Vigilant Investor

Stephen Roach has another fine piece challenging the accepted wisdom of market experts with regard to the infinite resilience of the U.S. market to handle virtually anything. Roach has commented on excessive complacency among his peers previously. Now he questions if we can expect a clean handoff from U.S. consumer driven activity to one where U.S. businesses step up to the plate with their built up stores of savings, with the result that the economy will continue marching on.

Well, we’ve long questioned if you can call what our economy is doing as “marching on”. After all, U.S consumers have kept the economy just above water since 2001 by taking massive amounts of new debts. As they tighten their pocket books eventually, the hope is that businesses will in turn take over. But why would they? For what reason in an environment with ever increasing capacity, and for a consumer that has spent itself into oblivion?

Your guess is as good as mine, but I’d not be expecting an investment environment like 1990 all over again.

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