Jim Grant has a long and envied reputation of being right. His lengthy article is detailed and persuasive. Most of all, I like it because it is well-grounded in history and facts.
One of his key points relevant to today’s cycle is that the bigger the fall, the bigger the recovery. He doesn’t quite promise a v-shaped recovery, but comes close to it. His point that the decline contains the seeds of the recovery is compelling. Those seeds today include inventory replenishment, bargain-hunting at today’s lower prices, and fiscal and monetary stimulus.
It is getting harder and harder to argue this economy has another leg down what with the stock market bounce-back, the clear green shoots in the housing market, and the repair of credit markets evidenced by narrowing spreads.
