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I just posted this over on the MDP Boards. After I read the last thread, I figured we could all chew on this for a while. It's about the most optimistic view on the economy I've heard in a while.

This was the title of a conference call that I sat in on today. It was put on by one of the largest banks (and major TARP recipient). I figured that I would post my notes here for everyone. These aren't necessarilly my points of view, just my notes.

In a word, NO, we are not heading for a double dip for the following reasons:

Global Economy
The massive stimulas and monetary policy responses to this economic downturn were in proportion to the scope of the crises.

Inventories are steadying to match the decrease in sales. According to the call this is consistent with past economic declines and show that world economies have reached a bottom.

Trade between countries is picking up again. During the worst of the crises, there was a major deterioration in world trade as every country tried to look out for itself first & global trade basically evaporated.

US Economy
Job market will lag for between 12-18 months into the recovery. They expect unemployment to start to improve again during the first quarter of 2010.

Consumers will only gradually increase savings rate so consumption, now that we are through the initial shock, will pick up. According to the presenters, the US only needs to increase the household savings rate to 8% in order to reverse all of the (scary) debt trends that have been prevalant.

US Economy - Danger Factors
Commercial Real Estate crash. However, the presenter pointed out that there has already been one quarter of disasterous results in the CRE sector and the banks have been able to absorb that.

State and Local Governments. This was a pretty confusing explanation that basically came down to: State and local governments need more money - do they raise taxes or can they get away with issuing bonds.

European Economy
Stimulus money is getting into the real economy because, unlike the US, it is not hung up in financial entities, since they are generally in good shape.

With some exceptions (Ireland & Spain were mentioned), there is no general real estate problems in Europe.

Europe already has a healthy savings rate

Europe has been hurt out of proportion by this downturn.

Disclosure: At this point I'm going by memory - since we don't do business in Asia, I didn't take notes.

Stimulus money was simply meant to absorb the shock of having exports dry up, which it succeeded in doing.

Historically, once there has been a capital infusion in Asia it takes about 14 months to see an increase in consumption due to people being more secure & getting higher salaries (presenters said wages were increasing at about a 14% annual rate in China), so we'll be seeing Asia's consumption increasing soon.

Q&A Session
One interesting exchange only. An attendee stated that the presenters sounded like the "Obama cheerleading squad" (his words, not mine) and he didn't necessarily think the US had a rosey future. The presenter responded that in the long run (which from this bank I'm learning is anything over 6 months or so) he agreed that the US economy was in for a long, slow, painful re-growth process and would likely lag behind much of the rest of the world in recovering.

Who hopes someone will find this a worthwhile read
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