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Dropping The Truth On Squawk

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Would love to see the highlights of this (it will be up on The Big Picture eventually);

David Rosenberg has been on Squawk Box for the past hour.

By Barry Ritholtz - July 7th, 2009, 7:00AM

He has been dropping the unvarnished Truth on the kids, powering through a basic set of reality regardless of dropped jaws and stunned silence.

It has been a thing of beauty to watch.

None of the things he is discussing is at all radical. Its simply clear-eyed, straight forward, reality based analysis. No hope, no cheerleading, no bull. Its like a bucket of cold water versus the feel good warm fuzzies the long-only, fully invested crowd (aka, the pompom squad) that typically comes on TV to talk their books.

Rosie has run through the usual metrics of economic factors we have discussed ad nauseum:

• Green Shoots was unsubstantiated nonsense;

• Unemployment Rate will rise considerably higher; this will be the “mother of all jobless recoveries.â€

• The rise from the 666 lows was the mother of all oversold bounces due to multiple expansion, not profit gains;

• The S&P5009 is likely to have earnings of a modest $50 over the next 4 quarters;

• Unemployment is usually a lagging indicator when we are dealing with an inventory or manufacturing recession; During a credit crisis recession, Unemployment is a coincident indicator cycling back into the economy in a negative way;

• We are going through a massive consumer deleveraging

• The Consumer is not going to save the economy anytime soon.


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This is a banking crisis, banking crisis takes years to resolve anyone who thinks this can be easily fixed is delusional.



OVER THE PAST QUARTER of a century, unlike the

preceding 25 years, there have been many large ban

failures around the world. Caprio and

Klingebiel (2003), for example, document

117 episodes of systemic crises and 51 cases of

borderline or non-systemic crises in developed and

emerging market countries since the late 1970s.

Moreover, cross-country estimates suggest that outp

losses during banking crises have been, on average,

large – over 10% of annual GDP4

– and that bank

lending and profitability have often remained subdu

for years afterwards. This article reviews the merits

the various techniques used by authorities when

resolving individual or widespread bank failures.



History suggests that leaders will only think the unthinkable on institutional reform once the challenge they face has really hit rock bottom. But history also suggests that we are wrong to think that the worst of the crisis is now past, given that many past banking crises have taken five years or more to unravel.

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...Green Shoots was unsubstantiated nonsense...


but presumably the recovereh is still on? there's something about, you know, the use of the definite article, calling it "the recovery" makes it clear which recovery you're talking about, not any old one but this particular one, meaning that it must exist if it has its own name that it's recognised by.

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