U.S. Headed For Japan Style Recovery?
On December 29, 1989, the Nikkei index finished at an all-time high of nearly 39.000 points. Twenty years later, the stock index is just a quarter of its former value, the real estate market has crashed, unemployment more than doubled, and a sentiment of insecurity has settled across Japan. Will the U.S. face a similar fate?
Santee California real estate
Ideas for Economic Recovery
economic recovery
Targeting of spending means putting the money directly into the hands of those who can use it to develop the economy and create jobs.
Propping up state and local governments, while not an entirely bad idea, does little to create jobs and can be left for later. In the meantime, the states should be allowed to operate at a deficit, issuing bonds to keep them going, and making up the debt with increased income and fiscal austerity once tax revenues have come back.
The money needs to be placed in the hands of small and medium-size businesses, in the form of grants or low-interest loans,.This would allow these businesses to expand, innovate, develop new products, and put people to work. Bailing out an already sick industry is not the answer. We see now that Chrysler will not be able to introduce new models based on Fiat products for several years. We also see that GM has not been successful in selling the Saturn brand, and will now abandon it. Despite the bailouts, the ship continues to the bottom. Read more 
Is it Really a Green Shoots Recovery I See?
housing recovery
Nouriel Roubini, a professor at the Stern School of Business, New York University, said there was now “a big risk” that the global economy would slip into a W-shaped recession. Roubini is credited as the prophet of the current financial crisis.
Roubini is now warning of the growing threat of a global, double-dip recession, where the economy briefly recovers before slipping back into contraction. Governments and policymakers are facing the twin threat of both stag-deflation and stagflation, he wrote in the Financial Times yesterday.
This is a crisis of solvency, not just liquidity, but true deleveraging has not begun yet because the losses of financial institutions have been socialized and put on government balance sheets. This limits the ability of banks to lend, households to spend and companies to invest…
The releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending.
In other words, Roubini is confirming what many others have said: that the problem is insolvency, more than liquidity, that the government is fighting the last war and doing it all wrong, and that we should let the insolvent banks fail.
Roubini is also confirming that incurring huge deficits in order to have the federal government itself act as a super-bank is causing a reduction in – and “crowding out” a recovery in – private sector spending.
Professor Roubini said that if the world was able to stave off a double-dip recession, the most likely outcome would be a weak U-shaped recovery, with below trend growth for at least a couple of years.