Obama Fears Double Dip Recession is Coming

A worried President Obama.

President Obama warned that loss of confidence in the US economy could occur, and echoes the many pundits who have warned the Fed’s policy and stimulus programs could lead to a double-dip recession:

I think it is important though to recognise that if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the US economy in a way that could actually lead to a double-dip recession.

The President’s words were reinforced by a report released by French Bank, the Société Générale, called Worst-case Debt Scenario. The Times Online reports

“As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse,” said the 68-page report, headed by asset chief Daniel Fermon.

Under the French bank’s “bear case” scenario, the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 a barrel in 2010.

Even without fresh spending, public debt would explode within two years to 105 per cent of GDP in the UK, 125 per cent in the US and the eurozone, and 270 per cent in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade, the report warns.

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