We will see–if there is ever a balanced budget.

If industrial production increases as expected in July, “It will be a sign that this recession is coming to a close,” wrote economists for Bank of America’s Merrill Lynch.

What a simplistic and narrow view type of statement. Is it really that simple?

If I’m not mistaken the first quarter of negative growth was 4Q ‘07. Then we had 2 quarters of positive growth on the heels of the $300 billion that was shipped to mailboxes, then 4 straight negative quarters.

$2 trillion in deficit spending and 0% interest rates, which produces a quarter of minimal growth and production does not mean that problems are solved. It means that the life support has helped the freefall and was enough to stabilize at these levels. I would hope that much money could give us some form of stabilization and growth.

I want to know what the economy does when the budget is balanced and rates are not at bubble creation levels. If the economy grow as rates rise and deficit spending is shrunk, then and only then will I believe this recession/crisis is coming to a close.

okinvestor

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