Tags: Rosenberg | Small | Shock | Recession

Gluskin Sheff's Rosenberg: We're 'One Small Shock Away' From Another Recession

Monday, 18 Jul 2011 08:56 AM

Gluskin Sheff economist David Rosenberg says another recession is only one small shock away.

"Everything is telling you how soft the underbelly of the economy really is," Rosenberg recently told CNBC. "We're just one small shock away from the economy going back into recession."

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Acknowledging that the stock market has been strong until late last week, Rosenberg nonetheless says he doesn't "think the stock market can stay divorced from the economy indefinitely."

"It is absolutely not normal to have two soft patches this close together nearly two years after the recession ends. It doesn't happen," says Rosenberg, who says that, from an academic perspective, another economically negative period would be considered a recession, which is generally defined as two consecutive quarters of negative growth.

"This will be two separate recessions," Rosenberg says.

Forbes magazine reports that New York University economist Nouriel Roubini believes a double-dip recession is already under way.
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These signs are: Home prices continue to fall, small businesses can’t get the credit they need, unemployment (now at 9.2 percent) has worsened, consumers are losing faith as evidenced by a drop in consumer spending, and 14 percent of the U.S. population are on food stamps — an increase of 67 percent of those receiving government assistance with food bills since 2006.

Meanwhile, pessimism over the United States’ economic outlook ruled as speakers last week took the stage at the annual FreedomFest in Las Vegas, reports HumanEvents.com. With the Aug. 2 deadline looming for a decision on the federal debt ceiling, speakers painted a grim picture of things to come.

“I think that all the talk about default is really an admission that the United States is running a gigantic Ponzi scheme,” said Peter Schiff, CEO of Conn.-based brokerage Euro Pacific Capital.

Decreasing global demand for the U.S. dollar will eventually trigger an inflationary crisis, said Schiff. “When interest rates go up in the United States, there is no way the U.S. government can pay the interest, let alone the principal, on its debt,” he said.

The country’s entire financial system was described by another speaker as being close to “collapse” as the nation continues to spend more than it produces.

“This financial system, and our currency, is completely in default,” said Ty Andros, president of Chicago brokerage TraderView. He foresees the stock market starting to collapse within a year.

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Gluskin Sheff economist David Rosenberg says another recession is only one small shock away. Everything is telling you how soft the underbelly of the economy really is, Rosenberg recently told CNBC. We're just one small shock away from the economy going back into...
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2011-56-18
Monday, 18 Jul 2011 08:56 AM
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