While on an exercise bike yesterday morning a number of economists on Fareed Zakaria's show kept talking about how we averted a depression by the skin of our teeth. You read about and see folks talking about how we avoided a second great depression a lot lately. Some will argue it's thanks to the actions of the fed or the stimulus or because of the powers of the market or some other reason. I wonder how they know we've actually averted a depression. Sure the stock market reached 10,000 the other day and the loss of jobs is slowing but in 1930 things looked like they were getting better too. That didn't turn out too well. I am not predicting the stock market is going to crash some more or the job situation is going to get a lot worse but it sure seems early to say the coast is clear.

Even if we aren't facing a Great Depression 2, there's also the possibility of a lost decade ala Japan. The best evidence that we aren't facing another depression is not U.S. economic numbers but the strength of economies overseas. On the other hand, Japan's economy went nowhere while the rest of the world grew at a good rate. In other words, let's wait a bit before we decide what exactly our current economic state is.