David Rosenberg, "We are likely in a depression today"

By on February 3, 2009

Zero Hedge reports that David Rosenberg, Merrill Lynch chief economist, has spoken the once unspeakable by a major brokerage house analyst. Rosenberg characterizes a depression as a very long recession. Some points made by Rosenberg and listed at Zero Hedge:

  • $6 trillion in private sector debt must be eliminated
  • Still in the early states of the credit contraction
  • Economy saddled with $1 trillion of excess capacity
  • Credit card delinquency rates break to new high
  • Housing market index slides to record low despite low interest rates
  • Fed’s balance sheet expansion needed to prevent deflation
  • Record wealth implosion – 20% hole driven into household balance sheet
  • Real unemployment rate at 13.5%
  • Intentions to raise wages slides to record low
  • We have no idea when the credit cycle will hit bottom
  • Rising savings rate will be incredibly deflationary
  • And scariest of all – The well for the US consumer has run dry for good

Sources:

http://zerohedge.blogspot.com/2009/01/merrill-lynch-analyst-says-depression.html

http://zerohedge.blogspot.com/2009/01/push-to-postpone-inevitable-collapse-is.html

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3 Comments

  1. Anonymous

    February 15, 2009 at 2:10 am

    why don’t you have any comments?

  2. stocksystm

    February 15, 2009 at 5:43 am

    If you mean a comment by me, I don’t normally leave one unless I feel an urge to.

    Regarding this, I don’t think its possible to determine at this point whether we are entering a depression or are in one now.

    However, the odds of a depression seem higher than the consensus view would have us believe. I’m very uncomfortable with my heavy allocation towards equities given the uncertanties regarding the success of the recent stimulus plans. I am fully aware that my risk of failure is higher than I’d like it to be, but it is under these circumstances that the greatest rewards down the road are achieved.

  3. Anonymous

    February 28, 2009 at 11:48 am

    Ouch you got crushed.
    Sorry, hindsight is 20/20

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