No. I generally don't short. As I have said in other threads, I anticipate a series of upside down U's until the excess leverage is removed from the financial system. Any leg of the U could lead to financial meltdown so I don't believe the Fed/PPT/Treasury will let those go too low. The top of the current U will occur in the next month or two. The next leg down will probably be July followed by a very sharp rise into another upside down U. There is no small matter of $8000 in new home buyer tax credits being paid out next year as well as other stimuli, so there will be growth late this year or next year.
These inflationary booms will succeed but increasingly create a malinvestment condition where prices for commodities and raw materials rise to strangle industry and ultimately economic growth. The subsequent deflationary booms will feature large amounts of deleveraging as long as the Fed pursues cheap credit as its only policy.
This whole mess could be easily rectified with a return to market interest rates combined with investment tax incentives (mainly reduction of the corporate taxes and elimination of the long term capital gains tax). We would also suffer an inflationary burst as this happens but that should be a one time event. Economies cannot grow on credit, only suffer booms and busts and in our condition a bust could end our financial system.
If you mean GDP growth in the U.S., yes, the 3rd and 4th Quarters of 2009 should show "growth" due to statistical ledgerdomain and happenstance, but that will come in the face of still falling employment, illiquid Secondary Markets, and a global credit crunch and trade collapse.
In short, GDP growth is already "Baked in" for the 2nd half of this year, but it won't mean a thing and the collapse will only be masked, not reversed, for a very brief time (e.g. half a year).
No.
The core problem is global overcapacity. Markets respond to overcapacity with deflation.
Governments fight deflation for political reasons, but deflation will continue globally until excess capacity is removed from the economy.
Tax credits, as you pretend above, could help...or could do harm if they are designed to encourage additional manufacturing, housing, or service expansion.
Expanding capacity when you already have overcapacity will simply accelerate deflation.
This isn't theory; it's real-world fact. Japan today has done *precisely* what you suggest above with industrial tax credits, and Japan has now given itself 12% annual deflation.
This is unsustainable, globally.
What Business Schools never told the MBA kids was what happened when you built too many factories. It was as if it wasn't possible to build too many houses, or too many shopping malls, or too many cars, or too many ships, or too many memory chip fab plants.
And building even *more* such capacity as above will accelerate deflation...the enemy of all *productive* wealth.