Stephen Roach, chairman of Morgan Stanley Asia, sees 2009 as a year of �severe global recession,� inflation, and declining earnings.
�The key call investors will have to make is not so much on the shape of the recession, but what the contour of the subsequent recovery is likely to be,� Roach told the Financial Times.
The markets will likely bet on a normal recovery, especially considering the huge amount of money the United States and European governments are pumping into their economies, Roach said.
�Hope springs eternal that a relatively short-lived downturn will be followed by a pretty solid U-shaped recovery,� Roach said.
Yet Roach isn�t buying that idea.
�To the contrary: my strongest out-of-consensus idea for 2009 is a realization that the world is now facing a multi-year slowdown,� Roach predicts.
�Any recovery in 2010 will be tentative and anemic.�
Roach is betting that the American consumer is finally completely out of the game, although he doesn�t discount a short-term stock rally. A very slow U.S. recovery will keep the rest of the world waiting for recovery as well, he warns.
Two well-known economists know predict unemployment in the United States of greater than 11 percent � a number which would mean up to 7 million more people out of work. The November jobless rate, the latest data point available, was 6.7 percent.
http://moneynews.newsmax.com/streettalk/roach_global_recession/2009/01/06/168201.html
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