Double dip recession, depression or just a slowdown? The questions remain…

Posted on September 30, 2011

US Durable Goods orders dropped while consumer spending and consumer confidence are down. Corporations are not hiring new employees or investing, despite sitting on 2 trillion dollars in reserves. The financial markets are once again concerned with the growing number of people still being fired, and home sales are down to record levels – due to high unemployment, increased foreclosures and tighter mortgage requirements.

It has just been reported that health care insurers are pushing premiums sharply higher, giving corporations an additional reason not to bring on new employees. Furthermore, if individuals are paying more for their health insurance, they have less discretionary money to support the recovery of the economy and help the comeback of small businesses…and that’s just the United States.

Japan and European countries are not only feeling the effects from the lack of growth in the US, but they are also experiencing major slowdowns of their own. The EU region is trying to deal with another run away crisis reflecting the unresolved European sovereign debt debacle and the instability and creditworthiness of the entire European banking system. It is a house of cards, built on sand. If one falls many others will likely follow as well.  Last week, the world’s major central banks had to arrange a three month dollar lending facility, to insure liquidity for these banks.  Despite this, Europe is still facing a financial meltdown in conjunction with an expanding economic slump.

The volatility and explosiveness of the major traded currencies, due to the uncertainty of a viable solution, only augments this instability in the financial markets.  If the EU leaders, the ECB, IMF, and the World Bank don’t get this right, you can forget about a double dip recession.  We could be facing a global depression.

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Joel L. Borshof



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