Global governments are ensuing that there is no light at the end of the tunnel, just another cliff.

Governments do what they want, not for you and not for me. But to stay in power no matter how illusionary as it may appear. To cling to the last remnants of an arrogant dream of 'everything is just rosy'. All sorts of calls are being made now as far as the economic recovery. Certain economists (government and private) that live in confused statistical ivory towers are putting in their bets for a US rebound, wayward as they may be. As the biggest economic blunder in history as yet to unfold, that being the massive amount of money that has been thrown into the global economy and the huge government deficits that were created. We have yet to see the repercussions.

I understand about the free markets, I respect and acknowledge the idealism of self interest in the context of evolving ideas and innovation. I also believe that the markets purge incompetence in business. This didn't happen. Government supported asset prices and allowed incompetency to return to profit. The sad aspect of all this is that a struggling shop, that is trying to hold onto business has been sacrificed by government intervention. Whilst investment banks of Wall Street posts profits (from government welfare assistance), a smaller business suffers under the weight of pending inflationary conditions and current recessionary conditions.

The idiots in government see the economic situation as a War. But as they (government) have made huge blunders in warfare in the last 10 years (refer to Iraq and Afghanistan). They of course are going to stuff this up too. So much excess was built up over the years that it needs to be flushed out of the system. As mentioned, instead governments have tried to maintain an illusionary economic status quo. To the benefit of top tier people connected to government and central banks. A collapse in economic activities doesn't necessarily mean the end of the world. The end of the world is when a meteorite destroys the planet. The motives in saving the global economy are misguided and will evidently prove more dangerous than allowing a recession to run it's natural course.

What we have now is governments using our money to maintain economic growth, installing small pegs under the built up excesses, whilst allowing the excess to continue to build up. Sun Tzu's The Art of War a classic text of strategy and conflict discusses this by seeing conflict/or action (prolonged) as a disadvantage to a society; more so a threat as it drains precious resources within that society to maintain attack orientated actions. Since politicians and central bankers liken the global economic crisis to war, they fundamentally make an age old error of prolonging and sustaining a crisis longer than it should be.

From the Art of War:

"Those who are not thoroughly aware of the disadvantages in the use of arms cannot be thoroughly aware of the advantages in the use of arms.

Those who use the military skillfully do not raise troops twice and do not provide food three times"

Now there is talk of a second stimulus. Some commentary has indicated that the US GDP (years end) will show that the US will be out of recession. The primitive form of utilising GDP relies on governments statistics, that of course will not be truthful and objective as it could be; just look at China and Argentina both countries that notorious play up GDP growth as much as they can.

The 2nd stimulus plan from the US government will be in response to the growing unemployment in the US.

If you work for a business you'll know that a deficit in accounts is a terrible thing. In fact a deficit eventually leads to bankruptcy as you need to constantly fill a hole that is growing; as other accounts are paid, the wider the deficit becomes. The US government seems happy to go down a path of bankruptcy and inflation, their obvious predicament. Since the Federal Reserve has shown that it is indefinitely going to wage a 'war' on deflation, then this quote also comes into play (from The Art of War):

"In the markets near the army, the prices of goods shoot up. Therefore long military campaigns are a plague to a nation"

But there is another play here, which is the US dollar. The US Federal Reserve can't solely detach it's self from the world economy. As much as it is arrogantly doing so. As long as the worlds base currency suffers from zero interest rates and money printing. This will continue to hamper the recovery of Asia, namely China. With commodity producing countries currency going upward (against a declining USD), China will demand cheaper commodities for it's recovery and sustainability. Here lies the current problem with China and Australia over iron ore. China is desperate in stockpiling commodities, particularly iron ore and oil - and they want it cheaper than the high export price.

In Australia's situation it will need to either cut export prices for the Chinese, or be punished by the Chinese as they drop off from the Australian commodity markets (relying on stockpiles) hence pushing Australia further into recession.

Even if China maintains a huge stockpiles of iron ore, the next major issue will be oil. With the declining USD driving oil price back up and supplies shrinking. China being a net importer of oil, it all entails to potential conflict situations.

This can all be blamed on a economic policy machine in the US, which is completely out of touch with reality. The reality being the scarcity of certain commodities, US dollar weakness and inflation. Also a reality that the markets, when they need to, become brutal and desperate which eventually leads to war.