As CNBC's Cramer The Bozo declares the depression over, CEO of Evercore Partners and former Deputy Treasury Secretary Roger Altman says don't expect the economy to snap back anytime soon.
Why?
Because, explains the Altman, the U.S. economy's current recession is atypical. It's not the usual cyclical recession spurred by inflationary pressures that are damped by higher interests rates.
This one is a rare event caused by what he terms a 'balance-sheet driven' recession. That is, Altman writes, "we saw a housing and credit market collapse that caused enormous losses among households and banks." The result? A steep drop in discretionary consumer spending and a halt to lending.
The U.S. recession is more like one experienced by Japan in what economists dubbed "the lost decade" - 1991 through 2005. Like Japan then, Altman sees a long and painful recovery with most banks and households working to reduce debt.
Links: Why this will not be a normal cyclical recovery
Modern history's greatest regulatory failure
The Great Crash, 2008: A Geopolitical Setback for the West
Tuesday, April 7, 2009
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