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When Will the Economy Recover?

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A legitimate economic recovery can happen, but only after we navigate the sovereign sequel to the first phase of the financial crisis.

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MINYANVILLE ORIGINAL

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

Anyone can hold their breath for a minute when they're 10 feet underwater, yet a person will drown in six inches of water if he's face-down long enough. The same can be said of our current economic climate; it's not the depth of the recession that matters, it's the length.

Our government has thrown upwards of $13 trillion in stimulus at the financial crisis yet we're seeing 1.9% annual growth, as per Wednesday's GDP report. Perhaps more concerning is that risk hasn't disappeared -- it simply transferred from one perception to another, from private balance sheets to public liabilities.

I'm on record championing a legitimate economic recovery ripe with Millennial-led human capital once -- and only once -- we navigate the sovereign sequel to the first phase of the financial crisis. Until we take our medicine, in the form of debt destruction rather than drugs that mask the symptoms, we're prolonging an inevitable fate.

As a trader, the path we take is entirely more important that the destination we arrive at; as an investor -- and a father -- I continue to monitor the unintended consequences of our current course as they percolate through our socioeconomic sphere. As we're apt to say in Minyanville, social mood and risk appetites shape financial markets -- and much more.

The Great Depression should serve as a framework for optimism; most of society worked, great discoveries were made, and formidable franchises were established. In order to get through it, however, we needed to go through it, and the same will prove true once again.

As we get from here to there, I'm reminded of the wisdom of my grandfather, who, when faced with adversity, assured me that, "This too, shall pass."

R.P.

Twitter: @todd_harrison

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