Jack Rasmus

In a few more months, it will be the fourth year since the banking crash of September 2008, the election of Barack Obama, and the deep recession and weakest recovery on record that followed. After nearly four years—and more than $3 trillion in tax cuts and spending by Obama and Congress and $9 trillion in free money given to the banks by the Federal Reserve—the U.S. economy has still not been able to generate a sustained economic recovery. Since April 2012 key sectors of the US economy are once again weakening. And with $2.2 trillion in sequestered government spending reduction scheduled to hit the economy beginning January 2013—plus the likelihood of trillions more in additional spending cuts to occur immediately after the November elections, the Eurozone’s deepening crisis, and China-India-Brazil all headed for a hard landing—the prospect of a double dip recession in the U.S. is increasing.

The prediction of double dip was first raised by this writer a year ago, in Z magazine’s June 2011 issue. It was reaffirmed in this writer’s latest book, ‘Obama’s Economy: Recovery for the Few’, completed November 2011 at a time when pundits and mainstream economists were all forecasting a robust rebound of the US economy over the winter, and repeated once again in the writer’s article, “Economic Predictions 2012-13” in the January 2012 issue of Z magazine. The double dip would most likely come in early 2013, it was argued, but possibly even earlier if the Eurozone and global economy experienced a second major banking crisis beforehand.

To quote from the January 2012 publication, “The first quarter of 2012 will record a significant slowing of GDP growth once again. Should the Eurozone debt crisis escalate in the second quarter of 2012, the U.S. economy will weaken further. It may even slip into recession if the Euro crisis is severe. More likely, however, is the scenario of an emerging double dip recession in early 2013, when deficit cutting by Congress and the Administration intensifies.”

The forecast of a double dip was, and remains, predicated on three factors: first, the continuing inability of Obama and Congressional policies to generate a sustained recovery. Second, a growing financial crisis and deep recession in Europe spilling over to the U.S. And third, a consensus decision and action by both political parties, Republicans and Democrats, immediately after the November 2012 elections to cut spending by several additional trillions of dollars, over and above the $2.2 trillion already scheduled to begin taking effect January 2013.

The ‘grand bargain’ revived immediately after the November elections will most likely include some token initial spending for a year, more stimulus in the form of even more tax cuts for business plus more subsidies for the states, a continuation of the Bush tax cuts for another decade in most part that will cost over $4 trillion more in deficits, further cuts in the top tax rate from 35% to 25% for corporations and the rich, and, to pay for it all, massive cutting of Medicare, Medicaid, Social Security disability, education, and just about all other areas of discretionary spending, except for defense where cuts will be reduced from the $600 billion already projected in the sequestration package of 2011.

So far as the short term of the past three years is concerned, none of the Obama administration’s three economic recovery programs introduced 2009-11 have been able to result in a sustained economic recovery. Each has led, in succession, to three economic ‘relapses’—where the latter is defined as a dramatic loss of economic momentum across key economic sectors of the economy following short, modest and temporary rebounds. At mid-year 2012 the U.S. economy consequently now finds itself in the midst of the third such relapse, following a third (shortest and weakest) rebound that occurred November 2011-March 2012.

With the U.S. third rebound now clearly showing signs of dissipating at mid-year 2012, and the economic crisis progressively growing in scope and intensity across Europe, two of the three strategic preconditions for double dip are thus being realized. The third precondition—the aforementioned immanent turn by U.S. political elites of both parties to still more spending cuts in addition to the $2.2 trillion already scheduled this November-December—appears increasingly likely. And should that occur, along with the first two preconditions already well evolved, a double dip is assuredly on the agenda for 2013.

This writer’s 2011 forecast of a double dip in 2013 is not unique, but is shared by others, including economist, Nouriel Roubini, financial George Soros, and the Economic Cycle Research Institute (ECRI), the latter of which has had the distinction of predicting the beginning and end of the last two recessions in 2001 and 2007-09 and has been calling a recession even earlier in 2012.

This past spring, 2012, another even more conservative source has added its voice to the prediction: the Congressional Budget Office. The CBO predicts recession in 2013 should just the $2.2 trillion in sequestered spending cuts agreed by Congress last August 2011 start taking effect in 2013. The $2.2 trillion cuts alone would be sufficient, according to the CBO, to drive the economy into recession again in 2013. Add to this the already weakening US economy and the Eurozone crisis, the scenario of double dip is therefore even more likely.

Politicians of both political parties have failed miserably over the past four years to deal with the fundamental causes and the resulting consequences of the economic crisis that erupted in 2007, morphed into the worst economic downturn in seven decades in 2008-09, followed by the weakest, most lopsided recovery on record for the past three years since 2009 that continues to date. But underlying this short term failure are a number of just as serious, if not more so, fundamental longer term crises.

Jack Rasmus
Copyright June 2012
Jack is the author of the recently published book, Obama’s Economy: Recovery for the Few, April 2012, published by Pluto books and Palgrave-Macmillan. His blog is jackrasmus.com and website, http://www.kyklosproductions.com, where his articles and radio and tv interviews are available.

Introductory Comments: The following article was written for the US-wide unionists group, the Emergency Labor Network, as one of its position statements. A more in depth analysis of the same topic is available on this writer’s website, http://www.kyklosproductions.com, (see ‘articles toolbar tab on the webpage) and accessible from the sidebar of this blog.

A pension crisis of major dimensions is growing in the US across all three forms of defined benefit plans (DBPs)—public, private single employer, and private multi-employer plans.

Corporate America and its political friends have begun to use the economic crisis that commenced in 2007 as an opportunity to initiate and expand yet another offensive aimed at further undermining defined benefit pensions in the U.S. Having already begun in 2009-10 with a new attack by governors on public employees’ pension plans, the Corporate Offensive over the subsequent eighteen months has expanded to include new coordinated attacks on private sector multi-employer and single employer DBPs as well.

Contrary to corporate, press and politicians’ claims, the crisis in pensions has had nothing to do with pension benefit increases for the workers. In many cases pension benefits have been frozen or actually reduced over the past decade and especially so since 2008.

Rather the crisis is directly attributable to government and corporate policies that have been implemented over the past thirty years—including, but not limited to, two decades of government encouraged management practices reducing pension funding, stagnant jobs and wage growth since 2001, massive speculative investment losses by pension funds, the collapse of the economy, jobs, and pension contributions after 2007, and the failure of the US economic recovery to restore jobs and wages the past three years, 2009-12.

Brief Overview of the Pensions Funding Gap

Multi-employer defined benefit pensions in the 1990s averaged shortfalls in funding (i.e. ratio of assets to liabilities) of only a very manageable $30 billion throughout the decade.
A 2009 Report by the Pension Benefit Guarantee Corporation, the quasi-government agency responsible for ensuring pension funds stability and solvency in the private sector, had a funding shortfall of $355 billion. A similar scenario applies to ratios and shortfalls in funding for single employer pensions, with funding shortfalls of approximately $407 billion. The highly respected Pew Center’s 2008 estimated public sector pensions gap for 2008 of $452 billion.

But the shortfalls in all the defined benefit pensions are overwhelming the result of economic conditions, government policies, and corporate practices over the past 12 years. In 1999, state public employee pensions were 103% funded, according to the Pew Center. Similarly, private pensions—multi-employer as well as single employer—were in good shape at the beginning of 2000. Whatever has happened is therefore clearly a consequence of events and policies since 2000.

Employers sense an opportunity today to falsify the facts regarding the causes of defined benefit pension shortfalls, and to use that falsification to attack and dismantle what’s left of defined benefit pensions that now cover barely 18% of the workforce compared to three decades ago when the percentage of coverage was two thirds or more. What facts are being conveniently ignored in this new corporate offensive?

Corporate Manipulation of the Pension Funding Gap

Corporations have not hesitated to take advantage of the funding gap that they themselves have largely created, with the help of compliant politicians.

On the multi-employer side, the employer new offensive is evident in a series of banks’ reports claiming the funding gap is even greater than it is. By making extreme low-ball assumptions on returns, banks’ research departments and corporations argue the gap for multi-employer plans is significantly higher than even the PBGC has estimated. Their conclusion is major reductions in pension benefits are therefore required, even though pension benefit payments are not the source of the problem.

This strategy of overestimation of the funding gap, cherry-picking the worst assumptions and then extrapolating the losses in a straight line out for decades, has been adopted as well by governors and state politicians intent on cutting pension benefit payments to resolve a crisis workers did not create.

A typical, extreme case is New Jersey governor, Chris Christie, who over-exaggerates an estimated $2.5 trillion funding gap in 2010—i.e. six times greater than that estimated by the respected Pew Center. Christie’s answer to the shortfall in New Jersey is a massive gutting of public employee pension benefits. However, Christie conveniently hides the fact that his state, New Jersey, only made 31% of the required contributions to its employee pension fund in 2009, thus contributing significantly to its relatively low funding ratio of 66%. Like Christie, governors complaining the most about State pension funding gaps are typically those who created those gaps by refusing repeatedly to make the required contributions to their pension funds in the first place.

Single Employer Pension funds are also under a similar direct attack, exemplified by the latest efforts of American Airlines to project massive losses in its fund as a way to justify dumping it on the PBGC and thereby shedding $9 billion in contributions it should have made, but didn’t, for decades. American Airlines for decades has been one of the most egregious practicers of ‘pension contribution holidays’, refusing year after year to make legally required contributions to its fund, and thereby ensuring it would be under-funded.

Fundamental Causes of the Pension Funding Crisis

The deterioration in defined benefit pensions over the past decade has had virtually nothing to do with providing more generous benefits for workers. Nor is it the case that workers are retiring in greater numbers all at once. The causes of the pension shortfalls are due to reductions in employer contributions to the pension funds for multiple reasons, to speculative investments gone bad and massive losses in pension funds over the preceding decade, a major collapse in jobs since 2000 due to repeated and protracted recessions, jobless recoveries, and shifting of jobs offshore that have further undermined total pension fund contributions, and government policies since 2008 that have ensured pension fund returns on investment are reduced to below-normal historical rates of return..

The following is a partial summary short list of a dozen true causes of shortfalls in defined benefit pension funding.

1. Two recessions since 2000 and two bouts of ‘jobless recoveries’ (2002-05 and 2009-12) resulting in sharp reductions in contributions to the funds

2. Structural unemployment due to offshoring and free trade that has in addition to #1 progressively reduced jobs and therefore contributions, especially in tech and manufacturing industries

3. Government allowed ‘pension contribution holidays’ that permitted suspension of employer contributions for decades, thus further lowering the contributions base of the funds

4. Employer manipulation of actuarial assumptions, like phony overstated rates of return and projected hirings that never happen, that covered up the shortfalls

5. Government rules that allow the diversion of pension funds to cover 20% of rising employer health care insurance costs

6. De-unionization of the workforce, resulting in employers suspending private pension plan participation for new workers, thus further reducing contributions.

7. Shift in U.S. job markets to part time and temp ‘contingency’ jobs and workers by tens of millions, who are excluded from participating (and thus contributing) to DBPs

8. Legislation and court decisions over the past decade that have promoted 401k plans and conversion to ‘Cash Balance Plans’, diverting contributions to what would have been to defined benefit pension funds.

9. Phony business bankruptcy policies that have permitted easy dumping of pensions on the PBGC, the Pension Benefit Guaranty Corporation that ensures DBPs, encouraging employers to underfund the pensions to create justifications for dumping the pensions.

10. Easing of restrictions allowing companies to leave multi-employer plans and for single employers exiting the PBGC

11. Pension Protection Act of 2006 that allowed pension funds to partner with high-risk speculators like hedge funds, resulting in pension funds’ headlong rush into speculative investing in subprime mortgages and other high risk real estate and financial markets, the consequence of which was massive fund losses in 2000-02 and again in 2008-12.

12. Low rates of return in general over the last decade on investments by pension funds, attributable largely to the protracted recession since 2008 and, even more so, to the Federal Reserve Bank’s still continuing policy of zero interest rates for four consecutive years.

Fundamental Solutions to the Pension Crisis

Pension funds are financial institutions. They perform much like commercial banks by lending to other non-financial institutions.

In 2008-09, the Federal Reserve bailed out the banks to the tune of $9 trillion by providing zero interest loans to banks for the past four years. The Fed also bought up bonds, especially mortgage notes, from the banks at their full value instead of their real depressed market values, thus further directly subsidizing the banks. The Fed in this manner not only bailed out banks and investment banks, but big conglomerates like GE and GM and their credit arms. So why shouldn’t it similarly provide assistance to financial institutions like the pension funds?

Given that the real causes of current pension fund shortfalls are: insufficient contributions by employers, bad investments by fund managers as a result of high risk speculation and losses, government rules allowing the undermining of pensions, and poor rates of return on investments by funds due to government economic policies since 2000—real solutions to the crisis should tackle the real causes.

Therefore, Congress, the President, and the Federal Reserve should:

· Provide short term 2 to 5 year bridge loans as needed to pension funds temporarily whose funding falls below 70%–i.e. funding provided at the same rate the Federal Reserve has been bailing out banks for the past four years, at a rate of 0.25% interest.

· Allow pension funds to issue their own bonds, much like corporations now issue bonds, and the Fed purchase those bonds long term, 10 and 30 years, to provide additional funding as necessary to pension funds.

· Prohibit pension funds from partnering in investments with hedge funds and other high risk financial institutions and financial instruments.

· Cities and local municipalities should be reimbursed for losses due to banks’ fraudulent and false promotion of derivatives and interest rate swap deals of the last decade, just as other institutional investors have been reimbursed for fraudulent subprime mortgages deals of recent years.

· Pension funding contribution holidays should be legally banned. Diversion of pension funds’ resources to subsidize employer health plans should be further prohibited.

· Corporate bankruptcy laws should be amended to prevent dumping of single employer plans. All non-pension assets in bankruptcy should be ruled subordinate to pension assets, requiring all other assets disposed of before pension funds are considered.

· Restrictions on employers exiting from multi-employer plans and from the PBGC should be strengthened.

· Public employee plans’ spending on consultants should be limited by law to no more than 1% of annual contribution levels.

· Employers should be prohibited from exempting ‘contingent’ workers from participation in plans, and should be required make pension fund contributions for all part time and temporary workers proportional to their total hours worked.

· Restore jobs and wage growth. The most important long run source of restoration of pension fund solvency is the creation of jobs at an historically acceptable rate.

· A sustained economic recovery—not the current ‘stop-go’ economy—that would raise rates of return on normal pension fund investments to restore losses of recent years

The crisis in Defined Benefit Plans is a crisis that has been brewing for decades, but that has appreciably worsened since 2000 and significantly further deteriorated after 2007. It is a crisis of falling and insufficient contributions fundamentally and not a crisis of excess liabilities or benefit payments to workers. Employers, both private and public, are now using the crisis they created that reduced contributions for decades to attack benefits. Fundamental solutions to the pension funding problems in DBPs must rectify the source problems on the contributions side of the fund ledger.

Jack Rasmus, copyright June 2012
Jack is the author of the just published book, “Obama’s Economy: Recovery for the Few”, April 2012, Pluto books and Palgrave-Macmillan, ordering from this blog at discount.

Nearly four years after the 2008 banking crash, and more than $11 trillion in liquidity injections in the US and Eurozone-UK-Japan, the global banking system is again showing clear signs of growing unstable. Notwithstanding several rounds of bank ‘stress tests’ on both sides of the Atlantic since 2009, what has been improperly identified as a sovereign debt crisis in Europe is revealing itself with each passing week, as a more fundamental banking crisis as well.

This past week registered a series of reports and events that strongly suggest below the surface the global banking system is not in particularly good shape, and is getting worse.

The most recent indication was yesterday’s, June 21, announcement by the rating agency, Moody’s Inc., downgrading 15 banks across the globe. Included were the two big US banks, Bank of America and Citigroup, which have been in effect technically insolvent since the 2008 bank crash but which have been kept afloat by various measures supported by the US Federal Reserve. Under pressure by the US government, both have been selling off their best assets at near-firesale prices in order to raise capital. Not much better has been the US investment bank, Morgan Stanley, which recently hosted the bungled Facebook initial public offering. French and UK banks fared no better, however. HSBC, Royal Bank of Scotland, Societe General, and even the Swiss, Credit Suisse were all downgraded. This kind of widespread, global downgrading does not occur randomly. It is reflective of something systemically at work.

The Federal Reserve Signals QE3

A day before the Moody bank downgrades, the U.S. Federal Reserve announced a further $267 billion liquidity injection into the US system, in an extension of its ‘Quantitative Easing 2.5’ program called ‘Operation Twist’ announced last fall. That $267 billion was in addition to the original ‘Twist’ QE 2.5 of $400 billion, which followed a prior QE 2 of $600 billion in 2010 and a QE1 of $1.75 trillion in 2009. The ‘markets’ in the US—which means banks, various financial institutions, and very high net worth individual investors—responded to the Fed’s latest extension of QE 2.5 announcement with a thud. Stock markets in the US the following day had their worst decline in months. Expect more of the same soon to come. Investors expected on Wednesday that the Fed would introduce a bona fide QE3. Translated that means expectations of hundreds of billions more of Fed direct liquidity injection into the markets, buying up not only US treasuries but mortgages and other bonds and securities. After all, QE 2.5 was coming to an end this month, and the Fed for the past four years has always followed the concluding of a QE program with still another QE liquidity injection. Indeed, a good argument can be made that the ‘markets’ in the US are becoming increasingly dependent upon—even addicted to—continuing massive Fed liquidity injections.

The correlation between announcements and anticipations of new QE programs and the take off of stock markets, and the declining of stock market indices as QE reach the end of their course, has been very high.

Dow-Jones Industrials Average & QE Correlation

QE Program   Dow Low & Date  QE Intro Date  QE Conclusion Date  Dow High & Date

QE 1                7,062                  March 3, 2009          April 4, 2010         11,204

(February 27, 2009)                                                         (April 23, 2010)

QE2                 9,686              November 4, 2010       June 30, 2011      12,657

(July 2, 2010)                                                                            (July 8, 2011)

QE 2.5           10,992

(September 9, 2011)  September 21, 2011        June 30, 2012        12,837

(June 19, 2012)

Source: Dow-Jones Industrial Average (DJIA) History, online at nyse/tv/dow-jones-industrial-average-history-djia.htm.

While QEs have been a boon to stocks and other speculators, QEs to date as a group have accomplished very little in terms of helping generate a sustained economic recovery in the U.S. In that respect they have done no more than the additional trillions of dollars in liquidity injections by the Fed in the form of near zero interest rates for almost four years now. Like QEs, near zero interest rates were supposed to provide virtually ‘free money’ to financial institutions that were, in turn, supposed to lend to stimulate investment and jobs. But that didn’t happen. Following QE1 and zero rates, after the official end of the recession in June 2009 bank lending fell for 15 consecutive months. To whatever extent bank lending rose in 2010 it went mostly to hedge funds and the largest corporations. Small and medium sized companies continued to starve for bank loans. And now, in recent months, lending is in retreat once again. So if anything is proven by the past four years, it is that monetary and Fed policies (QE, zero rates, etc) have had little to no effect on the real economy and economic recovery in the U.S. What they have achieved is a return to speculative lending practices by banks (called euphemistically ‘trading’)—i.e. banks lending to hedge funds and other institutional investors that then speculate in foreign currencies, commodities, oil futures, stocks, junk bonds, and, of course, derivatives of various sorts including CDS on Greek sovereign bond debt.

ECB Follows the Fed’s Lead

What the US Federal Reserve has been doing since 2008 the ECB has begun to mimic increasingly as well. For the EU banks, the ECB since late 2010 has been the only game in town when it comes to EU banks’ bailout. The two Euro-wide bail out funds, the European Financial Stability Facility (EFSF) and the more recent European Stability Mechanism (ESM) are targeted mainly for bailing out sovereign debt, from Greece to Spain and beyond. And the International Monetary Fund’s smaller cash hoard is being held in reserve, uncommitted, as the IMF tries desperately to line up China and other emerging economies’ contributions to its fund. But now the Euro banks are in deepening crisis, not just the governments, confirming what this writer has been saying and publishing for more than a year—namely, what’s developing in the EU is not simply a sovereign debt crisis and contagion but, more fundamentally, a growing banking crisis and contagion. It is a dual debt crisis growing in scope and intensity, and the two poles of the crisis—sovereign and banking system—are exacerbating each other.

Following the lead of the US central bank, the Federal Reserve, since 2010 the European Central Bank, ECB, has injected the equivalent of trillions of dollars into the Euro banks, including hundreds of billions of dollars in late 2011 plus another $125 billion earlier this month in what is only an initial tranche required to bail out Spanish banks. An eventual full bailout of Spain’s banks will cost, per this writer’s estimate, at least $300 billion. (And that doesn’t include future bailouts of more hundreds of billions of dollars to rescue Spain’s regional and central governments that the EFSF and/or ESM bail out funds will have to address.)

The Eurozone banking crisis is so severe that in recent months cross-border bank to bank lending in the Eurozone has been drying up. As ECB chairman, Mario Draghi, reportedly said just last week, the inter-bank lending system is ‘dysfunctional’ and ‘simply not working’. And as inter-bank lending has begun to dry up, so too as lending to EU nonbank businesses. Together the two developments signal a sure sign of a general banking crisis in early stages of development.

Much of the growing EU bank crisis can be laid at the feet of the general solution to the sovereign debt crises that EU governments, banks, and investors have been attempting to implement for two years now: Austerity. Austerity solutions imposed in Greece, Spain and now the U.K. result in less government revenue generation and further rising government debt. Repeated and prolonged recessions result in revenue falling off faster than cuts in deficit spending (austerity) can make up for the revenue losses. Budgets consequently continue to fall deeper into the red and government bond yields escalate further. Speculators in credit default swaps on government debt then accelerate the process, making it worse. Government debt then has to be restructured, often at a greater cost. Austerity solutions also have a simultaneous negative impact on the private sector as well: The deficit cutting at the heart of austerity solutions results in less consumption by households and subsequently less business spending in turn as household income drops. Banks thus generate less income from loans to businesses and households, while they simultaneously have to put aside more capital in anticipation of sovereign debt losses. Bank lending freezes up, as is now increasingly the case in the Eurozone, just as it has been in the U.S.

The Bank of England

Like the US Federal Reserve and the ECB, the Bank of England ((BoE) has also implemented a near zero interest rate policy and successive QEs. To date nearly $500 billion has been committed to QE bond and securities buying by the BoE. But that hasn’t prevented the UK from falling into a double dip recession recently, as the government simultaneously embarked on a major austerity, deficit cutting policy. QE by the central bank may have temporarily kept the UK banking system afloat, but not so the economy now in a bona fide double dip.

A week ago the BoE’s monetary policy committee met to discuss increasing the amount of liquidity into the banks in yet another QE round. It postponed that decision, however, until early July, waiting on events in the Eurozone later this month, and further ECB and US Federal Reserve actions. Another $120 billion QE by the BoE therefore will likely soon occur.

Bank of Japan

The Bank of Japan also launched its own QE in a surprise move this past February-March 2012. It is projected to further that injection of liquidity later sometime later this year

Global Central Bank Crisis Coordination

What appears in development is an attempt on a global scale to coordinate central bank interventions in the form of QE liquidity injections, not only in the Eurozone but elsewhere as well. This appears to be in response at least in part to the big private banks globally demanding such coordinated action. In other words, they expect another banking crunch soon and are demanding another bailout in anticipation and before it happens.

The Eurozone debt crisis in Spain, Greece, and soon Italy is only one of the main drivers of this, however. The sovereign debt crisis represents a squeeze on banks’ income as a result of borrowers inability to repay principal and interest on past debt. Austerity is about getting someone else, the taxpayer and populace, to pay the bill. QE, zero interest rates, and monetary policy represents the equivalent of a massive, short term ‘bridge’ loan (often free of charge) to the banks via printing money or government subsidized bonds. But all that’s ‘past’ payment revenue. The deepening recession represents the inability of banks to earn ‘future’ revenue.

And recession and future revenue shortfalls are the even greater, imminent threat to banks’ solvency. Not only is the Eurozone rapidly descending, country by country, into recession across the continent, but the UK is already there. Meanwhile, the US economy is now clearly on a track in recent months to its third ‘relapse’ this summer. Economic indicators across the board are flashing red, from jobs to housing to business spending to manufacturing activity to consumer and business sentiment. And should US policymakers decide in November 2012 immediately after the elections to cut spending by an additional $2-$4 trillion, on top of the $2.2 trillion to start taking effect in January 2013—as this writer has repeatedly predicted will be the case—then a US double dip recession is etched in stone. At the same time it is becoming abundantly clear, as this writer also predicted last year, that China and the other BRICS economies are destined for a ‘hard landing’ in 2012-13. All that said, a global double dip possibility is rising significantly.

The banks know this and are demanding pre-emptive action by their respective central banks in order to buffer their cash and liquidity up front. A coordinated global QE action may buy global banks some additional time, but it won’t solve the bigger problem of a global economy slouching toward a synchronized double dip. Bankers may indeed get their pre-emptive bailout. But the rest of the economy will likely be left to fend for itself in 2013-14, just as it was in 2009-11. Only this time, this ‘second dip’ may be worse, much worse, than the first.

Dr. Jack Rasmus
June 2012