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Is economic stagnation "better" than V-shaped recovery?

May 18th, 2009 · No Comments

I have to say that I’m puzzled by the recent movement in the stock market. By all indications that our economy is not getting better. I’m still not convinced that our government is doing the right thing, and the bail-out packages are the right moves.

I’m not shorting any stock. So, I’m not negatively affected by the upward movement of the stock market. But, I’m very concerned about the long-term health of the U.S. economy. We’ve been feeling deep economic pain. We’ve taken some pain killers that temporarily reduced the pain. But, the serious illness is still there. The root cause is not cured at all.

It is not my intention to start a government conspiracy theory here. From political standpoint, wouldn’t it be better for the government to have a U-shaped stagnation than having V-shaped recovery?

Think about it — if we choose to have a v-shaped recovery, we would have taken the bitter medicine, which means we’d let the banks and auto companies fail, and have possibly Great Depression 2.0. More people will suffer, but the recovery would be faster.

Politically, it’s just not feasible. Politicians care about votes and elections. More and more, I think we’ll have a period of stagnation that is similar to Japan’s "lost decade". It’s time to plan career and business strategy accordingly.

Full disclosure: I’m neither republican nor democrat. I voted for Barack Obama in the last election.

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Tags: Beat Recession

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