Are we going to have a double dip?

The question on everybody's lips is are we going to have a double dip recession or not? Many people from common persons to market watchers are predicting that we are going to have another recession. Stock markets certainly have taken the hint and taken a deep hit down, at the moment of writing the OMX Helsinki has plunged over 5% and major stock exchanges around the world have seen prices going down. The media while still not preaching doom and gloom is constantly speculating on the issue. On this climate it is hard not to be pessimistic about the future, it is easier to say that things are going down hill than say that they aren't. However, I myself think that we are not going to have another recession, we simply don't have enough reason for it.

Recessions happen for a reason
They happen because the market has had long enough digression that finally runs out, leaving the market and the market actors paralysed by both their past misinvestment and invisibility of the future. The financial crisis that started in 2008 was largely caused by housing and commodity bubbles around the world. In the USA investors, banks and lenders had for too long thought that property values can go only up, leading everybody and their dog to take advantage of the market. The same was happening in Europe where endless amounts of leisure and holiday apartments where mushrooming here and there, for example at the peak of the Spanish property bubble, over half of the cement used in Europe was used in Spain. The belief that the market can go only up was the market delusion that finally lead into recession.

Do we have a good enough reason for another recession?
This is the question that we should be thinking about, is there a good enough reason for a recession. I don't think so. We do have big problems in the world economy that need fixing sooner or later, for example the increasing debt of US government, continuing crisis in the Eurozone, doubts about continuing growth in China, etc.. However if we look at the real economy, on what people and companies are actually doing, there is a lot less to be worried about. People and companies haven't over extended themselves, quite the contrary: people have been investing carefully especially to real estate markets; and companies have restructured themselves during the recession and are now more efficient and enjoying healthy profits.

In my honest opinion, we don't have good enough reason to have the economy go back into the recession. However we neither have good enough reasons for the economy to boom, like I said before, there are many troubling things that make the market uncertain about the future, but that doesn't lead into a recession, it leads into an era of slow growth until the major causes of this market nervousness are corrected.

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