CHESSNOID

This is the latest Meredith Whitney video I could find with her assessment on the current economy.  I have to agree with her.  She has been accurate with her previous forecasts and based on what she says here it looks like more bad news up ahead.  Her main examples of tight credit with credit cards like American Express, Discover, Visa and MasterCard all reducing credit lines or closing accounts will have long term negative effects.

Nothing has changed fundamentally in the last year.  The banks are not stronger nor are they managed better.  Foreclosures are still being added to the inventory faster than they can be resold and unemployment will continue to stay in the double digits.

CNBC:

“I have 100 percent conviction that the consumer is not getting any better and there’s not more liquidity,” Whitney said. “So if everything touching the consumer is going to be represented in the S&P, then the S&P is going to be under pressure.”

The solution, she said, is for the government to take proactive steps that will give consumers more money to spend.

“I don’t think you can cut taxes enough to stimulate demand,” Whitney said. “For a 2010 prediction, which is so disturbing on so many levels to have so many Americans be kicked out of the financial system and the consequences both political and economic of that, it’s a real issue. You can’t get around it. This has never happened before in this country.”

I think when you have analysts like Whitney worried about the overall economy, then we are in for stormy weather.  Even though her specialty is the financial industry, she recognizes that effects the rest of the economy more so now than before.