Joseph Stiglitz is warning of a double dip recession in Europe because governments are becoming overly concerned with their deficits. Europe has similar fears but emphases weaknesses in US private sector housing demand that they some claim call for an increased US fiscal stimulus.
Equity markets around the world – including Australia – are tipping trouble ahead. Uncertainty over the election outcome in Australia seems to be having a minor influence compared to fears of a global recession. The banks are being hammered.
These gloomy expectations have a self-fulfilling character. It is deeply troubling. (639)