Understanding The “Kitchen Sink Economy”

Barry Ritholtz has a great blog: The Big Picture. He describes it as "Macro perspectives on the capital markets, economy, geopolitics (with a dash of tech, film & music)."

How can you not like that?

One of his better posts is called Understanding The “Kitchen Sink Economy”:

The post-crash era [after the tech bubble burst] saw massive government stimulus: Personal income taxes were cut, deficit spending soared, interest rates were dropped to half century lows, money supply increased dramatically, two wars were prosecuted, corporate dividend taxes were slashed, capital gains taxes were cut, capital expenditures were granted a special accelerated depreciation. Massive stimulus from the government included “everything but the kitchen sink.”

Now, that stimulus is fading. The most vibrant sector of the economy – the real estate complex – is slowing. Increased energy costs are a drag on the global economy. Interest Rates and taxes have been going higher. Earnings momentum, as measured on a year-over-year basis, has been slowing for 5 quarters. Hiring remains anemic, CapEx is unimpressive, LEI are softening, GDP is fading.

The market has begun recognizing that the first post-bubble expansion was premature. It has failed to develop organic momentum of its own. Without further stimulus, this cycle will more likely than not end over the next 2 or 3 quarters.

I blogrolled him. Check him out.

P.S. Even if you don't read him, tell me: who are the greatest American R & R bands? These have to be bands, not backups to a solo act and they have to be American and they have to play Rock and Roll.

Who? Tell me.

(HT to The Cunning Realist, another great read)