New Reality

I posted many months ago on something I called the new reality. The new reality is, sorry, here and it is here to stay. The economy seems to be reaching a bottom on several fronts. I personally am worried that this is not the true bottom and more pain is in the future, but let us assume we are reaching a bottom. A bottom on unemployment, housing, stock declines and the like. Where do we go from here? Here is my take on this economy. It is V shaped, U shaped W shaped or some other shape. Personally, I think it is \_ shaped. Down and out. We went down and are staying down as far as I can see.

Let's say I am wrong. We already have a nice recovery in the market. How much further can we go without a true recovery in the economy. You decide. Right now I suspect the economy in the U.S. will be like Japan for the past decade or two. Lost decade? Lost two decades?

I say this because we had a large run up in the economy and it was all fueled by debt. Easy credit and a housing bubble coupled to create trillions in spending on debt. Time now to pay that debt off. Call it a debt hangover. This headache is going to be around for a very long time. We have of late been replacing personal debt with public debt. Short term gain for long term pain in my book.

Disclosures: None.