In addition to my prior post's focus on the coming defaults in commercial loans and the hard impact that will have on smaller, local banks, here is some more gloom from Roubini*:

"... the total effect on labour income – the product of jobs times hours worked times average hourly wages – has been more severe than that implied by the job losses alone, {Billy T insert: which are 17.5% when the discouraged and under-employeed are counted} because many firms are cutting their workers' hours, placing them on furlough or lowering their wages as a way to share the pain.

Many of the lost jobs – in construction, finance, and outsourced manufacturing and services – are gone forever, and recent studies suggest that a quarter of U.S. jobs can be fully outsourced over time to other countries. ... {Billy T insert: Even jobs you would think impossible to out source, like an MD reading your chest X-ray. Many routine ones travel via the internet to an Indian MD who reads and writes the report while US is sleeping. That report is waiting the next AM in a US computer before the clinic that took the X-ray is even open! for about 1/3 the cost.}

Consider also the credit markets. Prime borrowers with good credit scores and investment-grade firms are not experiencing a credit crunch at this point, ... But non-prime borrowers – about one-third of U.S. households – do not have much access to mortgages and credit cards. They live from paycheque to paycheque – often a shrinking paycheque, owing to the decline in hourly wages and hours worked. And the credit crunch for non-investment-grade firms and smaller firms, which rely mostly on access to bank loans rather than capital markets, is still severe.

Or consider bankruptcies and defaults by households and firms. Larger firms – even those with large debt problems – can refinance their excessive liabilities in or out of court, but an unprecedented number of small businesses are going bankrupt. The same holds for households, with millions of weaker and poorer borrowers defaulting on mortgages, credit cards, auto loans, student loans and other consumer credit.

Consider also what is happening to private consumption and retail sales. Recent monthly figures suggest a rise in retail sales. But, because the official statistics capture mostly sales by larger retailers and exclude the fall by hundreds of thousands of smaller stores and businesses that have failed, consumption looks better than it really is.
...
the household savings rate has risen from zero to 4 per cent of disposable income. But it must rise further, to 8 per cent, in order to reduce the high leverage of the household sector. To be sure, the U.S. government is increasing its budget deficits to put a floor under demand.

But most state and local governments that have experienced a collapse in tax revenues must sharply retrench spending by firing policemen, teachers and firefighters while also cutting welfare benefits and social services for the poor. Many state and local governments in poorer regions are at risk of bankruptcy without a massive federal bailout. {Can you say "California"?}

Moreover, income and wealth inequality is rising again. Poorer households are at greater risk of unemployment, falling wages or reductions in hours worked, all leading to lower labour income, whereas on Wall Street, outrageous bonuses have returned with a vengeance.

With the stock market rising and home prices still falling, the wealthy are becoming richer, while the middle class and the poor – whose main wealth is a house rather than equities – are becoming poorer and being saddled with an unsustainable debt burden.

So, while the United States may technically be close to the end of a severe recession, most of America is facing a near-depression. Little wonder, then, that few Americans believe that what walks like a duck and quacks like a duck is actually the phoenix of recovery. ..."

From: http://www.rgemonitor.com/blog/roubi...ican_economies
OR, direct from the Globe & Mail original source here:
http://www.theglobeandmail.com/news/...rticle1366935/
Where 46 reasonably intelligent comments on artilcle have been posted already (In first day following publication)

------------------
* Widely creditied as among the first to predict the current crisis, even though a few years after I did. (He, is well know university professor - I am retired physicst - what would I know? )

PS:
The image that comes to mind which for me best describes this “recovery” is the desert mirage of water as salvation for a thirsty man.

For very complete discussion (with hard data) on inflation / deflation etc see: http://www.rgemonitor.com/index.php (Click on first item.)