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Although many claim that the US recovery has begun, there is still fear among economists and forecasters that what seems to be a recovery, is actually only a deceiving break from the recession before an even greater storm. The reason for the fear is the fact that the temporary economic boost that we are currently witnessing is actually triggered by the $1trillion of government bailout money to financial institutions and the stimulus package. Unlike the steady drumbeat of good news sounded by the media like the Wall Street Journal (“The Economy Has Hit Bottom“) and Newsweek (“The Recession is Over“), economists and forecasters fear that the US economy is on the verge of a double dip second recession which most likely will be longer and deeper.

Gerald Celente, founder of The Trends Research Institute, forecasts “food riots, tax protests, farmer rebellions, student revolts, squatter digins, homeless uprisings, tent cities, ghost malls, general strikes, “bossnappings”, kidnappings, industrial saboteurs, gang warfare, mob rule, and terror” by 2012 in the latest edition of The Trends Journal.

Harry S. Dent, frequent commentator and TV shows and the financial press predicted another stock market that could cause the Dow to fall to 1800-3800 by 2010. In his 2008 book “The Great Depression Ahead”, Harry S. Dent explained that it is not a normal recession or stock crash. But it “represents the peaking of the massive Baby Boom generation around the developed world from Europe to North America and these affluent consumers will be predictably shifting from spending to saving over the next decade despite stimulus programs.” As he had said it back in 1992, he still says now that no amount of government stimulus will prevent this “massive deleveraging of credit or the Baby Boom slowdown.”

Because it is not a normal stock crash, the stimulus programs will be very short-lived in their impact. Moreover, Dent says, because of so much stimulus there are potential inflation risks and because of expected recovery, interest rates and mortgage rates will go up, bringing affordability down.

Dent also sees a major shift towards growing economic and military power in Asia as a result of economic forces, away from Europe and Russia. With credible global institutions emerging to deal with global trade agreements, global warming and terrorism and so on, the growth in the coming decades will be more clearly in Asia and in other emerging countries.

Dent’s forecast that Obama’s stimulus package will only have temporary impact on the US economy was agreed on by Martin Weis, a financial market analyst and head of Weiss Research Group. Although the stock market has been rebouding, he still believes that the US is still at risk of another depression as claimed in April 2009 book, The Ultimate Depression Survival.

“The government stimulus package, but also all the efforts of the Federal Reserve to pump money into the economy will have some effect,” Weiss explains, “and the impact they are having is to turn a bad situation into a less bad situation and that shift is perceived as good news and so if that transition is helping consumers to become more optimistic, it is helping to bring optimism to Wall Street and so temporarily you see a stabilization and that temporary stabilization will last several months, maybe into the year.”

However, Weiss believes that because none of the steps taken by the Obama administration have addressed the underlying causes of the crisis, all that the government is doing is prolonging the agony. This makes it even worse when next the economy starts running down which he thinks may be as soon as next year.

Regarding the long term effects of this global crisis, Weiss says that we are currently witnessing a millennium shift which is a economical and political power shift from the West to the East. It is very obvious that the Indian subcontinent and East Asia are experiencing rapid growth while Europe and North America are going to experience a slow and interrupted growth.

The reason for this long term factor, according to Weiss, is that North America and Europe are now deep in a mess of debt all the way from the household to the federal government level. In the meantime, countries like China, India, Brazil have actually a much lower debt level now and a much larger cash surpluses. So financially speaking, these countries would be the ones who are sounder financially.

It is very ironic to see how this used to be the other way around. In the past, the United States was the one that had all the capital and developing countries above were the ones heavily reliant on the US and Western Europe for capital. Now countries like Brazil, China and even India to some extent are America’s greatest creditors.

Apart from these countries, Weiss sees that even Indonesia, Malaysia and South Korea will benefit and are better positioned. It is interesting to see that Indonesia and Malaysia are the ones who have a much sounder financial situation in today’s economy because of the Muslim-Islamic oriented traditions and restrictions on debt and interest. This practice has helped those countries to be more conservative financially and fiscally. Evidently, Indonesia and Malaysia are currently doing much better than Thailand and the Philippines and other non-Muslim countries.

Gerald Celente, founder of the Trends Research Institute and publisher of the Trends Journal, does not believe for one second that the US economy has begun to recover. He reasons that the people who are now predicting recovery are actually the same people that were saying recession wasn’t there. The same people talked about green shoots a few months ago and early this year they said that the US recovery will begin by the second quarter of 2009. Unfortunately none of those are true.

Celente pointed out that the Obama administration had estimated that without the stimulus package, the unemployment rate would be 8% but the fact is, now that the stimulus package is here, unemployment has gone up to 9.5%. Celente strongly critiziced that all their forecasts are wrong and none has come to pass. Celente says, “How could people believe these people when everything they said is wrong.” Celente strongly disagrees that the US economy is actually recovering, considering that, “You can not print phantom money out of thin air based on nothing, backed by nothing without destroying the economy. Look at Brazil, India, China, Russia, the BRIC countries, they all talk now about another reserve currency.”

While the optimistic drumbeat of good news that the US economy is recovering, we are now left in wonder whether what they are doing is keeping us in an illusion instead of warning the people that the dam is broken.

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