HolyCoast: The Coming Double Dip Recession
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Tuesday, March 03, 2009

The Coming Double Dip Recession

If you think all this federal spending, including the spending of wealth that hasn't even been created yet by our kids and grandkids, will end the recession, think again:
WASHINGTON (Reuters) - U.S. companies, consumers and communities may grow so addicted to government financial help that cutting them off could trigger another recession soon after the current one ends.

Between the U.S. Federal Reserve's trillions of dollars in lending programs, the $787 billion stimulus package and $700 billion -- and counting -- in bank bailout funds, no one can accuse officials of soft-pedaling their crisis response.

But there is increasing concern that when the flow of public money subsides -- beginning next year when much of that stimulus package is spent -- the economy still won't be strong enough to stand on its own.

"The stuttering attempts to repair the banking and lending mechanisms so far by the new administration suggests that by late 2010, the specter of a second dip into recession will be looming large," said Merrill Lynch economist Sheryl King.

This is pretty much what happened in Japan in the 90's. When the government spending slowed the economy still wasn't strong enough to pick up the slack. Massive debt will only exacerbate the problem.

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