:
We’ve been running similar graphics since July 2003 . . .
Source:
The Wrong Spin
by Alan Abelson
Barron’s, FEBRUARY 9, 2004
Up And Down Wall Street
http://online.wsj.com/barrons/article/0,,SB107611028028723440,00.html
