Abelson and the Aftermath Paper

In his latest Barron's piece Alan Abelson picked up and commented on, a little late but we'll cut him some slack (better late than never and all that), the fast-becoming classic Rogoff and Reinhart paper titled The Aftermath of Financial Crises.

So it's fair to assume the notion that we will have a long, protracted and painful recession is in the public now. Granted, Abelson has a well-deserved reputation as a congenital bear and his detractors are prompt to say about him that a broken clock is bound to be right at some point. However, he's been right on the money for the last couple of years and people are definitely paying attention to what he writes about.

From a contrarian point of view therefore, now that the possibility of real ugliness has seeped into the collective unconscious, we would deduce that any new data that even hints at a less than extremely ugly economic future should power some kind of rally. The question in my mind though is that I have the gnawing feeling that even those who have read and accepted the conclusions in the Aftermath paper still hope for something less painful unfolding. Others actually believe the coming stimulus package will thwart the bleak predictions in the Rogoff and Reinhart study. The spirit of hope that has engulfed the nation lately might thus, for better or for worse, foil any contrarian analysis.