Tuesday, July 28, 2009

FT: Animal spirits rarely stay down for long

Nice perspective with analysis on duration of recessions  in this article at the Financial Times.
As late as the autumn of 2008, economic forecasters in general were far too optimistic about 2009. Are these same forecasters now too pessimistic about recovery? The historical evidence reveals a typical pattern of recession and recovery that suggests this may be so. Very few recessions last longer than two years. And most recoveries, once they start, are strong.


Lsquared said...

Do I detect hope?

BBL Jr said...

Well one has to try to look at both sides. There are cogent arguments for optimism such as the one by this author or by Jim Paulsen at Wells Capital. There are also very sound arguments justifying caution or even outright bearishmess.david Rosenberg of Gluskin Scheff provides a good example of these arguments. This is a classic case of two handed markets. ( "bullish if this happens but , on the other hand if this happens bearish)