Lots of reports since the Obama Coronation about signs of “green shoots”. However, last month investor Warren Buffett said he wasn’t seeing any “green shoots”. In fact, Buffett added the economy is in a shambles.
Just yesterday ABC News spoke with Buffett, who says he doesn’t see a recovery anytime soon:
First week in July economist Nouriel Roubini colorfully stated:
- The June employment report suggests that the alleged ‘green shoots’ are mostly yellow weeds that may eventually turn into brown manure.
Today along comes former Secretary of Labor Robert Reich who says the economic recovery will begin — “NEVER”.
Oh, and those “green shoots”? Reich says they “are turning brown in the scorching summer sun.”
- [...] In a recession this deep, recovery doesn’t depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, [...]
Problem is, consumers won’t start spending until they have money in their pockets and feel reasonably secure. But they don’t have the money, and it’s hard to see where it will come from. They can’t borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water — owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can’t are hunkering down, as they must.
Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can’t be built on replacements. Don’t expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don’t rely on exports. The global economy is contracting. [...]
What does Reich suggest? A new improved Brand X economy:
- [...] instead of asking when the recovery will start, we should be asking when and how the new economy will begin.
