William Katz:  Urgent Agenda

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UNMINCED WORDS –  AT 7:52 A.M. ET:  Morgan Stanley holds nothing back in a sharp warning about America's, and the world's, possible economic situation in 2013.  From CNBC: 

The global economy is likely to be stuck in the “twilight zone” of sluggish growth in 2013, Morgan Stanley has warned, but if policymakers fail to act, it could get a lot worse.

The bank’s economics team forecasts a full-blown recession next year, under a pessimistic scenario, with global gross domestic product (GDP) likely to plunge 2 percent.

“More than ever, the economic outlook hinges upon the actions taken or not taken by governments and central banks,” Morgan Stanley said in a report.

Under the bank’s more gloomy scenario, the U.S. would go over the “fiscal cliff” leading to a contraction in U.S. GDP for the first three quarters of 2013. In Europe, the bank’s pessimistic scenario assumes a failure of the European Central Bank (ECB) in cutting rates and a delay of its bond-buying program.

But the bank says investors should also be nimble, in case policy action is “convincing and decisive,” leading to a big uptick in growth.

“Importantly, investors should keep an open mind and be prepared to switch between the scenarios as policy developments unfold.”

The bank’s most optimistic scenario forecasts GDP growth of 4 percent in 2012 compared to around 3.1 percent this year.

Morgan Stanley isn’t alone in warning about a recession next year. Noted bear, Nouriel Roubini warned on Monday that certain key developments would exacerbate the downside risks to global growth in 2013.

COMMENT:  Even a growth number of four percent isn't particularly impressive.  Reagan reached seven percent.  And if things go in the other direction, you may be sure that the lapdog media will 1) blame BUSH (!!!!) and 2) announce that people need the government more than ever. 

Most Americans might well believe it.  Consider the recent election.

November 26,  2012