Reflections on This Recession, Deleveraging, and Media Pundits

My Sunday post featured a video clip, and accompanying text, on a Yahoo finance webpage. In the clip, retail consultant Howard Davidowitz gives a sort of unvarnished, 'no punches pulled' analysis of consumer behavior, government policy, and the banking sector. Despite his billing as a 'retail' sector guy, I fully agree with his take on the other topics.

As I wrote that post Sunday morning, a conversation I had with a friend on Thursday evening came back to me. The friend is a young man with no appreciable personal experience of severe recessions. Thus, when he asked my thoughts about recent equity market gains and the economy, I found myself focusing on the rarely-discussed effects of deleveraging.

The many bullish comments from guests and anchors on CNBC have become almost tiresome. As I viewed Davidowitz's clip, it dawned on me that he didn't seem to have a sense of context about his remarks. That is, he seemed to be speaking rather candidly, and only to the interviewer. In contrast, I realized, many pundits and on-air anchors on CNBC seem almost afraid to give anything but optimistic, or at least, non-negative comments about economic recovery.

And if this were a normal recession, in a normal context, we might, indeed, be seeing the early signs of a recovery.

But, as I explained to my young friend, this is no normal financial/economic situation. We are grappling with a capital deleveraging unseen since before WWII. Almost nobody who was an adult then is now alive, or, at least, going on the record about our current economic plight.

When I heard Larry Kudlow declaring the recession over earlier this month on CNBC, it seemed preposterous. That's because I think he is totally ignoring the context of a severely deleveraging global economic situation. The usual signals of economic renewal probably don't mean the same thing in the current context.

And when people like Kudlow are on a widely-watched medium, they seem to get, well, tepid and tentative about any negative remarks. Davidowitz's raw energy, attitude and humor contrasts so vividly with the rather stolid, self-important comments one hears on CNBC these days.

That's why I'm steadily losing respect for and faith in most of the editorializing I hear on major business media. Everybody seems to feel personally responsible to not be too negative, even if it's sustained by facts.

I remain unconvinced that a sustainable economic recovery has now begun, that deleveraging has ceased, or that the effects of both the recently-begun recession and damage to global capital markets have reached their worst, and are poised to imminently reverse. If nothing else, Howard Davidowitz's remarks provide some fairly specific reasons why I believe this to be true.