Oof, maybe not so short!

CNNMoney:
"We have a deadly combination of commodity price inflation and credit contraction," said University of Maryland economics professor Peter Morici. "It's tough to imagine a worse combination. In a worst case scenario, the recession could last several years."

Stimulation or simulation? Action / reaction ?

OK, the Fed made a pre-emptive move that "rescued" the falling markets; but they've opened the door to the potential disaster of runaway inflation AND downturn...and Bush's "stimulus" package would be great *if*:
1. People SPEND THE MONEY ON GOODS and not pay down credit debt or hike savings.
2. We get the money TODAY, not in June!

Anyway, they're both acting like they could stop/delay the recession by throwing money at it. The only real solution is increased government spending on infrastructure, but Bush & Congress are not likely to go there. Watch for more economic turmoil by election day!

Merrill Lynch,MorganStanley vs Bernanke 1/4%

Bloomberg.com sez:
Dec. 10 (Bloomberg) -- The U.S. will slip into a "mild'' recession next year, Morgan Stanley said in its latest research, joining Merrill Lynch in predicting a downturn for the world's largest economy. "A mild U.S. recession is now likely, with no growth for the year ahead,'' Richard Berner, chief U.S. economist for Morgan Stanley in New York, said in his weekly note to clients today. "Financial conditions are tighter, the weakness is broadening into capital spending, and global growth is slowing.''

Bernanke and crew duly allowed the equity market to assume they would act boldly to stave off dollar losses...but then wimped out with only a quarter-point cut. Dow drops along with investor confidence. Back to reality, guys: the Fed always keeps one eye on inflation.

Deef's Recession Probabilty: 100%

Credit Crunch not exactly what I expected

I have been predicting an economic downturn since 2005, based on the lackluster "recovery" from the dot-com debacle. Jobs have never "been there" despite low unemployment, and banks [backed by the infamous Federal Reserve interest-rate hikes] have been squeezing ever more blood out of the middle class. (Who can really afford 25-30% interest rates on credit??)

Real-estate appreciation led many people to re-finance their homes as a way of getting spending cash. BUT the loans being "pushed" were ADJUSTABLE rate mortgages (ARMs), with low initial "teaser" rates but blockbuster "reset" rates nearing (or exceeding!) double digits. Teasers made it easy for buyers to qualify for loans they really couldn't afford. No one was complaining because home sales and refinancing were keeping the economy "thriving" [GW Bush, Aug 2007] So now with real estate prices at "plateau" levels (everyone who can afford one has one, no one who doesn't have one can) , the mortgage/re-fi boom is over. No more easy cash to spend on consumables, AND no way to pay the mortgage.

OK, I thought the impact would be in loss of consumer purchasing power (drop the GDP).
What REALLY happened is that the failure of these "subprime" mortgages tanked financial instruments that included them! If the loan won't be repaid, it's value is zero. How do you know how many will fail?? Hence, all the hedge funds et al can't be reliably valued and nobody wants to be stuck with them!

Different cause, same result: economic depression, possibly leading to a recession. Triggered,
ironically, by the Fed jacking up interest rates to try to cool down the economy and control
inflation. If there's a lesson here it's that you shouldn't mess with things you can't control or even fully understand! [rant off]