There is are some problems with predicting recessions and the lifespan of recoveries.
The willingness to go through small recessions has a way of preventing large ones. We have opted to prevent even the smallest of downturns.
Economists never understand how economic policies that prolong recoveries change incentives and end up changing the structure of the economy when that is not what is intended.
There is no good answer as to how long a recovery can be maintained with expansionary monetary and fiscal policies.
I think we are at the point now where tax rates are low enough so that a supply side tax cut from this leval would not have the intended effect off increasing tax revenue while contributing to an expansion at the same time. Productivity is leveling off world wide so that agressive monitary and/or fiscal policies would both be inflationary. Countries around the world have turned to bubble economics as a way of boosting consumer sending from borrowing against rising asset pricces. When asset prices finally stop rising, there will be a recession and probably a large one.
The timing is everything. Right now, it is too speculative and pessimistic, only the blow off to upside in financial market will negate extreme bearish publicized sentiment.
When extremely bearish sentiment is publicized by media, "Inflation" is not a problem, it is "Recession".
Of course, economic cycle is inevitable; however, we are in the best global economic cycle. With the right monetary policy handling the bad risk management by subprime takers and other fancy financing, we will not see severe economic down turn.
Rate cut is a good one until the subprime drama is stopped and becomes an old news.
Breaking out new high in financial market is another cure.
after all, it is about all about money circulation.
Edited by Trend-Signals, 23 August 2007 - 10:42 PM.
; otherwise, 
