Get ready for a Double Dip in  Economic Activity. What is a double dip? A Double Dip is the second phase of economic activity subsequent to an increase in activity from the bottom of a recession.  While the economy appears to be on the upswing from the recession bottom, all of a sudden it runs out of steam. In the present case the rise from the bottom was the direct result of government stimulus, but as always, the stimulus funds run out and the economy resorts to its original down trend.  This is known as the Double Dip.  On a graph the Double Dip looks like the letter W. 

We are in the downward phase at the present time. And it will continue to get worse. The culprit in this mess is the government and its handling of the economy. Although many of the problems go back years, we can attribute the current situation to three events. 1. the allowing of Freddie Mac & Fannie Mae to buy mortgages from banks with little or no money down. This bankrupted both Government Sponsored Enterprises (GSE's). Excessive speculation caused by low interest rates caused demand for housing resulting in prices not actually reflected by ordinary demand and supply. 2. the monopoly status of Standard & Poors, Finch and Moodys Rating Services to rate the debt of the GSE"s and the Securitized Loans packaged by the banks. The rating agencies were paid by the companies selling the securities which bundled the mortgages that the banks sold to Wall Street. Without the rating agencies imprimatur, this would never have happened.  3. the zealous action of Elliot Spitzer which led to the firing of the CEO from AIG. Inexperienced managers then in control of the company took excessive risk without having adequate controls in place to limit losses thereby causing AIG's ultimate collapse resulting in the bailout by the U.S. government to the tune of 180 billion dollars.