Why read: To test the contemporaneous views I expressed four years ago, to observe similarities and differences then and now, and to determine if you agree with my current views.

Commentary then: On October 22, 2008, about one month after the Lehman Bros. bankruptcy, I commented on whether I thought the U.S. then was in recession. At that time I said:

• there is daily ongoing talk by any number of economists as to whether the U.S. is in recession. What are these economists thinking? Who is kidding whom? Irrespective of 'economic modeling' and historically based 'measurement of what constitutes a recession as economists assess such things', as a practical matter I can't see how the U.S. is not in recession based on:

  • continued drops in housing prices, foreclosure increases and housing sale stagnation;

  • reported lack of consumer confidence;

  • the extent of existing U.S. consumer credit; and,

  • bank credit extension issues (read 'Bail-out Strategy').

How can the U.S. not be in recession? Moreover, I believe it stands to reason that said recession will deepen before we see improvement;

• my sense is that many Investment Advisors, including those at the high end of the investment advisory spectrum, simply find it incomprehensibly that what is happening in the markets in October 2008 indeed is happening, and are firmly entrenched in the belief that all will be well once the current 'correction' has passed us by.

  Having regard to the fact that many investors rely heavily on these investment advisors, I consider these views unrealistic, frankly naïve in the extreme, and downright frightening. One of these Investment Advisors, who unflaggingly believed when the Dow was at 13,000 that the broad stock market indices would not erode materially.

  That same investment advisor has given me various versions of 'why he thinks this' over the entire 2006 - 2008 period. Most often, his reasons have centered on the argument that the market weighs all probability into stock prices and hence material erosion could not occur. He has been closed minded with respect to any other outcome, irrespective of the reasons and statistics given to him. In a conversation last week he was so discombobulated that part way through the conversation he began to talk in garbled sentences.

At October 22, 2008 I continue to believe retail consumers are the key to the economic puzzle and where we are headed economically. If we see continuing drops in consumer spending at the retail level in the U.S. and elsewhere, I strongly believe we will find that neither the U.S. Government or any other world government has enough 'fingers' to plug the holes that exist, and are threatening to develop, in the world economic 'dike'.

Commentary today: In summary, and with the benefit of four years of hindsight and experience, what I see today is very little different from what I saw in October, 2008:

• economists continue to worry about whether the U.S., not now in technical recession (being two consecutive quarters of negative GDP), is headed that way;

• U.S. consumer confidence, consumer credit, and whether or not new quantitative easing is going to be introduced by the Federal Reserve are still 'daily news topics';

• the U.S. has far more debt outstanding today than it had four years ago with no real end to even more National debt being accumulated (at the end of 2008 the U.S. cumulative National Debt stood at about $10.5 trillion. Today it stands at just under $16 trillion);

• the U.S. Federal Government is more polarized today than it was four years ago;

• U.S. monthly net trade deficits have been experienced in every month since October, 2008, there is no end in sight to that continuing monthly experience, and as a result the U.S. weakens each month against its trading partners;

• the financial equity markets, now more clearly 'trading markets' than they were in 2008, are riding high in an environment where world economic underpinnings are questionable; and,

• the U.S. consumer continues to be the engine that drives the American economy, in circumstances that today as contrasted with October, 2008:

  • U.S. official unemployment is higher now than it was then,

  • U.S. unofficial unemployment (which accounts for employable people who have removed themselves from the work force) is higher now than it was then,

  • youth unemployment is higher now than it was then,

  • house foreclosures are higher now than they were then,

  • house prices are lower today than they were then, and

  • the list goes on.

As I see things, what were holes in the U.S. economic dyke in October 2008 are now 'bigger holes', and there are more of them.