Montreal, Canada

U.S. non-financial companies are sitting on almost $1 trillion dollars of cash in 2010 and continue to hoard liquidity at the fastest clip since records began in 1952. According to The Financial Times, U.S. non-financial companies boosted cash by 26% over the last 12 months through March – a record.

Unless big companies start spending, the ongoing recovery since March 2009 looks vulnerable because traditional sources of stimulus are exhausted in mid-2010.

As the bond market vigilantes continue to choke access to credit for some of the weakest sovereign borrowers, the markets are leaning on corporations to fill that void. Governments are now being forced to cut spending; events in Greece, Ireland, Spain, Dubai and elsewhere are sobering reminders of the spreading nature of this ongoing credit crisis, now in its third year. Debt markets are in grave danger at the sovereign level.

At some point even the United States will be forced to cut bloated deficits – if not through internal policy mechanisms than by foreign creditors. International investors will demand higher interest rates. That's the worst possible punishment for the United States because the interest on the national debt is increasingly hindering the nations' ability to service its monster-sized obligations.

Governments now have limited stimulus alternatives after firing a massive round of policy bullets since late 2008. And if governments can't continue spending, then who's left?

The American consumer, home to the epitome of reckless spending and borrowing throughout the 1990s and first half of the 2000s, is almost out of gas. Retail sales disappointed in a big way in May with consumers paring back from big ticket items like cars and homes; Americans have grown more frugal and are shopping for bargains. In the absence of tax credits and incentives there doesn't seem to be a will to binge.

In Europe, consumer spending remains lethargic with VAT tax rates rising in most countries to supplement bulging deficits and the rising costs of the welfare state. Nobody really spends in Europe, except England, but she's virtually bust.

So if the consumer won't save the economy and governments have already stretched their finances to the outer limits of reality then who's left to save the world economy from a double-dip recession?

The emerging markets might offer salvation – eventually. However, the size of these economies remains too small to really help offset stagnant Western consumption. China, for example, probably won't be able to supplement American consumer spending prowess for at least another twenty or twenty-five years. That gaping hole of consumption implies too many goods are still chasing the world economy as demand is far from its pre-2008 boom phase; capacity utilization remains well below 75% in most countries with too much slack in the global economy hinting at renewed deflation or falling prices.

If companies believe we're in an extended period of price wars and slack demand for their goods and services then it's unlikely that they'll commence a spending boom anytime soon. And if companies don't start spending soon governments and consumers won't be around to pick up the slack.

Double-dip ahead?