At this point is the United States even capable of permitting bubbles to deflate without a massive run-up to a desperate crash? Probably not. Bloomberg cites Krugman, revving up the Stimulus 2.0 motors already.
Nobel Prize-winning economist Paul Krugman said he sees about a one-third chance the U.S. economy will slide into a recession during the second half of the year as fiscal and monetary stimulus fade.
It is not entirely clear how, in the event we start pumping more meth into the national bloodstream, we ever manage to get the body off of the habit. When exactly can we stop stimulating housing prices and not see an "increase of one percent in mortgage rates" that will "inhibit recovery"? When will the country finally be disabused of the fantasy that a 5.5% mortgage and 8.5% equity returns are some kind of god-given right? Who is finally going to have the courage to tell America that the average family of four is either going to get pimp-slapped out of some more net worth in the next few months, or that they can wait another half-year to a year and go six rounds with Evander Holyfield c. 1990 instead? Anyone? Bueller?