Lots of talk now about the US heading into a double dip recession. The US should be so lucky!! We're actually looking at something a lot worse.
As we learn here, post war recessions in the US have lasted an average of roughly 10.5 months, compared with an official figure of 18 months for the 2007-09 decline. And with US unemployment at 9.1 per cent, you would have to say this last recession never ended.
Noted Harvard University economist Kenneth Rogoff says this particular recession is a completely different beast and it's likely to last a lot longer. "The phrase "Great Recession" creates the impression that the economy is following the contours of a typical recession, only more severe – something like a really bad cold,'' Rogoff writes. "That is why, throughout this downturn, forecasters and analysts who have tried to make analogies to past post-war US recessions have gotten it so wrong. Moreover, too many policymakers have relied on the belief that, at the end of the day, this is just a deep recession that can be subdued by a generous helping of conventional policy tools, whether fiscal policy or massive bailouts. But the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation. A more accurate, if less reassuring, term for the ongoing crisis is the "Second Great Contraction."
Indeed, what's happening now is what happened in Japan. Two decades ago, Japan's economy crashed and it's never recovered. It's economy hasn't grown and its debt levels are now the highest in the world. What's happening now is that the US and Europe are turning Japanese. The Economist says that like the Japanese, American and European political leaders refuse to face reality. The debate about debt is almost kabuki-like. The more they avoid reality, the harder it becomes.
In view of that, another recession would be the least of our concerns.
no comment untill now