[LINK] "Will invoking the Great Depression bring it on?"

[rfmcdonald]

Heather Scoffield, economics reporter for The Globe and Mail, wonders.

Dominique Strauss-Kahn, who heads the International Monetary Fund, has suggested that the world's major economies are "already in depression." Economist bad-boy Nouriel Roubini warns that the United States is in a "near depression."

Such seemingly casual use of the D word has many analysts balking, warning of the effect such a mindset can have in an already fragile economy plagued by a lack of consumer and business confidence.

"The Depression narrative is not merely a story about the past: It has started to inform our current expectations," the influential Yale University economist and New York Times columnist Robert J. Shiller wrote recently.

[. . .]

[A]s confidence in the banking system continues to falter, jittery investors drive down stock markets and inflation hovers close to zero, more economists are grappling with the possibility that the deepening recession could turn into something worse and more intractable - a slump that may earn the D-word moniker, even if it doesn't replicate the misery of the 1930s. "It's a worry," says Angela Redish, an economics historian at the University of British Columbia.