Hussman Weekly Market Comment: Recession Warning, and the Proper Policy Response
As of Friday, the S&P 500 was below its level of early November 2010, when the Federal Reserve initiated its second round of quantitative easing. Aside from a brief bump in demand that kicked the recession can down the road a bit, the U.S. economy is not measurably better off. Meanwhile, countless individuals in developing countries have been injured by predictable commodity hoarding and global price instability. The Federal Reserve has leveraged its balance sheet by over 55-to-1. As policy makers look to address the abrupt deterioration in U.S. and global economic prospects, we should ask ourselves: Do we really long for more of the Fed's recklessness?
I began drafting this update in a fairly measured way, but on further reflection, I think it is time to be blunt. The economic evidence now suggests that the U.S. and the global economy are again entering recession. Technically, this is not a "double dip." The National Bureau of Economic Research, which officially dates the beginning and end of U.S. recessions, was very clear about this last year - noting that it would view any future economic downturn as a new recession, not as a continuation of the one that ended in June 2009.
If there is one crucial point that should not be missed, it is this: the fundamental source of our economic challenges, from joblessness, to unresolved housing strains, to sovereign debt crises, is that our policy makers have repeatedly opted for fiscal band-aids and monetary distortions instead of addressing the core problem head-on. That core problem is simple: the careless encouragement of asset bubbles, and the refusal to restructure bad debt.
- Hussman Funds Semi-annual Report
The U.S. economy appears suspended at the boundary between tepid growth and recession, requiring a trillion-dollar federal deficit and unprecedented monetary easing simply to maintain that position. The Federal Reserve continues a well-known and fully-announced...
- Hoisington Q3 2012 Letter
Growth Recession Entering the final quarter of the year, domestic and global economic conditions are extremely fragile. Across the globe, countries are in outright recession, and in some instances where aggregate growth is holding above the zero line,...
- Hussman Weekly Market Comment: Leap Of Faith
Economists know that there are three ways to deleverage an economy: austerity – where debt growth is held below the rate of economic growth; restructuring – where bad debts are written down or renegotiated; and monetization – where money is printed...
- Hussman Weekly Market Comment: Dodging A Bullet, From A Machine Gun
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- Hussman Weekly Market Comment: Recession, Restructuring, And The Ring Fence
In recent months, our recession models have forcefully shifted to warning of oncoming recession. Our initial concern in August was based on a fairly compact set of indicators that we track as a Recession Warning Composite (see Recession Warning, and The...