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We Are in a Toilet-Shaped Recovery: Roche

CNBC.com
Wednesday, 23 Sep 2009 | 4:58 AM ET

Analysts have described the U.S. economic recovery in many shapes and sizes, be it L-shaped, W-shaped, or even shaped like the Nike swoosh symbol.

But David Roche, global strategist at Independent Strategy, added a new wrinkle on CNBC Wednesday.

The Shape of Things to Come
The U.S. economic recovery will be hard without a pick up in real investment and final demand, says David Roche, global strategist at Independent Strategy Limited, speaking to Karl Eggerss of LafferFrishberg.com and CNBC's Martin Soong.

" You want to know my shape? My shape is a toilet shape," Roche said on "Squawk Box Asia." "Because I think that's where 14 percent of (gross domestic product) in terms of spending and central bank help will disappear."

A lot of the money spent by governments should not have been spent at all, Roche said.

Roche predicted there would be a short-term recovery, but afterwards demand would peter out because the problems that caused the credit crisis were not addressed.

"The problem about the recovery is that none of the problems that caused the credit crisis have been resolved," he said. "Household leverage is worse than before, banking leverage is worse than before. The bad debts problem have not been dealt with and we have a new level of prophesy and leverage which is the government."

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