On the left, Nobel Laurete Paul Krugman recently penned a frightening op-ed in the New York Times. Krugman, warned that the United States has entered the initial stages of a third Depression. In his view, inadequate fiscal and monetary stimulus, coupled with obsessive worry about short-term, record breaking budget deficits, are increasing the probability of a long, deflationary-driven Depression.
On the right, economists, and politicans are calling for the Government to cut spending, which they predict will lead to the collapse of the dollar at current rates. Ron Paul, and Peter Schiff have called for painful spending cuts, higher interest rates, and end to bailouts.
Schiff recently stated, "When creditors ultimately decide to curtail loans to America, U.S. interest rates will finally spike, and we will be confronted with even more difficult choices than those now facing Greece. Given the short maturity of our national debt, a jump in short-term rates would either result in default or massive austerity.
Outside of the political realm, people are equally as frightened about the US economy.
I mentioned in an article recently that John Hussman is predicting a double dip recession. Hussman further stated,
"In my estimation, there is still close to an 80% probability (Bayes' Rule) that a second market plunge and economic downturn will unfold during the coming year. Last time Hussman made a similar prediction was in November 2007. The National Bureau of Economic Research stated that the " Great Recession" started in December 2007.
Other people who foresaw the real estate bubble like Robert Shiller, are worried that the economy could be headed for some tough times ahead. Shiller stated that he sees a significant risk of a double dip recession.
Seth Klarman one of the best investors of our time, stated recently that he has never been so worried about the economy. It was surprising hearing this from Klarman, because he rarely is in the public eye, and focuses on the micro aspects of companies and not the macro picture.
Business Insider recently compiled a list of 23 "doomsayers", who are predicting that we may be headed for a depression in 2011.
Below is a link to the full list.
Read more: http://www.businessinsider.com/23-doomsayers-who-say-were-heading-toward-depression-in-2011-2010-5#ixzz0sIYhNlxF