Transcripts

"Two Ways to Play"-Kevin Depew of Minyanville

SUSIE GHARIB: From Vs to Ls to Ws, there's been lots of talk about the shape of an economic recovery. Tonight's "Two Ways to Play" takes on recovery and re- sizing. Here's Kevin Depew of minyanville and minyanville's Kevin Depew.

KEVIN DEPEW, MINYANVILLE: Our economy is in a severe economic downturn and while most recessionary shocks of this type have been followed by quick, V-shaped recoveries, this one has been so deep and painful that the majority of the economists aren't looking for anything more than a mild recovery at best. And that's the problem. When is the last time the majority of economists were correct? The thing is, we've been here before many times. Yes, the economy is in bad shape, but to say the eventual recovery will be weaker than usual is to make the classic Wall Street mistake of saying, this time is different. It's never different. It's true, I don't believe in a V-shaped recovery and here's why. Beyond the headwinds of private sector de-leveraging, high unemployment and further deterioration in credit quality still to come, I think there's a more profound test facing this country and that's the enormous resizing of the American economy. By resizing, I'm referring to the need to bring U.S. economic capacity down to a much lower level of demand. Choose just about any industry in America and you will see too much capacity. Our debt excesses enabled it and now our debt destruction will require the elimination of it.