I read the following in last weekend’s Wall Street Journal, “Heard on the Street”, p. B16, October 9-10, 2010 …

Being a bear with a capital “B” is tough when the Federal Reserve is juicing markets. The prospect of more extraordinary easing measures Friday pushed the Dow back above 11,000.

But that hasn’t deterred David Rosenberg, Gluskin Sheff’s chief economist.  While the National Bureau of Economic Research (NBER) has said the recession ended in June 2009, Mr. Rosenberg insists we are still in a depression.

That view is based on a less-technical measure of downturns than that used by the NBER.  Mr. Rosenberg says a recession is when government tries “to stimulate the private sector.” A depression is when government tries “to sustain the private sector.” The latter, he argues is very much the case today.

And for those who question the absence of 1930s-style bread lines, Mr. Rosenberg counters that today, thanks to food stamps and other government-assistance programs, “the soup and bread lines are in the mail.”

He makes a good point.  Due to the recession, 1 in 8 Americans now receives food stamps.  If you were to count all those who are eligible, but for whatever reason do not collect, the number is something like 1 in 5 Americans.

Let’s see whether the Fed is successful in stimulating the economy with lower long-term interest rates.  It might work, but it might not.  Personally, I’m not convinced it will.  The Fed is trying to pull a rabbit out of a hat.

Amongst other things, the Fed is also trying to juice housing prices, and I think the juice will help prices to bounce somewhat.  But a dead cat will bounce only so many times.  Eventually, a dead cat is a dead cat.  Don’t get me wrong … Housing will eventually recover, but don’t hold your breath waiting.  It might be a very long time.

And as for the economy, it too will recover, but only when the fundamentals allow it to recover.  Until then, there’s a fair amount of debt that needs to be flushed out of the financial system before that happens.  In the meantime, and to that end, mortgage refinancing might be in order.