by Michael Sanibel

Created on: November 08, 2008   Last Updated: November 28, 2008

Is the U. S. in store for a quick or protracted economic recovery?

Most of the so-called economic "experts" did not see a recession coming in the United States because they had their eyes firmly glued on their rear-view mirrors. Unbeknownst to them, what was approaching was a slow-motion, economic train wreck of epic proportions. The housing bubble, and the underlying factors that caused it, have set us up for possibly the worst recession in history. In fact, were it not for the fact that the government is printing money at an increasingly alarming rate, we would already be in a depression. At best, it will be a "U-shaped" recovery, and the bottom leg of the "U" may last for several years. Why is this so? Let's examine where we are today versus a time prior to the Great Depression of the 1930s.

We now have the largest federal debt in history, the lowest savings rate in history, the end of the home equity ATM machine, housing price/income ratios which are double their historical norm, the upward adjustment of variable mortgage interest rates that is just now beginning, the largest government entitlement programs in history, illegal aliens streaming across the border, the highest personal debt levels in history, huge increases in the demand for oil worldwide that will put upward pressure on prices, gold near record price levels, annual trade deficit of $700+ billion, record low consumer confidence indices, banks getting rescued by the Federal Reserve and middle eastern investors, rising unemployment, the Fed printing money and lowering interest rates as inflation rises, and two wars that are draining scarce resources out of the country.

The only solution that the government has come up with is to loosen credit and print more money. What should be obvious is that cheap money and easy credit are what got us into this mess to begin with. The actions taken by the Treasury and Federal Reserve equate to pouring gasoline on a raging fire. While there may be some short-term relief from all this free money sloshing through the system, the long-term consequences will be catastrophic. They have already engineered bailouts of Bear Stearns, Freddie Mac, Fannie Mae, insurance companies, several investment and commercial banks, and the major auto companies. Where does this end and where is all the money coming from to pay for it? If these companies are eligible for taxpayer-funded bailouts, should all companies be rewarded for their failures as well?

Now we hear that the government

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