I really like the comments by Sandler O'Neill's Chief Strategist Robert Albertson in this week's Barrons interview.
Many such articles consist of the subject reminding people that he predicted the present dire state, and warning that it will get much worse. While Mr. Albertson also seems to have also made some early and accurate calls, I think his outlook is much more realistic and valuable than most.
His most important point is that the government's attempt to stimulate consumer spending is a misguided approach to the problem. The economy needs to delever, and pumping money in an effort to "jump-start" consumer spending ultimately won't help the deleveraging process. The solution is patience-- patience to work through the delevering process as consumers and institutions pay down debt and rebuild savings. Albertson thinks that's a "two or three-year process."
other interesting points:
Don't forget that the banking system earns money, so it can pay down some of the embedded losses through future earnings. Also, while many assets were clearly overvalued in the past, some are just as mistakenly undervalued now (some securities that are current in payments and likely to remain so are being marked down to 30 0r 40 cents on the dollar).
Similarly, we run the risk of being just as wrong on the downside as we were on the upside. Three years ago, few thought that housing prices would ever peak. Now many believe that they'll never bottom.
Don't count out the emerging market economies, particularly Brazil and China. Their domestic markets are huge and growing, and while they have certainly been slowed by the worldwide recession, they are becoming increasingly independent of the United States. We tend to view the world through the lens of our own experience, but it's possible that worldwide demand for commodities and raw materials could continue to grow despite significant weakness in our country.
Bottom line: we'll get through this, but it will take time.
I was able to start a position in PG at 50 (and a few pennies) last Thursday.