Lisa Simpson
Dec 17,2010
In: Foreclosure

Recovery Would Be Slow for Another Decade

Recovery would be slow for another decade.

New research conducted by economist Carmen M. Reinhart of University of Maryland has indicated that the economy of America would grow through a period of painful tardy growth and persisting high levels of unemployment for ten years or more caused by the 2007 collapse of the housing sector followed by the financial mayhem. Reinhart is an authority on financial crises’ history.

The analysis has generated hot debate during the yearly conference in Maryland sponsored by the Federal Bank of Kansas City. The venue of the symposium concluded on Saturday 28th August was Grand Teton National Park. It was attended by 110 bankers representing the Federal Reserve and economists.

In 2008 the symposium had taken place just prior to the collapse of Lehman Brothers causing the near shutting down of the financial system. In the 2009 conference the officials had lauded each other for having weathered the danger period.

But the recent report and figures on the performance of the economy has cast a pall of gloom on the gathering this year. Some of the economists in jeans and cowboy style boots exchanged views on the terrace commanding a majestic view of Mount Teton and nearby ranch training unruly colts.

The pundits were focusing on the research findings of Reinhart. It was emphasized by a Federal Reserve spokeswoman that the participants fund the occasion and it is not a load on the taxpayers.

Allen Sinai of Decision Economics who has been attending the symposium for many years said, “I’m more worried than I have ever been about the future of the U.S. economy. The challenge is unique – poor and diminishing growth, a sticky unemployment rate, sky high deficits and a sovereign debt that makes us one of the most fiscally irresponsible countries in the world”.

Reinhart had based her paper upon the study she had conducted together with Kenneth S. Rogoff of Harvard University for a book jointly authored ‘This Time is Different: Eight Centuries of Financial Folly’. Princeton University Press published the book in 2009. The co-author of the paper was Carmen’s husband Vincent R. Reinhart who was formerly monetary affairs director of the Federal Reserve.

The couple studied severed crises in the financial sector since the close of World War II. Also they scrutinized the stock market collapse of 1929, the 1973 oil catastrophe and the 2007 sub-prime mortgage implosion.

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