I predict that Q4 '06 GDP will be negative.

I stand by my depression prediction. Someone is going to have to save $12 trillion to restore low savings levels over '80-'05 to historic levels.

Why? Because someone is going to have to pay for Baby Boomers' retirement and health care. It will be either (1) us working stiffs via higher taxes or (2) the Baby Boomers by continuing work and shoving lots and lots of cash into savings. In either case, the conspicuous consumption of the past decades will be long gone.  With that consumption gone, we'll have a substantial drop in GDP, which is 2/3rds consumer spending.

For those of you familiar with accounting and balance sheets, the national balance sheet for households harbors ugly implications: http://www.federalreserve.gov/releases/z1/current/z1r-5.pdf

Yes, the table indicates $53 trillion of net worth as of Q2 '06. 

But that reflects $20T in household real estate; if 1/3 of that goes 'poof', so does a big chunk of the $5T in equities held by households and $11T held by pension funds on behalf of households.

In the Great Depression, GDP was cut in half over '29 to '32, and didn't regain its nominal '29 level until '40.  And, the speculative excesses that led to the '29 crash didn't seem to be nearly so widespread as such are today.