A prominent bear, Merril Lynch economist David Rosenberg, is saying that will be the worst one since the 1970s.
I think that it will be worse, because we are in a debtor economy, and bills will be coming due sooner, rather than later.
In fact, I think that some of the indicators may show it to be more profound than that of the 1930s.
Here’s why:
- In the 1930s, we were a net exporter of oil, now we are a net importer of oil.
- In the 1930s, the rest of the industrialized world was still suffering from the shocks of WWI, which had left the US largely unscathed.
- The US was running a trade surplus.
- The Federal government was running a budget surplus.
- The amount of leverage and risk are far higher now than in 1930.
- The US industrial base has been decimated over the past 35 years.
- Consumer savings is non-existent.
- We have crushing defense expenditures.
- The dollar is overvalued, meaning that we will be experiencing a foreign exchange driven inflation.
Note, however, that but I’m an engineer, not an economist, dammit*!
*I love it when I get to go all Doctor McCoy!!!