This is NOT a business cycle: this is a one-time reversal of twenty years of inflation of the household balance sheet. An aging populationneeds a 10% savings rate (at least) to meet minimum funding requirements for the biggest retirement wave in US history (comparable to Japan’s retirement wave during the “lost decade” of the 1990s). With 17% effective unemployment, many Americans are dis-saving, after a $6 trillion shock to home equity.

10) There is no recovery at all in Europe. European growth ground to a halt during the fourth quarter and German busines confidence unexpectedly fell in February.

9) China won’t collapse, but government efforts to stop overheating by raising reserve requirements make clear that the world’s second-largest economy can’t be the locomotive for world growth.

….read 8-1 HERE