How Can We Go Into A Depression?

How Can We Go Into a Depression?
Tuesday, June 23rd, 2009

As previously indicated, in this June 19 post, most mainstream economic forecasters as well as many other financial professionals believe that “the worst is behind us” as far as economic damage. It certainly would be nice if this were the case.

However, for a variety of reasons, I continue to believe that while it is possible that “the worst is behind us” there is more likely to be more damage ahead. There is an array of serious problems, as well as various indicators that indicate potentially severe economic weakness ahead. Any further economic weakness could certainly push the economy from a “severe recession” into a Depression.

The way I view it, there are a range of various scenarios that can play out from here. On the one end of the spectrum is the above-referenced mainstream economist consensus, one of gradual improvement. On the other end of the spectrum is that of continued economic weakness that has the potential to build upon itself.

A question arises as to how continued economic weakness could happen, both from a fundamental basis, as well as a quantifiable one. The situation is highly complex and there are many drivers. Continued economic weakness, assuming it will happen, would likely “play out” in a very unpredictable fashion.

As a reference to our current situation, I would point out the writings in the “Investor” section, which provide some quantifiable aspects. The writings in the “Articles” section will provide some other background as well. They can be found in the "Directory Of Articles."



SPX at 897.33 as this post is written