I've been predicting a recession for at least a couple of years. While not an economist I can still look at the American economy that's being savaged by the costs of the war in Iraq, the loss of unionized jobs in manufacturing in exchange for service industry jobs at near minimum wage, and a housing market that to my eye looks like another bubble.

Remember the last time that housing prices in Toronto reached the point where a two income household could just barely carry a mortgage? That's when they created 5% down mortgages. Now we're creating 40 year terms to get payments low enough for people to buy.

How much of an economic slowdown will it take before defaults start happening and prices start to drop?

The claims by well heeled analysts and bankers that we have nothing to fear don't convince me of much. I'm sure that every major economic slowdown has been preceded by similarly confident appraisals.

Politicians and economists still believe that they can control economic forces. I suspect that ultimately the best that they can hope for is to bottle up the pressure until a point when everything explodes entirely.

Ultimately, Barry, you could be right.

But the experts tell me they don't see this as a bubble. And we don't have the subprime time bomb here.

However, if banks in Canada affected by their subprime losses retaliate against Canadians by playing hardball on credit, maybe we'll have more trouble than we anticipate.

My guess is we'll know more in the coming months. If the U.S. falls fast, hard and deep, then our problems will be bigger than we currently think.

If the U.S. has a short, shallow recession, maybe we'll come through it without much carnage.

For one thing, inflation's under relative control, so there's wiggle room on interest rates. And most governments are in good fiscal shape, so they can add some stimulus to the mix if needed.

This doesn't help, but one definition I've heard of an economist is someone who can confidently predict the future of the economy -- and then just as confidently explain his prediction away when he's proven wrong. :)

One thing the experts told me is that

Today at the Dow Jones Marketwatch site....

The great fiscal stimulus package ... of 1929

Popular imagination has the Great Depression opening with a bang in October 1929. We forget that even by December of that year, the market had no idea what was really in store. After a period of wild, bipolar volatility ... the top bankers and "captains of industry" rushed to shore up the market.

But, the financial pundits and government leaders of the day insisted the economy's fundamentals were still strong. Mass unemployment was ... still just something that went on in Germany and Britain. America was strong and merely needed a push to keep the financial markets from harming the broader economy.

With that in mind, Herbert Hoover assembled ... an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package.

Sound familiar?