How Long Will the Recession Last?

According to Intrade, the market is pricing the odds of a recession at 67%. 59% of American consumers already believe we’re in one along with Goldman Sachs and Merrill Lynch. Only the economists are a bit behind at 49%…

So maybe a better question to ask would be how long will the recession last?

According to a paper co-authored by Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University, the US recession bears striking similarities to five other large financial crisises and the US would be lucky even if it has a recession… As long as it won’t last too long… The paper uses a lot of graphs to really hammer in their point, i.e. the U.S economy is doomed, and is a very convincing argument.

Is the US Subprime Crisis so Different?

The other article that foretells imminent disaster is one written by Nouriel Roubini, professor at the Stern School of Business at NYU. Roubini’s analysis is a twelve step scenario towards a global financial meltdown. Its basically a chain effect. The housing market will crash, followed by the mortgage market, and then followed by consumer credit defaults, corporate defaults, bankruptcies, a lack of liquidity and result in the largest recession over the last quarter of a century.

The Risking Risk of a Systemic Financial Meltdown
The Twelve Steps to Financial Disaster

Its all looking rather ominious. From a very selfish viewpoint, I’d have loved a nice short recession simply because I’d be looking for a job in a bull market. Unfortunately if both of these articles prove correct, it’ll still be a difficult market when I’m graduating. Perhaps it might be a good idea to hedge my job prospects by shorting the financial sector…