[quote=EconProf]Jim Grant has a long and envied reputation of being right.[/quote]
Actually, I’d argue that Jim Grant has “a long and envied reputation of being a great writer and a great thinker.” I don’t think many folks would argue he’s been “right” from a timing perspective very often – that includes himself, by the way, as he’s a very self-deprecating guy. For example, he wrote a bullish article on AIG about two years back as its stock was coming down that’s obviously turned out to be a black eye. Having said that… he has a great sense of history and of monetary policy and I think he’s generally right… eventually. So, I kind of ignore his short-term prognostications and focus on his long-term forecasts which tend to have some value. He’s been generically bearish on credit for about 20 years now. So, he was only about 18 years early. But I still love his insights and writing.
[quote=EconProf]His lengthy article is detailed and persuasive. [/quote]
I actually found the article to be somewhat persuasive, but short on detail. It would not surprise me to see a short period – maybe a couple of quarters or a year – where we see a sharp rebound in real GDP. But, the long-term problem – too much debt – is going to take a LONG time repair.
As you know, EconProf, GDP=C+I+G+netX. As we’re paying down the mountain of debt we’ve got, C & I must, by mathematical definition, suffer. And eventually G will suffer too. And given the state of the rest of the world, it’s hard to see net exports helping out a lot. So, yeah, while we could conceivably see a few quarters or a year of 3%-5% real GDP growth as part of a reflexive economic rebound, the next decade doesn’t look very good. I’ll be very surprised if we see greater than about 1% real GDP growth over the period. The math behind resolving our debt issues is just too daunting.
