by John Browne, Senior Market Strategist, Euro Pacific Capital | February 25, 2009
Everyone has been guilty, at one time or another, of ignoring a cold. Though you knew you were sick, you may have kept working hard, playing hard, and staying out late. Not until you were bed-ridden did you start drinking orange juice and taking your health seriously. The U.S. economy appears to be following a similar trajectory. We have consistently ignored serious symptoms to the point where our economy is nearly a terminal case.
After ignoring and downplaying the inflating credit bubble for much of his first two years in office, this week Fed Chairman Ben Bernanke emphasized, in testimony before the Senate Banking Committee, that no economic recovery would occur unless the financial system was restored. He was quite correct in his belated diagnosis. His prescriptions, on the other hand, are much more dubious.
As the evidence gathers, it looks as if Bernanke and his new colleagues in the Obama Administration are becoming increasingly desperate. The current recession is deepening at an alarming rate. In fact, it now appears to be diving fast towards the depression that we have ...