Mauldin - Double-Dip-Onomics

Without federal stimulus, the GDP of the US would have been over minus 6% in the second quarter, not the minus 1% it was. The third quarter would be flat to down and not the plus 3% it is likely to be. Housing and autos will turn down as the stimulus on those markets goes away.

I think it is very possible we will see a negative GDP by the first quarter of next year. Unemployment will still be rising. Deflation will be more of a problem, because the housing component (the largest portion of the consumer-inflation index), based roughly on rentals, is clearly under pressure. ... savings are up and consumer spending is down. Without the stimulus, things would be much worse....

Expect to see a big push for another large stimulus package next spring (and maybe sooner), as the effects of the current one wear off. The government wants to bring back demand by getting consumers to spend again...It is going to be hard for a Democratic administration to not push for another large stimulus. ...They are going to have the cover to do so, because deflation is going to be seen as the problem

.... what it [gold] may be saying is that paper currencies are a problem. Gold is going up not only in dollar terms, but in euros, pounds, yen, and more....right now, my bet is the Fed will print money to fight a double-dip recession and deflation. And gold would be one way to play that bet.

--- John Mauldin newsletter 9.4.09 (Subscription link)