The big worry is that economists are now starting to say that a double dip recession is on the cards.
Gluskin Sheff economist and former Merrill Lynch economist David Rosenberg has told The Wall Street Journal that the odds of a double dip recession are "certainly higher than 50-50" and that the US economy could start contracting before the end of the year. The only answer, he says, is more programs focused on creating jobs. It's time to declare war on unemployment.
Economist Robert Shiller has told MarketWatch there is a more than 50% chance of a double dip recession while the world's most famous bear Nouriel Roubini came out on Twitter proclaiming that the risk of a double dip recession in advanced economies (US, Japan, Eurozone) has now risen to 40%.
Actually, you could argue that it won't be a double dip recession because America didn't get out of the last one. Rosenberg has argued that the recent GDP rebound in the last two quarters in the United States was not a recovery at all. It was all artificial, temporary growth lead by rising inventories and government stimulus.
So what would a double dip look like? There are some gloomy prognostications from 24/7 Wall St including the S&P 500 crashing, wiping trillions of dollars off business balance sheets and destroying retirement savings. If it happens, bank closures will reach catastrophic levels. We ain't seen nothing yet. And because interest rates in the US have been dropped to zero, the central bank has run out of ammunition.
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