Reality Comes to Wall Street
Michael Panzner

The evidence of an impending U.S. recession has been building for months, but most of the Wall Street crowd has been ignoring (or denying) it.

Still, there have been some exceptions. One is Merrill Lynch economist David Rosenberg, who seems unusually attuned to reality for someone on the payroll of a firm that is in the business of selling hopes and dreams.

In "Merrill: Recession Is Already Here," my friend Barry Ritholtz at The Big Picture highlights a report (and a chart) detailing Mr. Rosenberg's latest call on the economy.

Telegraph:

The US has entered its first full-blown economic recession in 16 years, according to investment bank Merrill Lynch.

Merrill, itself one of Wall Street's biggest casualties of the sub-prime crisis, is the first major bank to declare that a recession in the world's biggest economy is now underway.    

US Treasury Secretary Hank Paulson has admitted that the US economy faces severe challenges David Rosenberg, the bank's chief North American economist, argues that a weakening employment picture and declining retail sales signal the economy has tipped into its first month of recession.

Mr Rosenberg, who is well-respected on Wall Street, argues: "According to our analysis, this [recession] isn't even a forecast any more but is a present day reality."

That's a slight overstatement. What I believe Rosenberg is saying is that, based upon the unemployment data, a recession is now unavoidable.

Michael J. Panzner

When the stock market bubble burst in 2000, the collapse that followed wiped out over two-thirds of the value of the Nasdaq Index and decimated the hopes and dreams of millions of Americans. Now, imagine not one, but four such disasters looming on the horizon, all poised to erupt in a massive economic firestorm that will wreak widespread havoc in the months and years to come. The author identifies the most pressing financial risks we face today: First, a burgeoning tower of public and private debt wobbling precariously on a foundation of excess and fraud; second, a multi-trillion-dollar house of cards to which all Americans are exposed but few understand; third, a vast array of largely hidden government promises that will ultimately go unkept; and fourth, a retirement mirage that will leave millions enslaved to the workplace until the day they die.

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