Rarely would I agree with the New York Times columnist and Nobel winning economist Paul Krugman. But, I have to agree with what he expressed this weekend, which was his belief that there is a possibility of a double dip recession in 2010:
I, however, am more certain that this will happen than Krugman. I personally don't see any depth to this recovery. What little growth that does exist is due to some smatterings of an artificial stimulus which are not organic or widespread. That can only create a short-lived recovery. The original Stimulus Package is well off it's target in creating jobs. In fact, the first package was specifically targeted to help state governments to grow which will ultimately get those governments in trouble. Those state's will continue to lose revenues and the already bloated deficits will only get bigger because they didn't make the hard choices needed to reduce spending. In addition, the new stimulus package -- nicknamed Cash for Caulkers -- will be another fruitless program.
Expect bank failures to rise next year to a level that is well above this year's 150 banks. Foreclosures are expected to be double this year's rate. The new and more disastrous bomb to hit the economy will be the default on commercial mortgages as the number of small business go under.
The important thing to note is that Paul Krugman is as far left and Democratic as they come. For him to predict another dip in the economy is more than just small talk. It's a big thing!