Could it happen here?

“I fade the deflation idea,” says Jim Glassman, senior economist at JP Morgan Chase. “What we are really asking is — is the economy going to be so dysfunctional and stuck in a subpar rut that prices just keep going lower? Most people would not agree we will see unemployment go to 25 percent and that we will get stuck there.

“The economy is very flexible and the policy responses have been quite assertive. We’ve learned the lessons from the 1930s and aren’t going to let that happen. If these programs don’t work and the economy continues to flounder, we are just going to get more [government stimulus].”

Glassman says the more unemployment rises, the more action the government will take.

Basile agrees the theme for the year ahead will be “private sector deleveraging and the public sector leveraging — and growth comes from the public sector.

” Pressler feels the only sector that will create jobs is the public sector.

“[However], in a capitalist society, it should be a rare time when that happens,” he says. “Normally, government has no business doing business. But the private sector is cutting back. Credit isn’t being generated. The government will gladly go into debt to make sure things don’t go catastrophic, but it’s just a stop-gap measure.”