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What's Next for the American Economy?

Asked by Paradox1 (1167 points ) September 30th, 2011

In 2007 the cracks of the mortgage and housing bubble began emerging. I remember those days well and the collapse of NewStar Financial, one of the first in a long line to go down. Next came Bear Stearns after over 100 years in business. The gravity of the bubble (or lack thereof) rapidly began weighing on people and it only kept getting worse with every release of new data until the global markets were roiled and collapsed in late 2008 and continued through the first quarter of 2009.
After March of 2009 began the recovery, and by June or July the recession was over (though we didn’t realize this until later). Our recovery was very weak, however, as it was not lead by housing as is typically the case by recoveries. But it was still a recovery and markets surged.

In August of 2010 rumors grew of a new shadow of recession, the dreaded “double-dip,” but these fears were premature and allayed.

Fast forward to now. It seems that the dim days of late 2008 are returning. I haven’t seen the sentiment on Wall Street this bad since then. Most people are afraid, most financial institutions are saying there’s a good chance of entering into a second recession. It seems like everyone thinks the economy will “go down the toilet,” though I’m not so sure. I feel as though it is usually never as bad as people think.

But assuming the economy does go into another recession, or we’re in one now. What do you think will happen? Will it be slow and dragged out, or quick, steep, and fast? Is it really as bad as people think it will be? Were the riots in Britain earlier this year only but a taste of the violence to come?

I don’t provide this information and question to frighten any, but rather to explore various potential outcomes in the years ahead. With enough responses, one of them will be right, and all we can do is to stay positive and do our best to prepare. Surely there is a chance for the return of the American dream, and our hope will not be cut off.

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