Double Dip Recession or Depression?

The global economy continues on a downhill trend despite two years of severe austerity measures, increased taxation and low interest rates.  European countries such as Italy, Greece and Spain are relying heavily on being bailed out or face bankruptcy.  In the UK, we blamed the snow last December and April's Royal wedding for our GDP nosedive, although the Royal wedding was meant to boost our economy.  The US indecisiveness last week in agreeing an economic policy and now the stock market turmoil. Added to that we have the US rating downgrade by Standard and Poor from AAA to AA+.  Economists are calling for more austerity measures and further reduction in government spendings.

Jeff Macke, citing Peter Schiff, writes  "The Depression [in the wake of the financial crisis] was temporarily interrupted by a bunch of stimulus which ultimately weakened the economy further,"  He further suggests that  the government's response of stimulating is, probably going to lead to "a complete economic collapse."  I would agree that this was a knee jerk reaction in the sense that while the governments were trying to stimulate the recovery they were also stifling and strangling it by severe cutbacks in the public sector and tax increases.


We blame the governments for interrupting the economic growth because they are borrowing more.  We make lame excuses that there are no jobs because there is no recovery.  The problem is that there is no recovery because there are excessive job losses both in the private sector and the public sector.  In the private sector because there is insufficient stimulus, lack of funds or lack of investments because the investors are being encouraged to invest in China (as per Todd Schoenberger) and India.  In the public sector the belief is to improve the economy, as per eminent economists, we have to reduce public spending.  In addition, we are paying higher taxes either directly or indirectly.


The pitfall is no jobs, no jobs and no jobs, therefore, no recovery, no recovery and no recovery.  And down in the dark hole of depression we disappear unless somebody is brave enough to take the bull by the horn and stop the rut.  Europe is in disarray; the European Union is not working as one. Each country forming the EU is trying to protect itself. Germany and Angela Merkel is strong but for how long? One person needs to stand out and let's hope it's OBAMA.  Go Obama go, let's see what you are made of?


Good Bye and Good Luck until the next time.