Are We In A Financial Freefall?

http://www.moneyandmarkets.com/

Here are six reasons for a double-dip recession I extracted from the article.

First, the economic rebound since March 2009 was bought with unprecedented fiscal and monetary stimulus. There has not been a real, market-generated recovery.

Second, despite the huge sums of taxpayer money and serial bailouts, the rebound is the weakest on record.

Third, at least 80 percent of this huge stimulus program has been used up. There isn’t much left to keep the economic engines running.

Fourth, aside from government debt, the wheels of credit creation are still sputtering. And that’s a problem, since former recoveries have always been driven by credit growth.

Fifth, the labor market is still in dire straits — and so is consumer spending. Friday’s disappointing payroll report is a very strong hint that the labor market is again deteriorating.

Following the ECRI data, this is not surprising. Historically, there has been a strong correlation between the ECRI weekly index and payroll numbers. Furthermore, I expect much weaker employment reports in the weeks and months to come.

Sixth, the housing mess has not been cleaned up yet. I expect another huge wave of mortgage debt defaults, leading to another round of falling home prices and problems for the banking sector.

All in all, the big economic picture is pretty grim. Indeed, the economy is at a crossroads here. Unfortunately, though, it seems to be heading down the recession path again.