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"Iit looks like it is going to be an L – not a V or a U"

The forthcoming Group of 20 summit is going to be a disaster.
So it looks like it is going to be an L – not a V or a U.
I mean an L-shaped recession, one that starts with a steep decline, followed by very low growth for many years.
Wolfgang Munchau, Eurointelligence 09.03.2009

In a V-type recession, the recovery is instant. In a U-type, it comes eventually.
My guess is that we are currently somewhere in the middle of the vertical bit of the L,
but it is the horizontal bit that is the scariest.

History never repeats itself exactly, but we know from economic history that financial crises are surprisingly similar.
This looks like Japan all over.

Martin Feldstein, a former economic adviser to Ronald Reagan and president of the National Bureau of Economic Research,
estimated that US consumer spending would fall by $500bn annually, and construction spending by $250bn.
Against this combined annual $750bn shortfall, the current stimulus package is woefully inadequate.
In other words: we are looking at an L.

In that period, the US current-account deficit will fall sharply, as will that of the UK, Spain and several central and eastern European countries.

The bulk of the adjustment would be borne by the world’s largest exporters: Germany, China and Japan.

Globally, current-account deficits and surpluses add up to zero – minus some statistical reporting errors. You can do the maths.

If the US stops buying German cars, Germany will eventually stop making them.

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Kan man undvika recession i USA när man måste minska importen med 600 miljarder dollar?
Rolf Englund på Nationalekonomiska Föreningen 30/11 2004