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June 08, 2010
A Double Dipper?
Chairman Bernanke says no double dip recession. Sort of. Federal Reserve Chairman Ben Bernanke said Monday he is hopeful the economy will gain traction and not fall back into a "double dip" recession.Broader financial contagion? IF? There is no IF about it. It is just a matter of when. And did the Chairman mention the China Real Estate Bubble? No he did not. And something else he didn't mention while we are at it. Housing may go into a double dip. mortgage purchase applications are down nearly 40 percent from a month ago to their lowest level since April of 1997. Yes, you can argue that a larger-than normal share of buyers today are all cash, but those are largely investors.The mentality seems to be "If we just hold on there are better days around the corner." But what if that is not true? What if they are cooking the books? The Bureau of Labor Statistics reported on Friday that employment in the United States grew by 433,000 jobs in May, but that those jobs included 411,000 temporary workers hired by the Census Bureau.So let me answer the question: what if better days are not around the corner? And the answer is: a second crash. A Double Dip Recession. This book on the Great Depression was pretty popular for a while: The Forgotten Man: A New History of the Great Depression The reason I bring it up is that there were lots of dips (rises and falls) in that depression. Could we be repeating some of the same mistakes? Why not? Cross Posted at Power and Control posted by Simon on 06.08.10 at 04:14 PM
Comments
Heh, we both linked the same book, almost consecutively. TallDave · June 11, 2010 11:59 AM Post a comment
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We are making some of the same mistakes that created and sustained the Depression.
Business investment is being crowded out by runaway government spending. Worse, the business environment has become so unpredictable do to government changes and scapegoating by the President, that businesses simply are not investing capital in any long-term plans for expansion. We are simply trying to weather the storm until adults take over again.
The fact that taxes are going way up next year will make this year look okay - as companies and individuals move income into this year. I think 2011 is going to be a disaster and unfortunately Arthur Laffer agrees.
http://online.wsj.com/article/SB10001424052748704113504575264513748386610.html