Among economists and Wall Street professionals there is an active debate at the moment regarding the future direction of the economy in the U.S.

Will we have a V-shaped recovery quickly bouncing of the lows returning to growth in rapid fashion or will we experience the L-shaped recovery that was the experience of Japan during their lost decade in the 1990’s?

At the moment the stock market in the U.S. is priced for an L-shaped recovery that lasts for about one year. Investors recognize that it will take time for growth to return, but they are not necessarily expecting anything longer than 12 months of sluggish activity.

That’s why the market can go up in the face of seemingly horrible news, but what if the shape of the recovery is something other than an L-shape? What if the recovery was more in the shape of that stair machine? What then?

We took our punches this fall that is for sure and now we are moving along sideways. Given the almost certain rise in foreclosures and defaults on home and commercial loans in 2009, an honest look at things would suggest we should prepare to move another step down.

Ponzi Bubble

As you know Bernie Madoff allegedly stole from his unassuming customers paying yields with capital from customer accounts. When new dollars failed to appear to pay old investors the scheme collapsed.

The question I had was, did the real estate boom in the U.S. represent its own macro version of the Ponzi scheme? While there is no one criminal in the real estate market, one could argue that there were multiple players that were willingly robbing Peter to pay Paul.

Mortgage brokers, appraisers and real estate agents were all promising unlimited appreciation in housing knowing that all they had to do was find the next loan to pay the next ridiculous price in the market from the next buyer.

It’s the same thing Madoff allegedly did if you ask me. The only difference is the victims in this scheme are all of us. The damage is real and only now starting to appear.

Boomers Hit Hard

One of the fastest growing population groups are those at or nearing retirement age. That older demographic is really feeling the brunt of the real estate Ponzi scheme. At a time when their incomes are dwindling, their property taxes are going up even as real appraised value is dropping like a rock.

In some cases the actual home may be worth minimal value, but the land especially in prime areas like lakefront property for example is worth much more. As a result, property tax burdens are creating an increasing burden on this population group at a time when such a burden is simply not needed.

The Long Haul

We simply have many things to work through thus it is highly unlikely that our woes will be complete by the end of 2009.

To me then the most likely outcome of the economic state is the L-shape that lasts 2 or 3 years instead of the 12 months priced into the market now. It will take a few months of data to confirm our direction and as of now it looks like that data will be negative.

Once confirmed the market will then need to adjust its current forecast of a 12 month recession. If growth is negative for a longer period corporate earnings will be at risk for further contraction. That is the rub for stocks and why the more likely direction for the market during the first few months of 2009 is down.

All it takes is one more Ponzi scheme to push us lower.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.