Suddenly Seeing Double

(Image source: Neatorama)

Although U.S. Treasury Secretary Timothy Geithner has assured us otherwise --

The risk of a "double-dip" recession is "much lower" now, U.S. Treasury Secretary Tim Geithner said [earlier this month].

Speaking on ABC's "This Week," Geithner said that with the recent ongoing economic growth, a second recession has become less likely.

"We have much, much lower risk of that today than at any time over the last 12 months or so," Geithner said. "Again just think of where we are. We are in an economy that was growing at the rate of almost 6 percent of (gross domestic product) in the fourth quarter of last year -- the most rapid rate in six years.

"So we are beginning the process of healing."

-- it seems that lots of people are suddenly seeing double:

"Double Dip Recession Looms: OECD Economist" (Yahoo!7 Finance)

One of the OECD's leading economists says there is a strong chance that the world's leading economies could quickly slide back into recession.

The deputy director of the OECD's financial and enterprise affairs, Dr Adrian Blundell-Wignall, has told ABC1's Inside Business program that the threat of a double dip recession remained because problems in the banking system have not been solved.

"There are many icebergs the ship has to negotiate before we're out of jail here. This is going to be a 10 year process, not a one year process," he said.

Dr Blundell-Wignall says many of the banks' problems have been hidden by changes to accounting rules and their most toxic assets have been shifted to the balance sheets of the big central banks in the US and Europe.

"That's basically taking the bad assets as collateral for loans from the central banks to these banks," he said.

"Well they have to be paid back and the question is if you put back this collateral back to them what would their situation be? That's why credit isn't supporting this recovery."

"JPMorgan's Dimon: Still Chance Of Double-Dip Recession" (Dow Jones)

J.P. Morgan Chase & Co. Chief Executive Jamie Dimon said he remained cautious about the economic outlook, and that a double dip in the economy is still possible.

"Double-Dip, Rate Spike 'Danger' Looms: Ex-Fed Governor" (CNBC)

"A double dip recession is still very much in the cards," Heller told CNBC.

"The big elephant in the room is the huge federal deficit, and that will eventually will force up interest rates. And as interest rates go up, it will kill both businesses and consumer recovery."

Therefore the economy is likely to weaken again, said Heller. He expects a spike in interest rates in the near future, which he described as the "danger" awaiting investors.

"Stiglitz Says Beware Double Dip" (TheStreet)

Joseph Stiglitz, Nobel prize winning economist and the author of Freefall, says the worst effects of the credit crisis may be behind us, but the American economy remains highly vulnerable to a double dip recession.

"Double Dip Recession Risk Is Near: CIO" (CNBC)

The global economy looks set to plunge back into recession as the sovereign debt pressure currently rocking Europe intensifies, Ashok Shah, CIO of London & Capital, told CNBC Wednesday.

"There's a risk of a double dip recession round the corner," Shah said. "Given the sovereign debt crisis that is going around the Mediterranean countries, this is going to put a lot of pressure on Europe."

The economic outlook for Europe is deteriorating very rapidly and that is adding to the factors dragging on the economic recovery, Shah told CNBC.

I guess everyone but Mr. Geithner forgot to put their (rose-colored) glasses on.

Comments

[Melinda]

Great post. BTW, I already have double vision, so the Mr. Bean picture was...amplified for me, to say the least! Pretty neat.

[austincompany]

I believe a few days ago I saw an estimate of a 2-3% GDP growth rate in the first quarter and a negative 1-2% in the second quarter. This was based on current sales and internet data - not unreliable government figures. I think these numbers will be be close and we will slip into negative territory in the second and possibly third quarters.

I believe this because I own and operate a small business. Our revenues did increase some what in the forth quarter of '09 (over the third '09 quarter) - though they were off more than 30% from the same quarter the year before. We are now seeing revenue slippage from a flat January to a decreasing February and possibly continual sliding into March. Our marketing people are detecting an increasing unwillingness of consumers to spend - much like the attitude of the same period of a year ago. Unfortunately, many businesses are now much weaker than they were a year ago with less cash on hand and lower prices - with no way to increase prices to increase cash flow or hiring.

These facts are being missed by the politicians in Washington. Instead of having meetings with business leaders on what to do to increase hiring and profitability, they are debating a health-care bill that is too expensive and bureaucratic. Instead of lowering taxes to increase business cash flow and confidence, the Bush tax cuts will be allowed to expire in December. This will become one of the largest tax increases in history. It is quite evident to me that our current government is completely out of touch with people like me (who hire people and provide a product and service to the American people). I actually feel like I am under attack - to get more taxes from me and the Company, change the way we offer health care to our employees, force the employees to unionize and make everything the Company does and offers "green". With that said, our Company has gone into defensive mode as we continue to downsize, ask our remaining employees to do more for less, cut office space and expenses, pay-down debt and save cash.

And since I often speak to other business owners, I can tell you with certainty that almost all others are doing the same thing. As we tell each other, "This party has only just begun..."

[sam]

Even a Republican I know can state with certainty that removing the Bush tax cuts is NOT a tax increase. It's a repeal, only, and a return to previous tax levels.

I have a different question for Republicans. George W Bush and his dimwit US Labor Secretary Elaine Chao, Mitch McConnell's wife, missed their monthly jobs creation target for 8 years, while corporations enjoyed tax cuts under Bush and at the same time established workforces in India and China. Twitmonkey Alan Greenspan and Elaine Chao have both chirped "health sciences" as the only jobs left in the US, the genuine demand side economy because of the aging population. The transition to health sciences is a long, long, long, slow, slow, slow process, 3-5 years minimally for training or re-training.

I have no respect for morons in the FIRE economy and the investment sector who thought mortgage payments could reset to higher monthly payments. Rick Santelli and the Chicago Mercantile Exchange, beloved by Teabaggers, are part of the problem because they engage in nothing but speculation; they drove the bubble in real estate and oil Have Republicans or Teabaggers figured out yet that given the jobs loss over 8 years under Bush, the US will need a minimum of 8 years of Extended Unemployment Benefits?

[austincompany]

With that thinking, an increase of tax rates back up to 70% would not be an "increase" only a "repeal" of the Reagan tax cuts. As facts go, since tax rates do tend to go up and down depending on the political climate, an increase in rates (regardless of the reason) is considered an increase in tax rates. Of course, the new progressive way of thinking is that we have to spend money to save money, the winters are colder because of global warmer and a tax increase is not an increase its only a repeal of a tax decrease. This type of double-talk belongs in the old Soviet Union.

And as to the employment record of the Bush era, I generally agree with you - though the Democrats are just as guilty under Clinton and democratic congresses. Quite frankly "sam", the time for blame on Bush, Clinton, Reagan or the man on the moon is over. As citizens, we must now demand action (any action) to help our economy moving again - regardless of party affiliation.