Juggling Dynamite

Economic Cycle Research Institute(ECRI)CEO, Lakshman Achuthan presented to the Chicago CFA Society this week and reaffirmed the ECRI’s call that the US economy is likely already in recession today. He reminded the audience that the last US recession began in October 2007 but was not officially confirmed in government reports until a full 10 months later during the summer of 2008.

Here is a direct link to his presentation slides.

Charles Nenner Research Center Executive Director Charles Nenner discusses the markets and his cycle work which suggests that the Dow is likely to drop to 5,000 starting this year. Here is a direct link.

The point is not that stocks are vulnerable because the economy is going to get so much worse from here as the host says, but rather that the economy already is very weak and stocks have disconnected and levitated on liquidity far above economic reality.

Joe Scarborough and Paul Krugman debated debt last night on Charlie Rose. The trouble with the can-kick crew personified in Mr. Krugman is that they never think it is a good time to cut government spending (or invest for the future in things like energy efficiency, education or infrastructure for that matter). Not during booms and certainly not during downturns like today. It was that short-term thinking over the last 30 years that got us into the present mess. Here is a direct link.