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Averting the Worst
So it seems that we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.
Just to be clear: the economic situation remains terrible, indeed worse than almost anyone thought possible not long ago. The nation has lost 6.7 million jobs since the recession began. Once you take into account the need to find employment for a growing working-age population, we’re probably around nine million jobs short of where we should be.
And the job market still hasn’t turned around — that slight dip in the measured unemployment rate last month was probably a statistical fluke. We haven’t yet reached the point at which things are actually improving; for now, all we have to celebrate are indications that things are getting worse more slowly.
For all that, however, the latest flurry of economic reports suggests that the economy has backed up several paces from the edge of the abyss.
A few months ago the possibility of falling into the abyss seemed all too real. The financial panic of late 2008 was as severe, in some ways, as the banking panic of the early 1930s, and for a while key economic indicators — world trade, world industrial production, even stock prices — were falling as fast as or faster than they did in 1929-30.
But in the 1930s the trend lines just kept heading down. This time, the plunge appears to be ending after just one terrible year.
So what saved us from a full replay of the Great Depression? The answer, almost surely, lies in the very different role played by government.
Probably the most important aspect of the government’s role in this crisis isn’t what it has done, but what it hasn’t done: unlike the private sector, the federal government hasn’t slashed spending as its income has fallen. (State and local governments are a different story.) Tax receipts are way down, but Social Security checks are still going out; Medicare is still covering hospital bills; federal employees, from judges to park rangers to soldiers, are still being paid.
All of this has helped support the economy in its time of need, in a way that didn’t happen back in 1930, when federal spending was a much smaller percentage of G.D.P. And yes, this means that budget deficits — which are a bad thing in normal times — are actually a good thing right now.
In addition to having this “automatic” stabilizing effect, the government has stepped in to rescue the financial sector. You can argue (and I would) that the bailouts of financial firms could and should have been handled better, that taxpayers have paid too much and received too little. Yet it’s possible to be dissatisfied, even angry, about the way the financial bailouts have worked while acknowledging that without these bailouts things would have been much worse.
The point is that this time, unlike in the 1930s, the government didn’t take a hands-off attitude while much of the banking system collapsed. And that’s another reason we’re not living through Great Depression II.
Last and probably least, but by no means trivial, have been the deliberate efforts of the government to pump up the economy. From the beginning, I argued that the American Recovery and Reinvestment Act, a k a the Obama stimulus plan, was too small. Nonetheless, reasonable estimates suggest that around a million more Americans are working now than would have been employed without that plan — a number that will grow over time — and that the stimulus has played a significant role in pulling the economy out of its free fall.
All in all, then, the government has played a crucial stabilizing role in this economic crisis. Ronald Reagan was wrong: sometimes the private sector is the problem, and government is the solution.
And aren’t you glad that right now the government is being run by people who don’t hate government?
We don’t know what the economic policies of a McCain-Palin administration would have been. We do know, however, what Republicans in opposition have been saying — and it boils down to demanding that the government stop standing in the way of a possible depression.
I’m not just talking about opposition to the stimulus. Leading Republicans want to do away with automatic stabilizers, too. Back in March, John Boehner, the House minority leader, declared that since families were suffering, "it’s time for government to tighten their belts and show the American people that we ‘get’ it." Fortunately, his advice was ignored.
I’m still very worried about the economy. There’s still, I fear, a substantial chance that unemployment will remain high for a very long time. But we appear to have averted the worst: utter catastrophe no longer seems likely.
And Big Government, run by people who understand its virtues, is the reason why.
- Posted in
96 Comments so far
Show All* A snippet from a more fact-based article by Mike Whitney at ICH
-----------------------------------
The World Needs A Breather From The U.S.
Aug 14 2009
There is some truth to the theory that Bernanke saved the financial system from a Chernobyl-type meltdown. But that doesn't change the facts. Accounts must be balanced; debts must be paid.
The Fed chief has committed $13 trillion to maintain the appearance of solvency. But the system is bankrupt. The commercial paper market, money markets, trillions of dollars of toxic debt instruments, and myriad shyster investment banks and insurance companies are now backed by the "full faith and credit" of the US Treasury. The financial system is now a ward of the state. The "free market" has deteriorated into state capitalism; a centralized system where all the levers of power are controlled by the Central Bank. If Bernanke's Politburo withdraws its loans--or even if he raises interest rates too soon-- the whole system will collapse.
The economy is now balanced on the rickety scaffolding of the dollar. As the Obama stimulus wears off, the rot in the economy will become more apparent. Household red ink is at record highs, so personal consumption will not rebound. That means US assets and US sovereign debt will become less attractive. Foreign capital will flee. The dollar will fall. The world needs a breather from the US. And they'll get it sooner than many think.
Full article:
http://informationclearinghouse.info/article23214.htm
The reason it didn't fall like the first depression is the U.S. whipped out the credit card and charged it. Everybody got paid off except the little guy who's too small and too numerous to matter.
The rest of the world is pulling the economy of the U.S. up, kind of dragging us along for the ride. Nobody is spending where I'm at! How can our markets make it if we can't buy what we produce? This is why I think it's going to be a quick fix that will collapse.
Printing all these dollars is only going to drive up inflation! Watch gas prices soar again. When the world cans the dollar watch out.
The downside to having all of the safety valves in place this time around is that the safety valves are intended to be a short-term fix that alerts you to the need to make systemic changes. Because the systemic changes are not being undertaken, the safety valves will probably not function when the ongoing systemic flaws manifest themselves again.
For example: The financial industry is continues to carry boat loads of bad debt and is no more regulated today than it was one year ago.
While safety valves like social security and unemployment insurance are generally good stabilizers, the downside is that they have prevented a repeat of the millions of people who camped out in DC in 1932 and 1933 and demanded the new deal. Obama, Bernanke and Congress will continue to print money for these programs to assure that the masses don't demand real change or interfere with the giveaways that banks and insurance companies are receiving.
Despite being a shrewd and well-informed economic analyst, Mr. Krugman remains an optimist at heart. He thinks that the crisis has been averted, I think that more than likely we're in a postponement. I guess it's a good thing that the Federal government is willing and able to spend its self-created money, though directly spending a little more on We the People might make some of us feel better. Mr. Krugman notes, in a parenthetical phrase, that "State and local governments are a different story." That is certainly true here in California, a fact that may have me jobless any time now.
Republican so-called conservatives are still out there, attacking anything any government does as "socialism" (they have sorely missed having "Communists" to accuse of anything and everything, and now they have managed to bring them back with a virulent vengeance). Their continued determined agitation seem destined to scuttle any recovery that Federal spending might be initiating.
We're only in a clearing; we are no way out of the woods, nor is it clear that we're on the right path to get out -- if there is an out.
I completely agree. This is not an economic crisis, it is a symptom of a much deeper problem. It is a crisis in consciousness, or lack of. We are in a state of complete disconnect. The economic crisis is nothing more than a reflection of the internal chaos caused by identification with personality. all thought and action is bound up in the parts with little or no realization of that which is the unifier and base of the parts. Continued movement in the field of opposing parts without realization of the whole will only heighten the perceived fear of opposites. People have shown that they would rather return to the familiarity of chaos than embark on an inner discovery of self, because it requires dropping the investment in the personality or parts. gathering up all of the parts does not produce unity, it is simply shifting the attention off of the parts and realizing that the unity of consciousness has always been HERE. At this point all systems including economic ones will be based in conscious connection with that which gives an endless stream of common sense.
The commercial real estate bubble is about to burst. The 24 trillion dollar bailout bubble will burst after that. Our future includes a depression followed by greater wars. Long term peaceful and sustainable living is the sane path forward. The top is corrupt and unable to face rational change. Changing by growing change from the bottom up, peacefully, over time, is the surest path to a better life.
"The commercial real estate bubble is about to burst. The 24 trillion dollar bailout bubble will burst after that."
I agree!
I live in NYC, and due to my economic situation, I walk everywhere I go. Everyone who lives in NYC is aware of escalating real estate prices, and how the escalating prices effect people who don't make hundreds of thousands of dollars per year -- it's a dire situation!
This city has to be in grave financial straits -- worse than the authorities are telling us. In every neighborhood, I see empty commercial spaces, large and small spaces, and also entire blocks that are now empty of businesses, most of which seem to have emptied out since the holiday season. No neighborhood, or area of the city, is immune. And, each day I see additional spaces closed.
For the past few months, Paul Craig Roberts, as well as Michael Hudson, have been reporting that the commericial real estate bubble is about to burst. That day has to be right around the corner!
I also agree with you about the "24 trillion dollar bailout bubble."
The stock market is rising quickly, and the banksters must be manipulating the numbers so that some kind of a bubble is presently in formation. I'm interested in any insight that you might have as to what that bubble might be.
If anyone is interested in knowing more about the $24 trillion -- Glenn Greenwald, on Salon.com, interviewed Neil Barafsky, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), on July 26, 2009. In the interview, the two men discuss the $24 trillion total of the bailout.
"The commercial real estate bubble is about to burst. The 24 trillion dollar bailout bubble will burst after that."
And then we will see the education bubble : There's trouble ahead for graduates who are competing in the toughest job market in years. Only 19% of them can find a job, as compared to the 50% in 2007 and the 25% in 2008.
And then the next bubble: the student loan bubble (which was fueled by easily-lent money and over-borrowing). Higher education is big money for institutions and lenders alike. . . and they're in big trouble. The institutions and lenders are in the same sinking boat that banks and other financial companies are in. Assets are drowning. And debt and costs are rising.
It won't be a pretty sight.
Ahh, join the military, they are offering to pay the tuition you can't pay back, (because you can't get a job).
Mr. Krugman is a good person, but from my perspective, all of this 'saving' was done to maintain the 1%. Any benefit to the rest of us is merely to pacify the masses.
The "masses" of the US are...obsolete. They clog the highways,hospitals, and are not very nice to look at. They are over fed and under educated - and too many refuse to jump when we say how high. Too many do not listen to talk radio, and too many understand the new media. We can no longer simply remove factories and encourge drug use and distribution where they live. Abortion and drug war have removed quite a few, but not enough.
If the masses want to survive they had better get on the stick. Do they even know what boot straps are these days? I like the way the Chinese elite deal with the masses - they dont even see them as human.
I would say to the masses - quit breeding and start reading! Only one in a thousand of you will make it out of the slums and prisons we built to keep you in. There is a way ...and its called the straight and narrow path, and we own that too.
"The "masses" of the US are...obsolete"
A new swine flu will take care of that.
The severity (mortality rate) will have to be increased and the antidote drug will have to be expensive and in short supply.
The "masses" of the US are...obsolete. They clog the highways,hospitals, and are not very nice to look at. They are over fed and under educated - and too many refuse to jump when we say how high. Too many do not listen to talk radio, and too many understand the new media. We can no longer simply remove factories and encourge drug use and distribution where they live. Abortion and drug war have removed quite a few, but not enough.
If the masses want to survive they had better get on the stick. Do they even know what boot straps are these days? I like the way the Chinese elite deal with the masses - they dont even see them as human.
I would say to the masses - quit breeding and start reading! Only one in a thousand of you will make it out of the slums and prisons we built to keep you in. There is a way ...and its called the straight and narrow path, and we own that too.
Meg: I could be wrong, but Mr. Krugman is probably in that 1 percent because of his salary as a Princeton prof and regular check from the NYT.
You are very likely wrong, at least if you assume that Krugman needed saving.
As a tenured Princeton prof, as a Nobel prize winner with a very impressive resume in economics, Krugman doesn't need saving. Even if Princeton somehow went bankrupt and had to close down, Krugman could take his pick of professorships from all over the world.
We already have big government. What Krugman should have said is that we need big government for the people and not the corporations. Ironically, big government for the people is much smaller than big government for the corporations.
Paul,
Please tell me you were hit in the head by a large heavy object before writing this article. Otherwise I will have to believe that you have lost it because the situation is way worse than you can really face or that you have become a schill for the cover-up using your article to anesthetize the public from taking real action. (Is there a new bulge in your back pocket?) Don't get me wrong. The government needs to come up with the answer, but what is going on now will only prolong and worsen the crises in the end-from financial reform, health care reform, civil rights, everything! The government is not acting on behalf of its citizens. It is merely doing what it needs to to keep the constituents fighting amongst themselves while the banksters and corporate theives run off with our lives. Government should come up with the answers to solve this, but only when the people realize that WE are the government!
Peak oil, global warming, droughts, floods and agricultural disasters caused by pesticides and genetically modified food are all coming. More financial bubbles will burst. The richest are grabbing up everything and think money will save them. This is what late corporate capitalist patriarchy has brought to the earth.
People in the USA of Goldman Sucks up all the money had better wake from their digital dreams and face the reality that their only hope is organizing and uniting locally, nationally and globally to stop the corporate leeches and their governmental enablers. War has been a great business for the US and too many here bow to militarism even on the left.
Many African women realize women are better at peace than men. American women need to wake up. Tell the Feminist Majority that war in Afghanistan is not making life better for Afghan women. Soldiers don't protect us war begets war and environmental disaster.
I had to read this article twice to see if it was just an economist's poor attempt at writing satire. But no, published in the NYT by a guy even liberals tout as the smartest guy around when it comes to money, I had to conclude that he was serious.
Utter catastrophe has been averted for the financial sector. What would "utter catastrophe" look like? No more multi-million dollar bonuses, the amount of which could run a small town for a year?
And wow, maybe a million jobs have been saved. Out of a country of 300 million, what is that, 0.3%? I'm sure that the 3 million people who have been foreclosed on this year, the 50 million uninsured, and the uncountable thousands of homeless are delighted that utter catastrophe has been averted.
And thank goodness we have all those people "who don’t hate government" running things so that we won't need those silly regulations and stuff that could have kept this from happening in the first place.
My question is this: who is paying Krugman and the Times to spin this BS to try to convince us that everything's coming up roses again?
Paul Krugman is well and asleep in his NY Times office, and his cappuccino is turning cold on his desk.
It may be time to throw a bucket of ice cold water at him to draw him from his slumber.
"True, the Hindenburg is not yet flying the way it did prior to May, 1937. But the fireball that brought it down appears to be extinguished. While the charred and twisted framework may not appear flight-worthy now, the worst seems to have been averted."
Krugman is all over the place. One week he writes an article saying "we should be very concerned" and the next week, he is a cheerleader saying "Hey, the worst is behind us. That wasn't so bad." Paul, which is it? If you stop drinking the Obama kool aid and see the real truth, you regularly would be publishing articles similar in nature to those by Matt Taibi. He gets it, you don't. The truth is the economy stinks, unemployment will continue to rise, the rich will get even richer, while everyone else daily will continue to be robbed and raped by the oppressive and greedy super-wealthy.
With all due respect professor, you need to come out of your economic bubble and look at the real consequences of this so-called "recovery." Who benefits and who loses?
So our financial institutions will be fine as our society disintegrates through the corporatist policies that continue to enrich the culpable. Perhaps there will even be a few crumbs that will trickle down to feed enough peasants to keep the capitalist machine working for the elite class.
In case you haven't noticed, the infrastructure of our country is imploding. Policy decisions of our government has done little more than reinforce what has been the status quo. We may have backed away from the abyss, but the chasm is substantially wider.
While you may find comfort in the statistics and reports you analyze, the pain and suffering outside the ivory tower is real; and although we may have avoided a second Great Depression, that event may have been our only salvation.
I am flabbergasted at Pauls’s decision to ultimately sell out I use to jump at the opportunity to read his articles because of the interesting insight he offered. I am not looking for gloom and doom theories I am in search of genuine intellectual inquiry and unfortunately Paul is coming short of that. I just had a birthday party yesterday and of the 23 people present at my home I was the only one employed and more then half were friends i graduated with from graduate school. Did the Obama Administration finally acknowledge you Paul? I hope it was worth losing some of your most loyal readers.
I completely agree with you! Several weeks ago, I read one of Paul Krugman's columns and I was furious! The column was about inflation, and he was denying that there was such a thing happening. Usually, I don't spend time responding to NY Times op-eds or articles, but in this case, I did -- listing some food items that have doubled in price over the past couple of years, as well other items that have more than doubled. The items I listed were items that most of us can't do without, and therefore, the escalating prices effect all of us. Several other responders talked about their dire circumstances, being without a job, and how their rent has escalated, as well as their utitilities, etc. The comments were from readers who lived in all parts of the United States. So, I wasn't the only furious reader who posted comments that day.
At that time, I quit reading his column. I was so disappointed in his commentary. I didn't read this column, either. However, I was interested in comments from people who post on Common Dreams.
Doesn't Mr. Krugman notice when he makes a trip to the grocery store, or is he living in a bubble -- like our elected officials? Is he talking to real people who walk on the streets of NYC? Evidently, not!
If the mark to market rule was re-enforced this minute the banks would collapse and the Dow Jones would implode.
An accounting trick is what's maintaining the illusion of an economy still standing.
All that toxic junk is still sitting on the bank's balance sheets.
Bernanke hopes that one day the toxic junk will be worth more than a few pennies on the dollar and the banks will be able to declare their solvency.
Ain't gonna happen.
All those loans Uncle Ben gave out are based on this utterly worthless collateral.
We'd be better off bringing in the Amazing Kreskin and asking him to make those losses disappear.
Compared to the 3 card monte Bernanke is playing this would be considered sound economic policy.
As every one of the preceding comments correctly notes, contrary to Paul Krugman's optimistic spin, conditions for ordinary people continue to worsen.
As long as corporatists such as the Democrats and Republicans front for the wealthy elite who finance them though our thoroughly corrupt political system, real improvement - a fair and just distribution of wealth - is impossible.
More and more Americans are waking up to the above facts. The real question is, what will we do about it?
Is true, non-violent, progressive change even possible here, or will we, as we seem to already be, descend into a 21st century U.S. fascism?
You have got to give credit to the GOP. Some of these clowns have bothered to learn American history. They understand all-too-well the ramifications of Franklin D. Roosevelt's victory in 1932 and the effect it had on their political antecedents. So successful was FDR's New Deal at repairing America's social and economic infrastructure after twelve years of Right Wing plunder, the Republicans would not control the executive branch of our government for twenty years. And other than one brief period, they would not control the House of Representatives for a full sixty-two years. They are absolutely determined that history does not repeat itself.
In order for the Republican party to survive politically, Barack Obama - and, thus, you and I - must fail. This very week, when it appeared that the economy might be on the mend, they were out on the talk show circuit, chanting the mantra. "Oh, no!", they bloviated. "the surge in the economy is not because of the president's policies - but in spite of them." Were we to believe the likes of John Boehner and Mitch McConnell, President Obama is the Chauncey Gardiner of American politics.
Please.
http://www.tomdegan.blogspot.com
Tom Degan
So Krugman was wrong, the government did do something about the last depression!!
?
Speak for yourself, Mr Krugman.... utter catastrophe is not only not averted, but permeating even the protected worlds of the true believers in the market. Time can be bought (via landgrabs, bailouts, manipulating the market & jockeying for position on the world stage) for only so long. There's a fundamental flaw in the capitalistic hyperindividualism (nonrenewably) fueled by the easy-street complacency and learned helplessness developed over the past few generations.... it is not sustainable. Not ecologically and, however much the iron-fisters try, not militarily/ideologically either. One heckuva fascinating time to be alive. For those of us outside the reassurances of status-quo insulation, there is a very big learning curve awaiting us... a whole world of both danger and opportunity in creative ways to localize our lives in ways that are humane and honoring of life on Earth. Even networked in solidarity with others in the same boat, we may wind up run roughshod over by the 'ownership society' ethic, but liberation from the LIE that security = power over others is an oppressive weight off the psyche that at least gives one a certain quality of life lacking in the collective trance of mammon-worship..... and a willingness to be present to a reality that doesn't come prefabricated from wall street. How as human beings we are to live is changing. Some will probably choose violence, fear, despair or nihilism, but hopefully many will come to share freely our 'intellectual property' enough to realize the absurdity in our Masters of the Universe ambitions and rediscover our place in the Mystery and simply praise Creation.
Brilliant.
Find solace in this, folks: "the government is being run by people who don’t hate government," the corporations, the banksters, the military, three wars and counting, torture, bullying other nations (e.g., Venezuela), threatening Iran every other day, maneuvering in Africa to install more U.S. military bases, the Bush regime's "amendments" to the Constitution, eavesdropping on the citizenry, and such things.
Whether they love it or hate it, for those running the gov't it's the same graft-driven gravy train. What's not to like?
Exactly! I haven't read all of the comments yet, but it's refreshing to be among a majority of Krugman-skeptics for a change.
Beyond his analysis, this seeming aside that seeks to (re)affirm that Obama was surely the right choice is the most telling phrase in the article.
Outsourcing the US Treasury to Goldman-Sachs, and completing his predecessor's Hollow State policy by radically handing control of the nation's finances over to the banksters is not a return to the "good government" ideology once taught in civics classes.
Krugman lacked the necessary neoliberal credentials to become part of Team Obama-- so far. Even a Nobel Prize didn't increase his cachet.
I agree that he's always been a moderate optimist-- e.g. rejecting single-payer health care and advocating a "robust public option" along with squeezing ordinary citizens to fund the "reform" scheme-- but his columns seem to be distinctly ingratiating lately vis-à-vis the Obama maladministration.
Maybe he's hoping for a Cabinet seat in the second term.
· Yr Obd't Servant
Whew! I am so glad I can relax, knowing the house of cards stands as strongly as ever.
Paul,
There is more than one rout to economic depression, the fast track, the meltdown of the financial giants has been averted...for the moment and at the cost of 12 trillion dollars.
There are still plenty of sectors that can fail and bring down the rest of the economy. Hyper-inflation should other nations lose faith in the dollar or if the 12 trillion debt were to be monetized, a collapse of the real estate market, more corporate bankruptcies, widespread bankruptcies of small businesses and should the banksters need another bailout the public might well rise up and prevent it so the banksters could well still bring the economy to its knees or the banksters could withhold loans causing the economy to fail.
And let’s not forget the possibility of widespread social unrest, specifically riots and police over-reaction. With the post 9/11 police forces being armed more like soldiers than police and the massive amounts of firearms in the hands of the public rioting would more resemble warfare than 60’s riots.
So, let's extend this logic to health care. Government already runs a public option: Medicare. Expanding it to "Medicare for All" would not be as difficult as reinventing the wheel. Most seniors are happy to be on medicare -- it probably beats the private health insurance they had prior to age 65. The process is already in place, we only need to create the framework to expand coverage to everyone. People could still purchase extra coverage from private insurers -- as medicare recipients also do.
Read Kunstler!
What existed before the modern recreation of self government in the United States of America???
feudalism run by hereditorial lords/rulers/kings.
IMO, this attack on government/self government is a concerted effort by the descendents of this hereditorial elite to bring about a return to feudalism.
Involving us in never ending wars of neo-colonialism, running up debt and more debt and giving it to these elites, driving as many wedges as possible between the people and ignoring the will of the people in all matters is designed to destroy self government and usher in a return to those horrible days.
GREG R and CATO:
The concerted effort has such abominable features that most people cannot stand to ponder the implications: “Collateral Damage” by E. P Heidner, part I and II.
>>> www.scribd.com/people/documents/2169400-ep-heidner <<<
and
http://video.google.com/videoplay?docid=4675077383139148549
People, people, people! The sky will surely fall tomorrow! Egads, did any of you read the whole article? "I’m still very worried about the economy. There’s still, I fear, a substantial chance that unemployment will remain high for a very long time." Yes, this is highly likely, and it will suck for a lot of people. Still, for the majority, things will work out with only a little luck. The biggest danger of collapse is over. Everyone commenting here is free to pretend they're great little economists, but golly, I doubt it. I know, I know, kinda too bad everything doesn't collapse so we can start over and finally live in an idyllic paradise.
Paul, Paul, Paul. You're such a nice guy. I like seeing you so optimistic. But I did a trend analysis on unemployment starting with that chart many of us saw from Pelosi's office. You know, the one where this current run on unemployment is compared to the other recessions since the end of WWII? The current trend stands out because on the time scale it's in a nose dive. Simply trending that out to any of the other inverted bell curves of the other recoveries gives us, at minimal, five years for full job recovery (remember, the dot.com bubble was not nearly this bad and it took 4 years to recover, so I, like Paul, am being optimistic with that "5" number). BUT, that's only if the trend were to start to recover right now. The only thing that has actually changed is that the joy stick on the unemployment plane has been, just so every slightly, pulled back. If you see that chart again, note that the trend I plotted goes off the bottom of that chart and extends off the chart to the right. You need three additional sheets of paper the size of the original chart to fit the curve.
I think you're right on with the a best guess of 5 years to full job recovery. The savings rate has been shifting up a touch, which is long term good. And of course stuff wears out, etc., and pent-up demand should start to kick in before too long. Some people have money and feel moderately secure. Especially if they feel some items are available at bargain rates (think housing for instance), they are likely to begin spending.
Government did not get us out--the taxpayer is footing the bill for lack of government oversight and deregulation.
And that well is running dry without any course correction or accountability.
Government will prop up the illusion, but sooner or later the devil will demand his due. You can bank on that. Nothing has changed, it is just slower.
Quite different from this opinion....
http://informationclearinghouse.
info/article23224.htm
hmmmmmmmm......
I have a feeling this weeks well choreographed "the worst is over" is the media's last big try at saving the 2009 Christmas' shopping (and media buying) season. If enough don't buy into the set up, me thinks things are going to start taking a very serious nose-dive, and fast.
15% unemployment by Dec. 31st if Krugman and his ilk fail to get consumers to buy into the false story.
Tonight's 3 networks lead story: "The Recession is Over".
We shall see. We shall see.
I visited a different Wal Mart than usual yesterday, it is a great big super Wal Mart about one year old, that at the time I first visited it I thought it was too big for the small town it was in. There are two other small communities that do not have Wal Marts that are close enough that they probably use this Wal Mart though higher gas prices may reduce that.
I was amazed when I realized that the shelves in the canned goods section of the grocery were all only about half full and the clerks were “fronting” the shelves. (Pulling the cans to the front with empty space behind them instead of restocking the shelves.) (The sort of labor intensive policy usually avoided by Wal Mart.)
Something else I noticed were the many skylights in the ceiling and that when the sun was shining the overhead fluorescent lighting turned itself off and then when a cloud came over they turned themselves back on. While I appreciated the savings of energy I couldn’t help but resent the Walton family was now reaping profits from freakin sunshine.
Point being, if Wal Mart is reducing inventory by fronting shelves the economy is a hell of a lot worse than the happy talk about “green shoots” we’re getting in the main stream media.
Anyone tempted to imbibe the "the worst of it is over because of big business" pablum of Mr. Krugman should take as an antidote to the pollyanna view of "averted catastrophe" the view of Gerald Celente, predictor of the dotcom and housing market busts, now predicting that, after this "averted worst" has laid waste to the commercial real estate market, the next and greatest bubble to burst will be the "bailout bust" associated with those very "stimulus" packages that are the apple of Mr. Krugman's eye. This bust will precipitate the world, believes Mr. Calente, into the greatest depression in its history. Read it if you have the courage:
http://www.globalresearch.ca/index.php?context=va&aid=14680
Good points Jerry!
Unlike Krugman, and like Calente, many other non-mainstream economists predict that the bailout bubble will burst. (Michael Hudson, Richard Wolff, David Harvey et al.) The expected "recovery" is just a short-term blip of a re-flated baibout bubble. Notice how the price of crude oil has gone way up in the face of declining demand and steady supply?
A good example for econ. 101 students: supply of commodity remains steady, demand falls significantly; what does the "laws of economics" tell us? Price rises of course!