Economist David Rosenberg isn’t worried about when the recession will end: He’s worried about when the depression will end.
That’s right, the “d” word, which nearly all economists have declined to attach to the current global malaise.
“We’re in a form of depression," Rosenberg, chief economist and strategist at Gluskin Sheff + Associates Inc., a Toronto-based wealth management firm, told CNBC.
"Depressions. . . typically happen after a prolonged period of credit excess morphs into a collapse, and you get asset deflation. We had asset deflation, and we had a contraction in private-sector credit."
The economy is in the midst of a post-bubble credit collapse, Rosenberg said.
"The government is scared to have any exit strategy now. That’s how fragile it is. Is the recession technically over? You know what? All the experts seem to agree on that. That's what has me a little nervous.”
Rosenberg says economists are basing forecasts of recovery on the stock market’s 65 percent gain over the past eight months and the 2.8 percent expansion of GDP in third quarter.
That misses the picture, he says. “This is a different animal than the garden variety recession we were used to forecasting.”
As a result, Rosenberg sees commodity prices rising, and he says stocks would be fairly valued after a 20 percent drop.
Not everyone is so pessimistic.
"We still think the economy will expand at a 3 percent annual rate in the fourth quarter," BMO Capital Markets economist Sal Guatieri told Agence France Presse. He sees growth of 2.5 percent next year.
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