The Dominant Causes of the Credit Crisis (Part 2): US Edging towards a double dip recession – is...

8/9/2019 The Dominant Causes of the Credit Crisis (Part 2): US Edging towards a double dip recession is the economic rec

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David Collett 2010 ANCHORAGE INVESTMENTS

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Part II: The Originating Causes of the Credit CrisisUS Edging towards a double dip recession is the economic recovery

blocked by an invisible wall?

July 15, 2010by David Collett

Introduction

Why is the world, especially the United States, edging towards a double diprecession? What is the invisible wall, that some, including Alan Greenspan, referto, that is holding us back from a sustainable recovery?

Despite using the nuclear option ofquantitative easingand government stimulus,the US has failed to create sufficient new jobs that can support a sustainableeconomic recovery, failed to extend much needed credit to small businesses andfailed to counter the slide in the housing market. Global shipping ( Baltic Dry

Index) has made a turn for the worse and consumer confidence is down. DarylMontgomery, Organizer of the New York Investing Meetup, summarised thebleak outlook for a recovery by stating that Governmentspending didn't juststimulate the recovery, government spending WAS the recovery.

In trying to determine what this invisible wall is and why it is holding us back,

we must first determine what the dominant causes of credit crisis are. Westarted to discuss this in our previous blog titled The Dominant Causes of theCredit Crisis and How To Solve it and will continue to develop this themethroughout a series of blogs. Most of our initial focus will be on the US economy.As we progress, the role of major European and Asian countries will also bediscussed. Unless we specifically refer to another country by name, the readercan assume that we are referring to the United States.

The Six Decades (1947 2007) Preceding the Credit Crisis

The fifties and sixties were periods of high growth in productivity and income. Itwas a period of increasing prosperity for Americans across the wealth spectrum,measured by either income or net worth. GDP growth for the fifties (48.3% over10 year period) and sixties (49.4%) was significantly higher than any of thedecades (below 40%) that followed. Top marginal tax rates were above 70% andincome inequalities narrowed substantially from the 1930s. Industrial capacityutilization was between 80% and 90% for most of the sixties. From around 1947to the 1970s, the relative high growth in real household income was evenlyspread between all wealth groups of the US. During this period the United Stateswas theworld's leading export powerhouse, running a sizeable surplus.
http://www.investopedia.com/terms/d/doublediprecession.asphttp://www.investopedia.com/terms/d/doublediprecession.asphttp://www.cnbc.com/id/38021317/CNBC_EXCLUSIVE_CNBC_TRANSCRIPT_ALAN_GREENSPAN_FORMER_FEDERAL_RESERVE_CHAIRMAN_ON_CNBC_S_SQUAWK_BOX_TODAYhttp://www.cnbc.com/id/38021317/CNBC_EXCLUSIVE_CNBC_TRANSCRIPT_ALAN_GREENSPAN_FORMER_FEDERAL_RESERVE_CHAIRMAN_ON_CNBC_S_SQUAWK_BOX_TODAYhttp://www.cnbc.com/id/38021317/CNBC_EXCLUSIVE_CNBC_TRANSCRIPT_ALAN_GREENSPAN_FORMER_FEDERAL_RESERVE_CHAIRMAN_ON_CNBC_S_SQUAWK_BOX_TODAYhttp://en.wikipedia.org/wiki/Quantitative_easinghttp://en.wikipedia.org/wiki/Quantitative_easinghttp://en.wikipedia.org/wiki/Quantitative_easinghttp://www.dailymarkets.com/economy/2010/07/12/double-dip-recession-nominees-where-investors-should-go-shopping/http://www.dailymarkets.com/economy/2010/07/12/double-dip-recession-nominees-where-investors-should-go-shopping/http://beforeitsnews.com/story/96/457/Why_We_Will_Have_a_Double-Dip_Recession.htmlhttp://beforeitsnews.com/story/96/457/Why_We_Will_Have_a_Double-Dip_Recession.htmlhttp://falsegodsfleece.wordpress.com/http://falsegodsfleece.wordpress.com/http://www.epi.org/publications/entry/webfeatures_viewpoints_tradetestimony/http://www.epi.org/publications/entry/webfeatures_viewpoints_tradetestimony/http://www.epi.org/publications/entry/webfeatures_viewpoints_tradetestimony/http://www.epi.org/publications/entry/webfeatures_viewpoints_tradetestimony/http://falsegodsfleece.wordpress.com/http://beforeitsnews.com/story/96/457/Why_We_Will_Have_a_Double-Dip_Recession.htmlhttp://www.dailymarkets.com/economy/2010/07/12/double-dip-recession-nominees-where-investors-should-go-shopping/http://en.wikipedia.org/wiki/Quantitative_easinghttp://www.cnbc.com/id/38021317/CNBC_EXCLUSIVE_CNBC_TRANSCRIPT_ALAN_GREENSPAN_FORMER_FEDERAL_RESERVE_CHAIRMAN_ON_CNBC_S_SQUAWK_BOX_TODAYhttp://www.investopedia.com/terms/d/doublediprecession.asphttp://www.investopedia.com/terms/d/doublediprecession.asp


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Subtle changes came about in the 1970s and intensified in the subsequentdecades (1980 2007). These changes were to influence the US and worldseconomic history in a significant way. It was a time when economic imbalanceswere building up to a point where a major correction became inevitable, acorrection which is still in process today.

The Divide between productivity and income growth

US growth in real income and productivity rose together in lockstep from theforties until around the middle seventies. All income groups benefitted equallyfrom the relative high growth in productivity of about 2.7% annually from 1949to 1973 as average wages kept pace with growth in productivity.

A major change came about in 1973, when the growth rate in productivity

decreased to around 1.5% annually until 1995. But an even bigger change camein the form of a substantially lower growth in real income over the same period.Growth in median income of US households slowed to less than % annually,and mean income of households slowed to around 1% annually. The real medianearnings of a full time male worker basically came to a standstill as his realannual earningsof $42,573 in 1973, dropped to $40,064i in 1995. The changes inthe growth rate of productivity are shown by this chart posted by the FRBSFEconomic Letter 2007-25; August 31, 2007:

Source: Federal Reserve Bank of San Franciscohttp://www.frbsf.org/publications/economics/letter/2007/el2007-25.html

From around 1995 to 2007 the pace of productivity growth increased to around2.5% per annum. Although the pace of growth in both median and mean income

picked up in the period between 1995 and 2000, it slowed substantially from2001 onwards. From 1995 to 2007 it grew at less than half the pace at which
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productivity grew. A report by Isabel Sawhill from the Brookings Institution andJohn E. Morton from The Pew Charitable Trusts, discusses how the benefits ofeconomic growth have not been shared evenly, referring to the growing dividebetween growth rates of productivity and mean family income.

The report states: Finally, even if growth were to resume at its former pace, agrowing gap between U.S. productivity and median family income challenges the

notion that a rising tide will lift all boats. For nearly thirty years after the end of

World War II, productivity growth and median household income rose together in

lockstep. Then, beginning in the mid-1970s, we see a growing gulf between the two,

which widens dramatically at the turn of the century. As the data in Figures 6-9

indicate, the benefits of productivity growth have not been broadly shared in recent

years.

A graph from the above report illustrates this divide between growth rates ofproductivity and mean family income.

Source: European TribuneAuthors calculations of U.S. Census Bureau and Bureau of Labor Statitics data.* Income includes before tax earnings,interest, rent, government cash assistance, pension, child support, and other cash income. It does not include the value of non-cash compensation such as employer-contributions to health insurance and retirement benefits, the effect of taxes or non-cash benefits. Graph sourced fromhttp://www.eurotrib.com/story/2007/5/30/6525/77055

This growing divide forms one of the cornerstones of the so called invisible wall the barrier that makes it so difficult for the US and world economy to escapethe clutches of the Credit Crisis. As we will show below, increasing productivityand the divide between it and growth in median income are one of theoriginating causes of the Credit Crisis.

For a period (1970 2000) the wages or compensation of workers with a

bachelors degree seemed to do better by moving in lockstep with growth in
http://www.economicmobility.org/http://www.economicmobility.org/http://www.eurotrib.com/story/2007/5/30/6525/77055http://www.eurotrib.com/story/2007/5/30/6525/77055http://www.eurotrib.com/story/2007/5/30/6525/77055http://www.eurotrib.com/story/2007/5/30/6525/77055http://www.economicmobility.org/


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productivity, but since 2001 even this relationship disconnected as shown by thegraph below from The Economic Policy Institute.

Source: Economic Policy Instituteepi.bluestatedigital.com/.../

In an article posted by Lawrence Mishel , president of the Economic PolicyInstitute in Washington, D.C. ON MARCH 27, 2007, Mishel acknowledged thegrowing gap between the increase in income of the American workforce and theincrease in productivity

Americans are working not just harder and longer, but more productively. Theeconomy has grown enormously, in large part because the American workforce has

been among the most productive in the world. Output per hour of work increased

71% from 1980 to 2005, making possible a dramatic rise in our living standards.

But the real compensation, including benefits, of nonsupervisory employees rose

only 4%. Productivity over the past 5 years rose almost 20%, but inflation-adjusted

wages for workers with a college education have been flat, just as they have for

those with a high school diploma.ii

But what does this have to do with the causes of the Credit Crisis? Well, if yourworkers produce more goods and services but get less compensation, who isgoing to buy those extra goods and services? Interestingly enough, this problemwas identified long ago byHenry Fordin 1914 when he more than doubled theminimum wages of his employees. Part of his underlying philosophy for payingworkers more, was that the workers had to earn enough income in order to buythe cars they built.

It is important to realise that from the middle seventies the average workerbecame relatively less able to buy the products that he produced with hisemployer. But how did the American work force continue to consume the

production from 1973 to 2006, even though the growth in their income did notkeep up with the growth in productivity? The short answer - Americans worked
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longer hours, got more credit, enjoyed significant tax cuts which increaseddisposable income and used their savings to keep on spending.

The divide between supply and demand

Since the late 1960s there was a general downward trend in the utilization ofproduction capacity. Although there was some stabilization in the 2nd half of the1980s and nineties, the downtrend (lower highs and lower lows) were confirmedby the steepest post World War II decline at the beginning of the 21 st century. Insimple terms; the production facilities created by private investment couldincreasingly produce more goods than what the consumer could afford (middleincome groups) or wished (high income groups) to consume. One can thereforeconclude that one or a combination of the following occurred:

The private sector increasingly over invested in production capacity,and/or

Demand expectations failed to realize, and/or

There was more competition from foreign production facilities, and/or

Productivitys pace of progress was much faster than expectations.

The graph below shows production and capacity growth from 1967 to 2010. Itillustrates the gap between capacity and production and how that gap grewduring recessions (grey lines) and narrowed during economic recoveries.

Source: Federal Reservewww.federalreserve.gov/releases/g17/20100315/
http://en.wikipedia.org/wiki/Capacity_utilizationhttp://en.wikipedia.org/wiki/Capacity_utilizationhttp://en.wikipedia.org/wiki/Capacity_utilizationhttp://www.federalreserve.gov/releases/g17/20100315/http://www.federalreserve.gov/releases/g17/20100315/http://www.federalreserve.gov/releases/g17/20100315/http://www.federalreserve.gov/releases/g17/20100315/http://en.wikipedia.org/wiki/Capacity_utilizationhttp://en.wikipedia.org/wiki/Capacity_utilization


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But it is the overall trend reflected in the graph below that is of most concern. Itshows how much of the industrial capacity (percentage wise) was used annuallyfor actual production over the same period as the previous graph. During eachmajor recession (three widest grey lines), the usage of capacity dropped lower

than the previous major recession while recoveries in capacity after eachrecession, settled at a lower level than the previous high. In other words, sinceapproximately 1975 we see a general downward trend in capacity utilizationwhich reached record low levels in 2009.

Source: Federal Reserve Bank of St. Louishttp://research.stlouisfed.org/fred2/series/TCU

What does this say about the current economic situation? We have an overhangof capacity. If needed, the producers could increase supply substantially tosatisfy any increase in demand without any major requirement for new fixedinvestments.

In simple terms, we dont have a supply problem, but one of demand. Whatwould further fixed private investment achieve? Would it not create a bigger

under utilization of capacity, resulting in more idle capital? Yes, it probably will -which leaves us with the next question; how do we grow the economy if not byprivate investment? At the end of this series of blogs on the Dominant Causes ofthe Credit Crisis we will come back to this very important question.

What caused this underutilization of capacity?

Factors that had a significant impact on supply and demand are the following:

1. Firstly, the United States increased outsourcing (importing products orparts of products) and off shoring (moving factories to foreign countries)
http://research.stlouisfed.org/fred2/series/TCUhttp://research.stlouisfed.org/fred2/series/TCUhttp://research.stlouisfed.org/fred2/series/TCUhttp://research.stlouisfed.org/fred2/grahttp://research.stlouisfed.org/fred2/series/TCU


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some of its production to countries with lower production cost, especiallywhere labour constituted a major part of total input cost. This happenedincreasingly more so at the beginning of the 21st century when theUnited States upped the pace of outsourcing and off shoring to China andother Asian countries.

2. As shown above, median wages started to stagnate from the earlyseventies. This created an increasing gap between what was producedand the capability of the wage earners to buy it for consumption. Eventhe so-called white collar graduates started to fall off the wagon in theearly part of the 21stcentury.

3. The above graphs which refer to the capacity overhang, relates mainly tothe manufacturing of goods for consumption. The United States economyhas grown more and more into a service consuming community. Fromaround 1970, the consumption of services exceeded the 50% mark aspart of total annual personal consumption. By 2008, services contributedmore than 65% to total consumption. An increasing part of income wastherefore allocated to services and service related products. The servicecomponent obviously competed with the above manufactured goods for apiece of the consumers spending power.

4. Increased productivity, outsourcing and off shoring led to significantdecreases in the prices of some goods, especially electronic goods. Thismade some goods more affordable. Therefore, although the averageconsumers income did not keep pace with growing productivity or

production, he could still afford to consume more of these goods(measured by quantity) as long as prices decreased relative to his income.This, to some extent, slowed the growing divide between supply anddemand.

But why should the above cause overcapacity? Why did investors not simplyreduce fixed investment to eliminate excess capacity and the idle use of capital?Fixed investment is a long term commitment built on future expectations whichis often based on past performances. When these assumptions dontmaterialized, overcapacity becomes a reality. But the increasing under utilizationhas been building up for some time now (nearly four decades) and if capital isscarce one can imagine that the highly payed CEOs and their talented executiveteams would be more nimble in adjusting their investments in order to minimizeexcess capacity. The reason for the over investment in capacity however, mightbe more intricate than one would guess.

Falling wages (except for top income groups) meant that more benefits (income)accrued to the owners of capital, business owners and high earners. Significantreductions in top marginal tax rates since 1980 increased the savings of the topincome earners even more. Most of the top income earners, however, did notspend all their income on the consumption of goods and services. In fact some

surveys suggest that they saved an increasingly larger part of their income overthe last three decades whereas the lower income groups tended to save less and


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increasingly dipped into their savings to keep up to the Joness; or simply spentin an attempt to maintain a certain standard of living. As savings continuouslyaccumulated at the top end of the income and wealth curve, these savingsobviously had to be invested somewhere.

Any form of investment in newly issued shares, corporate bonds, bank depositsand other financial instruments are all destined to end up in financing theproduction and supply of goods and services. Alternatively it is used to supplycredit to those who spend such money on the goods and services created by theabove investments. The resultant returns on such investments are trading andcapital profits, interest, dividends, rents, royalties etc. If more and more capitalaccumulates, competition for limited investment opportunities will increase.Owners of capital then have to accept lower returnson their investment. Lowerinterest rates are usually a consequence of such a glut of savings.

Too much capital did accrue to the top wealth groups during the 29 year periodfrom 1979 to 2008 (see detailed discussion of this period later in this blog). Thisaccumulated capital could and still can, produce more goods and services thanthe average consumer can afford to consume. In addition, the consumer has toolittle income to take on more credit. Furthermore, due to decreasing homevalues, few have the collateral to qualify for further credit. Clearly, the consumernow has to do without further credit - in sharp contrast to the previous twodecades, when escalating credit helped to bridge the gap between supply anddemand.

In conclusion, when too much capital competes for limited investment

opportunities, investors will tend to over invest in production capacity (for goodsor services) and over lend to those who are potential buyers of goods andservices.

What can one do about overcapacity or insufficient demand? Well, the top wealthgroups can increase their own consumption to absurd levels (e.g. each buying anadditional 100 cars or boats), destroy existing capacity (e.g. war) to create roomfor new investment, or they can follow Henry Fords example and pay the middleincome groups more in wages in order to enable them to consume more goodsand services. The first two options are obviously impractical or undesirable.With regard to wages; its difficult to argue for higher wages when businessenterprises have justification for their attempts to minimize input costs.Globalization will make any reversal of the downward trend in wages, verydifficult. That leaves us in a stalemate position. Breaking this stalemate will bevery hard, unless we can find a way to restructure the economy and the fabric ofsociety in such a manner that we can take advantage of the benefits andabundance that productivity, innovation and technology has brought to ourworld.


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The divide in income growth

From the middle to end of the 1970s, the divide between the growth inproductivity and median income had a severe affect on the unequal distributionof income. This naturally raises the question; if the fruits of increase productivitydid not go to the average worker, where did it go? Before attempting to answerthis question, it is necessary that the reader grasps the differences between theterms median income, mean or average income and income for eachquintile.

Median income is the middle income of all households; 50% ofhouseholds earnmore than the median income and 50% earn less. With few exceptions, it isrepresentative of the typical household income of a country. The mean oraverage household income might differ significantly from the medianhousehold income. Average income is calculated by dividing total income by the

total number of households. Where the higher income households have a largeinfluence on the average household income, the average income will be higherthan the median income. Cases where the average income is higher than themedian income, and where the difference between them increases, are indicativeof a growing gap between the typical household and those households in thehigher income brackets. For example; for the period 1975 -1980 the meanincome exceeded the median by 18.9% (Collett 2010: p.50)iii and for the period2001 -2005, mean income exceeded the median income by 36.7% (Collett 2010:p.50)iv - indicating that households in the upper income brackets got anincreasing larger share of total income.

When one divides the total population of income earners or households in fivecategories (e.g. each categories represents 20% of total households), it is referredto it as a quintile; alternatively one refers to the various quintiles as thebottom 20%; middle 20% ; top 20% or one can add four quintiles together to callit the bottom 80%.

The following graphs from The Working Group on Extreme Inequality show theextentof growth in the value of each quintiles real household income for the 32year period 1947 to 1979. During this period the income for all quintile groupsincreased by nearly 100% with the higher increases going to the lowest, third

and fourth quintiles (which accounts for the improvement in income equality). Insimple terms, poor households and the middle class income grew slightly fasterthan the highest income earners. Alternatively, one could say that all householdshared equally in the increase in productivity with the scale tipped slightly to thelower and middle class groups.
http://extremeinequality.org/?page_id=8http://extremeinequality.org/?page_id=8http://extremeinequality.org/?page_id=8


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Source: Analysis of U.S. Census Bureau data in Economic Policy Institute, The State of WorkingAmerica 1994-95 (M.E. Sharpe: 1994) p. 37, cited Working Group on Extreme Inequalityextremeinequality.org/?page_id=8

In the subsequent 29 year period from 1979 to 2008, the improvement inincome inequality since the beginning of the Great Depression was completelyreversed. As shown by the graph below, for the 29 year period from 1979 to2008, the distribution of increases in income were heavily skewed in favour ofthe top 20% quintile while the two bottom quintiles went backwards. Within the

top 20% the distribution of income were even more skewed towards the top 5%.More importantly, whatthe graph below doesnt show is how the income curvebecomes much steeper as you continue upwards, past the 5% percentile to thevery top of the income curve.

Source: U.S. Census Bureau, Historical Income Tables, Table F-3 (for income changes) and Table F-1(for income ranges in 2008 dollars), cited Working Group on Extreme Inequality extremeinequality.org/?page_id=8
http://extremeinequality.org/?page_id=8http://extremeinequality.org/?page_id=8http://extremeinequality.org/?page_id=8http://extremeinequality.org/?page_id=8http://extremeinequality.org/wp-content/uploads/200http://extremeinequality.org/?page_id=8http://extremeinequality.org/?page_id=8


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The next graph is important in that it shows why all quintiles were better offwhen measured by disposable income (income after tax). Disposable incomegrew relatively faster than gross income, courtesy of significant tax cuts since1980. This had a positively effect on demand for goods and services from allquintiles groups. As said above, inequality in the income distribution curve

within the top quintile was even more pronounced. The after tax income growthof the top 1% is a phenomenal 256%, outpacing the middle 20% - quintilesgrowth rate by more than 12 times. This is no small matter as the top 1% shareof total income constituted more than 20% of total income. Since then the top1% share of total income has grown to nearly 25% and real income for the lowerquintiles decreased from 2008 onwards.

Source: Congressional Budget Office, Average Household After-Tax Income, Data on the Distributionof Federal Taxes and Household Income, April, 2009, cited Working Group on Extreme Inequalityhttp://extremeinequality.org/?page_id=8

The graph below is sourced from a report drafted by Jonathan Wang, Ph.D. titledtheReal Causes For US Financial Meltdown and Global Recession.It shows to whatextend the top 1% groups share of total income has grown since the mid 1970swhen it bottomed at 8.9%. At the end of 2006 the 1% groups share moved up toaround 22% and by 2009 it was closer to 25%. As can be seen from the graphbelow, the only other time this groups share of total income was as high, was in

1928 shortly before the onset of the Great Depression.
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Source: Amlinkhttp://www.amlinkint.com/English/global_recession_cause_3.html

The importance of the growth in the unequal distribution of income from aroundthe mid seventies till 2008 and beyond had profound effects on the worldeconomy:

1. It significantly contributed to the concentration of wealth and capital inthe hands of the top households measured by income or net worth,especially the top 1%.

2. The top households were therefore able to save more whereas the middleto lower income groups consumed their savings in order to maintain ahigher standard of living than that allowed by their wage income.

3. The size of top earners (mostly executives) income , mainly via bonuses,was dependent on growing the profits and share values of their respectivecompanies. Cutting labour cost to the bone, outsourcing or off shoringmost of the manufacturing processes to lower cost centre (often lowpaying Asian countries) and increasing mechanization were often the mainfocus in achieving higher profits and hence higher bonuses. After slashingcosts and payrolls, and riding the wave of many governments stimuluspackages and many US companies (especially those who operate on an

international scale) have been racking up enormous profits in the lastdecade, while the ordinary US citizen has been fighting desperately,especially since 2008, to keep head above water.

4. This over time led to increased savings at the top end of the income curveand consumption of savings (savings used to pay for consumption of goodsand services) at the middle and lower end of the income curve. Asexplained above, the accumulated savings must be invested, creatingcapacity for the production of goods and services which the vast majorityof income earners (bottom 80 -90%) cannot afford and for which the topincome earners (top 5%) has insufficient needs. This growing gap

between supply and demand or income available for consumption andcapacity to produce; have in the past three decades been bridged by
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negative savings (savings used for consumption), Americans working morehours, reduced income taxes and steep growth in credit. These sourcesare now just about fully tapped and there is little left for any furtherassistance from these sources.

5. Growth in productivity of both labour and capital has greatly increasedmans ability to produce abundance. But once it reaches a stage wheresuch abundance cannot be effectively distributed by current economicstructures to ensure continued growth, the economy stagnates andeventually contracts. When the imbalances become too great, thecontraction may become so severe that it can cause social upheaval andfurther economic destruction. Unless huge sacrifices are made by allincome and wealth groups, in order to establish a new equilibrium, theinvisible wall may become an impenetrable curse to all of us.

In the subsequent blogs we will look at both the consumption and accumulationof savings on an international scale; increasing outsourcing and off shoring toChina and other Asian countries; how outsourcing and off shoring negativelyaffects income inequality and the imbalance between supply and demand on aglobal scale and how this caused a global glut in savings which laid thefoundations for the many bubbles in the lead up to the Credit Crisis. We will alsolook at previous major crises to see if there are similarities in the build up to theclimax of such a crisis, how all of the above factors eventually paved the way fordebt bubbles, asset bubbles and stock market bubbles. Finally, we will discussthe potential remedies and why it will be difficult to implement a workablesolution.

David Collett is a chartered accountant with more than 25 years experience in the field offorensic investigation. He has acted as an expert on many subjects such as business,investment and share valuations; fair presentation in financial statements and prospectuses;lax credit standards, credit risks and professional liability.

Over the past decade he closely followed the financial markets. Through a series ofpresentations made to the finance and investment communities, he forecasted the collapse offinancial markets and the 2008 stock market crash.

For more information about David and his work, please visithttp://www.false-gods-fleece-the-faithful.com/.

Copyright David Collett 2010.

Whilst every effort was made to ensure the accuracy of this article, neither this document; nor itsauthor, David Collett; nor any publisher of this article; offer any warranties (whether express, implied orotherwise) as to the reliability, accuracy or completeness of the information appearing in this article.Neither do any of the above parties assume any liability for the consequences of any reliance placed onopinions expressed or any other information contained in the above article, or any omissions from it. Itscontent is subject to change without notice. Any information offered, is intended to be general in natureand does not represent any investment or business advice of any nature whatsoever. If you choose torely on such information you do so entirely at your own risk. Neither David Collett nor any third party

involved in publishing this article, assume any responsibility or liability for the outcome of such reliance .
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The Dominant Causes of the Credit Crisis (Part 2): US Edging towards a double dip recession – is...

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