Double-dip fears across the West as confidence crumbles

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The Western world is at mounting risk of a double-dip recession after key measures of confidence collapsed in both the United States and Europe, with Germany suffering the steepest one-month fall since records began in the 1970s.

The US Conference Board's index of consumer sentiment in August plunged to the lowest level since the depths of the slump in 2009, falling to 44.5 from 59.2 in July. Future expectations fell even harder.

The drop was far steeper than expected and follows grim warnings over the weekend from Christine Lagarde, new chief of the International Monetary Fund, that the global crisis is entering "a dangerous new phase" .

The fund has slashed its growth forecast for America and Europe, according to a leaked draft of its World Economic Outlook. It has called on both the US Federal Reserve and the European Central Bank to stand ready for "further easing of monetary policy" - implying a fresh blast of quantitative easing (QE) by the Fed.

The minutes of the Fed's meeting in early August show that a number of committee members called for more "substantial" stimulus, suggesting that they pushed for further bond purchases or 'QE3'.

The Fed's so-called "Gang of Three" hardliners has already shrunk to two. Minneapolis Fed Narayana Kocherlakota said on Monday that deflationary pressures are building again. "Increasing policy accommodation might well be appropriate," he said.

In Europe the picture is as bad if not worse. The eurozone is already on the cusp of recession even before austerity bites in Italy and France, and bites harder in Spain, Portugal, Greece, and Ireland.

The European Commission's economic sentiment index (ESI) dropped below the contraction line in August. "A loose monetary policy seems to be the only medicine left to prevent a painful fall back into recession," said Peter Vanden Houte from ING.

Stephen Jen from SLJ Macro Partners said the next phases of the eurozone crisis is likely to come when the debtor states conclude that it is no longer worth putting up with the pain of EU-imposed austerity. "I think this will happen in weeks rather than months."

Well, the next phase of the Eurozone crisis, indeed the global economic crisis, may be within weeks rather than months. Among the indicators, and there are of course some positives, are a fast growing number of negatives indicated here by those measures of business and industry confidence. Real economic measures are beginning to reflect the reality of forthcoming global recession > depression - slowly but surely, though this pace can rapidly escalate. Time of course will tell.

the MSM's are saying QE3 quite a few times throughout the day since Monday. August was flat line, which amazed me honestly in the dow, I figured it would be down.

Germany was side stepping last week about the bailouts of a few countries, I guess the reasons are cmoing to light. They are in trouble also.

Eurozone is in sad shape, Japan is doomed, Britain will follow and also America. Does not look like a gravy train is ahead of us.

I ♥ it! I hope it continues. I want the birthplace of political-correctness to suffer greatly. Rejoice!!!