As the recession ends and faltering growth begins, that catch phrase keeps popping up among pundits and economists - even if none of us really understands its ramifications. PIMCO Managing Director Bill Gross gives it a shot in his September essay:
To us at PIMCO, means that if you are a child of the bull market, it's time to grow up and become a chastened adult; it's time to recognize that things have changed and that they will continue to change for the next - yes, the next 10 years and maybe even the next 20 years. We are heading into what we call the New Normal, which is a period of time in which economies grow very slowly as opposed to growing like weeds, the way children do; in which profits are relatively static; in which the government plays a significant role in terms of deficits and reregulation and control of the economy; in which the consumer stops shopping until he drops and begins, as they do in Japan (to be a little ghoulish), starts saving to the grave.
Gross also believes that investors "should continue to anticipate and, if necessary, shake hands with government policies, utilizing leverage and/or guarantees to their benefit." All fine and good, but there's a sizeable plurality in this country that wants nothing to do with the "new normal." They're only interested in going back to the old normal ("Don't take away my health care plan!"). They're angry that the world has done them in and is now passing them by. Many of them, still years away from retirement, are stuck in-between - sitting ducks, I'm afraid, for demagoguery or worse.