A Double Dip Recession on the Way?

By Tim Connolly

There are now numerous data points that indicate a double dip recession is now on the way for the U.S. First, contrary to most academic thought on how to recover from recessions, the Congress has chosen to raise taxes substantially, via the new taxes for healthcare reform, and now new taxes on capital gains and small business S-corporations that are called for in the new Financial Regulation bill. Don't get me wrong - we need new controls on banks. There should be capital behind every derivative, banks should be prohibited from using leverage beyond ten times their capital, and taxpayers should never be paying for trading losses. Bank sponsored trading should be in separate subsidiaries with dedicated capital that is not covered under any FDIC insurance. Last, but not least, derivatives should be publicly traded for complete transparency. [more...]