New York Times columnist and Nobel Prize-winning economist Paul Krugman knows the situation facing the United States is very serious, so he doesn't mince words.

Krugman outlined: The housing sector has collapsed. Consumers have sharply decreased their spending, due to a declining stock market, home prices, and stagnant wages. Businesses are cutting investment. Exports, the formerly one strength of the economy, are plunging, as the recession grips emerging markets. The Fed has already cut short-term interest rates to zero. And there are signs of deflation. In sum, the U.S. economy is very close to the dreaded negative spiral that tends to feed on itself, and that could continue for a long, long time without fiscal stimulus.

Hence, the nation needs to pass the fiscal stimulus package, and if anything, the current package is too small, he argued.

General Motors Corp.'s (NYSE: GM) problems are well known: declining growth, huge debts, and enormous contingent liabilities (such as for retirement and health care benefits).

Yes, it also sounds like the U.S. economy, huh?

Well, this is the gloomy assessment from Ray Dalio, who is the chief investment officer of Bridgewater Associates. A few years ago, he warned about the overleveraged economy. More importantly, he positioned his portfolio for the New Reality.

In fact, in 2008 the Bridgewater Pure Alpha 1 fund was up 8.7% and the #2 vintage increased 9.4%.

So, what's is his thinking now? Unfortunately, it's fairly gloomy (this is according to a great interview in this week's Barron's, which is a paid publication).

Inflation -- the bane of earnings -- must always be watched, lest it rob the nation of return on investment.

Further, while the inflation hawks have been out in force, given the U.S.'s likely, record fiscal stimulus package and the Federal Reserve's doubling of its balance sheet, so far inflation remains tame.

Unit labor costs -- a key gauge of inflation, and one the Fed watches closely -- rose at a 1.8% annualized rate in Q4 2008, the U.S. Labor Department announced Thursday. Meanwhile, productivity in Q4 2008 rose at a 3.2% annualized rate.

Productivity measures output per hour worked. Economists say rising productivity usually leads to increases in income, as businesses can increase salaries/wages paid without increasing their per unit costs.