Goldman is pegging the odds at 40%. Those seem a bit high to me. Now it could be that they have a more sophisticated gasp of the effects of a European Implosion than I do.

However, I have a hard time getting there from here. You would have to believe that the exports channel is going to be really big for the Untied States and that it will not be offset by the gasoline channel.

I still think the Fed can do more to promote recovery including extending low interest rates to 2015. I also think the fiscal authorities could do more, particularly through expanding and extending the payroll tax cut – business side as well as worker side.

However, even in our current state its just hard to piece together a recession.

Look at these vehicle fleet dynamics


The center of the distribution is moving rightward. This means not only is our vehicle fleet rapidly aging but that if vehicle production actually fell the scrappage rate would skyrocket in the coming years.

You would have the mass of cars headed towards obsolesce. Is this what is going to happen? Its hard for me to see how it is.

This is something we should talk about more but an export oriented economy like Japan could easily get trapped in a very long liquidity trap, especially when you add a rapidly aging workforce to the mix.

However, a relative young and import oriented society like the US is going to have a much harder time staying stuck.