Until David Rosenberg's recent research report is recovered (or is replaced by today's report), here's a roundup of recent media reporting in which Rosenberg appears. On CNBC yesterday, he said: "It’s pretty fool-hearted to believe that anything is going to reach any sustainable low until we put in a firm bottom on residential real estate valuation across the country."
He was brought in to CNBC to discuss his latest FT article: We expect to be in recession through to the end of 2009 at the earliest, even with the help from intense monetary and fiscal stimulus before a recovery takes hold in 2010. Sustained negative wealth effects from the slide in housing and equity prices will reinforce the uptrend in the personal savings rate. This, in turn, creates a highly disinflationary environment as job losses mount and pushes the unemployment rate up towards 9 per cent in the US in the coming year. What we probably need is a supply-side resolution, either creating regional land banks to ring-fence the inventory or a moratorium on new housing starts to prevent further corrosion in residential real estate values. Supply-demand divergences are likely to persist through 2009, in our view, and will require even further contraction in construction activity before balance is restored in the real estate market.
In a story for Reuters from earlier this week, he is quoted as saying: "The pullback in consumer and business spending in the coming year will likely be so big that even under the latest leaks on the size of the coming fiscal package, we think it will barely offset half the retrenchment in organic private sector GDP."
Rosenberg is apparently quite vocal lately: The [recent market] rally appears to hinge on a growing consensus view that the economy will start to rebound in the second half of 2009. And guess what? That view is almost certainly wrong, growls David Rosenberg, Merrill Lynch's North American economist, in reports published every day of the new trading year.
You see, he "growls" because he's bearish. Here's another: "The market may be focused less on the patient right now and more on the cure. This, in turn, means that the doctors better come up with something that is going to turn the economy around."
In the Monitor: The US has experienced a two-decade expansion of credit availability – punctuated in recent years by phenomena such as mortgage loans with no down payment, says David Rosenberg, an economist at the investment bank Merrill Lynch in New York. "Attitudes toward spending and debt have changed semipermanently," he argues in a recent report to clients. After a year in which $12 trillion in stock and real estate asset wealth were wiped off household ledgers, he says families will be focused not on borrowing but on boosting their annual saving back up to about 5 percent of income.
Here's a Bloomberg piece from a couple of weeks ago: Rosenberg predicts the carnage will cause a 2.5 percent contraction in gross domestic product in 2009, and sees historians calling the current era “GDII,” a reference to the Great Depression. “We came off a prolonged period of prosperity that was fueled by excessive leverage and an asset bubble of historical proportions,” Rosenberg said in an interview. “Either you believed that this was sustainable or you didn’t. I came to the conclusion that this was going to end very badly.”
The Sunday Telegraph quoted one of his reports: "This is a recession that may ultimately be labelled something a little different once we come out the other side - not unlike how the Great War ultimately was renamed World War I." "What we learn from recessions that are rooted in shrinking household balance sheets is that the process of de-leveraging, asset liquidation and debt repayment, tends to last years -- not months or quarters."
Taking a step back: In August, Merrill Lynch analyst David Rosenberg argued “that fashions are going to change ... We’re going to be living in smaller houses, driving smaller cars and living more frugally.”
Rosenberg expresses my sentiment exactly: "People would rather rent than take on a mortgage to service a deflating asset." Merrill forecasts another 15 percent housing price decline, as inventories remain double the rate of a normal market.
Rosenberg Roundup | 
