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August 18, 2003

Why This "Recovery" is So Unstable

The Wall Street Journal writes that the real dangerous thing about this "recovery" is that the mortgage bubble and Federal Reserve and fiscal policy have been injecting the equivalent of steroids into the economy and the results have still been only anemic. Unless the economy find self-sustaining growth, subtract the recent tax checks mailed out and equity withdrawals from homes next year and we could see a serious crash.

This graph shows how remarkable the fiscal and monetary policy help to this recovery has been:

As the article notes, there aren't too many bullets left in the conventional fiscal/monetary recovery gun.

Posted by Nathan at August 18, 2003 10:37 AM