So Credit Suisse is out with a new note arguing that we’re not going to double dip, because we don’t have certain conditions in place, like an inverted yield curve, and whatnot.
Credit to them: The firm is at least making an argument. Others have argued, simply, that we’re unlikely to get a double dip, because, well, double dips are “rare.”
We suggest you throw all this pretty much out the window.
The fact is, that this wasn’t a business-cycle recession. As folks like Richard Koo have been arguing since the early days of the crisis, this was (or more like is) a balance-sheet recession, a fundamentally different beast that. That’s not to say we will double dip, but looking at normal cycles don’t apply when the issue is one of a massive bubble bursting, deleveraging, and a potentially gigantic mismatch between supply and demand.