What the hell is up with the economy?

I definitely do NOT predict it ending by Q2 this year.  Not this year either.  Hopefully next year.  Things look really bad.  The credit crisis is doing exactly what people thought it would do, and consumption has really dropped off.  What's going on in Iceland hopefully doesn't spread to any major countries.  If that happens there could be trade wars as countries block imports.  That is kind of the worse-case scenario floated by some investment banks; slowing demand in emerging markets prompts currency devaluations and trade blockades, which would basically destroy the worldwide economy.  It happened right before the depression with Smoot-Hawley.  I don't think the US would make that mistake again, but other countries might when faced with violent protests.  A while ago I know I said that a Depression-like situation was extremely unlikely.  It's not so unlikely any more.  We're already at 7+ levels of unemployment, and it's not getting better soon.  Hopefully we don't peak higher than 10%.  Credit spreads are still enormous, which means it is very hard for businesses to get financing and hire people.  There's not really much the Obama team can do about this directly - they have to try and address it by building confidence in the economy in general with the stimulus plan.

Contributed by guest columnist Dime $ack