Wednesday, October 6, 2010

Now, More Bad News: The ‘New Normal’ is Here to Stay -

A very well written article by Temma Ehrenfeld regarding the new normal, which I have also written about and published in the local newspaper. Her reasoning is simple:
  1. Households must and will deleverage either through saving or default.
  2. Demographics are against growth.
  3. Globalization will reverse as power shifts to protectionist nations.

All these trends point to slower growth and lower returns on investment.  It is strange that she ignores the imminent and crushing interest burden on our national debt.  Perhaps she didn't want to cross that magical barrier between truth telling and just plain negative.

It would also be a mistake to under-estimate the effect of an ever faster changing global economy as India and China crawl out of the Middle Ages and technology driven ideas outstrip current thinking on everything from bread to management science and hierarchies.  While productivity will increase, a great number of large corporations are going to undergo a 'creatively destructive' experience.

Source: Now, More Bad News: The ‘New Normal’ is Here to Stay -

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