The recession could last for a whopping 20 years, John Rosevear of the Motley Fool writes.
Rosevear points out that on Dec. 29, 1989, the Nikkei 225, Japan's benchmark stock index, reached a high of 38,957. However, on December 3, 2009, it closed at 9,977.67, a startling 74% decrease.
He predicts that the US will follow the same fate because of “excessive asset expansion,” weak corporate governance and the bank crisis.
“The Japanese government's response to the crisis was very different from that of the United States. In a nutshell, it was several years before its government did much of anything, and what it finally did do was arguably too little, too late. But at the same time, it's hard to argue with this: In the past decade, the S&P 500 index is down more than 20%. It's a disturbing parallel to ponder, especially for those of us worried about our retirement portfolios,” he said.
With the unemployment rate at 10 percent, some experts are predicting the recession could end by the middle of next year, Bloomberg reported.
Harvard University professor Jeffrey Frankel, a member of the National Bureau of Economic Research’s Business Cycle Dating Committee, said the recession could end by the middle of 2010.
“Mid-summer remains the best candidate for ultimate dating of the trough, probably July, or possibly June,” he said.
Robert Hall, who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said the economy could be affected by another downturn.
He said the current estimates “presume that there won’t be any new adverse shock. “There are some horror-story scenarios that could stand in the way, so I don’t see the point of forecasting. We just wait until we are ready.”
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