David Brooks is afraid of a double-dip.


Dean Baker says it's unlikely. The Fed engineered the last one in the early 80s.

Brooks:

A few years ago, Kenneth Rogoff and Carmen M. Reinhart wrote the definitive guide to the current economic downturn, a book called “This Time Is Different.” Rogoff and Reinhart studied data from eight centuries of financial crises. They found that banking-crisis recessions are worse than normal recessions. They last longer.

In these recessions, it took an average of six years for housing prices to stop their decline. Unemployment rates were high or rising for an average of five years. Government debt increased by an average of more than 86 percent.

The general lesson I take from this history is that policy makers stuck in a financial recession should probably think about the long term. You’re going to be stuck with a lousy economy anyway.

When asked about Reinhardt and Rogoff's study at a press conference, Bernanke deadpanned that "policy makers stuck in a financial recession" haven't performed well in the past. They were too complacent or made mistakes in other words. In a recent speech, Chicago Fed President Charlie Evans said the same thing.

The title of the book is referring to the manner in which people explained away the housing bubble and past bubbles, people like Greenspan and Bernanke. Baker didn't and I'm willing to bet Brooks did, or else ignored the issue, so Baker's probably right here.