Wednesday the 10th I attended a breakfast sponsored by West Coast Bank.
Their CEO Bob Snevis was the primary presenter and discussed what he sees on the economic horizon. His presentation covered a wide range of topics, but had a central framework from research done by two Harvard economists Reinhard and Rogoff. The paper is titled “This Time Is Different … Again?”
We’ve had unprecedented intervention both here at home and in worldwide markets by central banksing attempt to fend off crises from unsustainable debt loads. We’ve seen minimal sustained results in improved GDP’s or employment numbers across the globe. Many country’s are still mired in double digits for unemployment and US growth rates have slowed since 2010.
The primary theme, the deleveraging process we are going through, is more than just an economic contraction. It was a ‘Systemic event” and based on historical precedents may still have some time to run.
Reinhard and Rogoff say they’ve studied 224 historical banking crises around the world. Some are minor, but ours in 2007 and 2008 was the first “Systemic’ one experienced by us since the Great Depression. The US experienced “Systemic’ crises in 1873, 1893 and 1906, as well as 1929.
In 1873 and 1893 it took 5 years for recovery to be completed. In 1906 it took 6 years, and 1929 it took 11. So if we take an average, it would be roughly 8 years. We’re halfway through!
So with that in mind I didn’t publish this on Monday to avoid running your whole week.