Decades Of Pain Ahead

The US Economy is in a massive consumer debt deleveraging cycle, anything to the contrary is borderline nonsensical.

Albert Edwards from SocGen has an excellent report out on the flow of funds data.

http://www.federalreserve.gov/releases/z1/Current/z1.pdf

Everyone in the media is stating that this report is further evidence of an impending US Economic recovery. To which MR. Edwards says Bullshit.
I tend to agree.

http://ftalphaville.ft.com/blog/2010/03/16/176396/the-recovery-cannot-be-sustained/

Household Leverage:

"With nominal GDP actually managing to inch up some 0.8% in the year to Q4 2009, the economy managed its first baby step along the long and winding road to normality, with US debt dipping under 350% of GDP. Household leverage has returned to 94% from its peak of 96% in both 2007 and 2008. But consider this: at the peak of the Nasdaq bubble, household leverage was just shy of 70%. There is a very, very long way to go."

Non Financial Debt:

"In the case of the non-financial debt/GDP ratio, it remained at a record 240% high at end-2009. We need to “lose” some 60% of GDP worth of debt to get back to where we were at the peak of the Nasdaq bubble (I use this reference point for no other reason than these levels seem obscenely high relative to history at that time). Either way, investors should accept we have a long hard slog ahead."

I have stated that we are in the early innings of a great balance sheet recession. The debt simply needs to be paid back and paying it back will kill the US Economy for the next 20 years.