Wednesday, February 24, 2010

David Rosenberg predicts more contraction in economy - Feb. 18, 2010


David Rosenberg predicts more contraction in economy - Feb. 18, 2010

According to a February 24, 2010, Washington Post article, "global trade contracted by about 12 percent in 2009." The Director General of the World Trade Organization, Pascal Lamy, referred to the trade decrease as "the sharpest decline since the end of World War II."

Well known and recognized as one of the top economists in the nation, David Rosenberg expects that trend to continue, according to a February 18, 2010, CNNMoney.com report. Rosenberg noted that "with about $1 trillion in mortgage securities on its balance sheet, the Fed owns more mortgages than Treasury securities."

Reuters reported a record low for new home sales in January in a Febrary 24, 2010, article. Bank lending continues to contract, according to various national headlines. Unemployment continues to creep upwards, when measured in realistic terms -- numbers that include those seeking full-time work but unable to find it. Without cash or credit, it is unlikely that the consumer is going to be spending much money that he or she doesn't absolutely have to, meaning the American economy, 70 percent of which relies on consumer spending, doesn't seem as though it is going to experience any major recovery any time soon. With 80 percent of American jobs coming from the service industries -- which rely on consumer spending -- it doesn't look like unemployment is going to be falling soon, either.

A common sense consideration of the various factors affecting the economy right now seems to indicate that Rosenberg is right in his assessment. The so-called recovery touted by the government and its associated economists and advisors is simply not happening.

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