Odds Of Double Dip Recession Increase

This is not something that I wanted to see or read.

http://www.google.com/hostednews/ap/article/ALeqM5g2RBEQAPpNMNour8nrK0y8IEYmeQD9BUP4O01

http://www.politico.com/news/stories/1109/29471.html

Deficit reduction is always good if its done for the right reasons. Obama is kow tailing to the deficit hawks who have been hammering him over the countries finances. These articles are masked under the false premise of fiscal responsibility and smart tough political posturing, but in actuality the country has to brace themselves for serious spending cuts and higher income taxes. In any event this tactics will kill off any chance of demand pickup and lead us into a double dip recession.

I agree that the deficit is ludicrous but worrying about it at the moment is not a good idea. This recession we are currently in is a severe deep one. The systemic risk is greater. Housing is a still a black hole. Most importantly, global imbalances as evidenced by the trade data still poses problems.

The Obama Administration is clearly spooked about the elections in NJ/Virginia. They are moving towards a more fiscally prudent financial model. Normally I would agree with it if it also brought an end to the looting of the country by Wall Street. It hasn't and this is a catastrophic mistake.

Also look for a 2nd round of Stimulus in the range of about $250B or so. How in the world can be finance both the Stimulus and deficit reduction? You got it! HIGHER TAXES! Which is not that bad of an idea either in normal times.