Saturday, December 26, 2009

Be afraid. Be very afraid... (Updated)

…when Treasury Secretary Tim Geithner says there is nothing to be afraid of. NPR’s Michelle Norris interviewed him recently and questioned him about two things: 1) the prospects of a “double dip” or a second recessionary downturn, and 2) whether it’s really a good idea to be urging banks to be lending aggressively given the recent problems with bad loans and defaults.

Geithner says everything is wonderful: "We are not going to have a second wave of financial crisis." And when Norris asks, "So it's ok for [banks] to take risks right now?" Geithner responds, "Absolutely." Norris is understandably skeptical about all of this. Mike Shedlock obviously doesn’t buy it: "The arrogance and ignorance of Geithner are both appalling."

Be ready folks: 2010—to paraphrase Bette Davis/”Margo”—is going to be a “bumpy” year (and don’t be surprised by a major swoon on Wall Street). I hope to be posting more about this soon.

(Here's an earlier related post: Double Dip.)

Update: In an interview with ABC News today, Paul Krugman expressed his belief there is a "reasonably high chance" the economy will contract again in 2010. "I'm really worried about the second half [of the year]."

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