It's like the government wants to deny how bad things are, so they just call it a 'recession'. And it took them forever to officially acknowledge it was even a recession.
I have never seen generalized pessimism like this ever before, even after the dot-com bust.
I was reading in the paper about how economists are decrying the fact that people are saving more now than they were before (over 2%, when it was less than 1% about a year ago.) That means we aren't spending, so the economy is not recovering. It's as if the economists hope that we can somehow resurrect the 'old economy' by doing the same old things and everything will come up roses.
Blogs like this, discussing how to live as cheaply as possible, will be considered un-patriotic and banned.
I guess that will take care of the 'dead blog' argument.
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Recessions get "officially" called by a private (not profit) organization called the National Bureau of Economic... R-something. Reviewers? Anyway, their criteria are open-ended, but they consider GDP, employment, etc. Because so much of what they look at are "lagging indicators" (like employment, which gets worse for a while even after the recession has already ended), they are usually late to the party.
ReplyDeleteDepressions actually have a technical, non-openended definition for when they start: it's a quarter with at least a 10% annualized contraction in GDP. (Annualized just means "the contraction that happened in this quarter generalizes for the entire year.") When they end is harder. The Great Depression is considered to have lasted twelve years.
Interestingly, the government decided to call it a "Depression" as a PR move, since what they had been called before ("panics") was too terrifying. I have a friend who studies panics--she said that in the 1800's they used to occur at the rate of about one every twenty years, and that what we are experiencing now looks a lot more like the Bank Panic of 1860-something (or maybe it is 1880-something), and that that Panic was a lot worse in many ways than the GD. I've been too afraid to look it up; my paranoia is bad enough as-is.
As for the "spending our way out of our problems"--what you say, at a visceral level, resonates with me. It's like, "The answer is MORE DEBT. What was the question?" But a very sensible economist friend of mine explained it to me this way: it's true that hard living (lack of exercise, bad diet, etc.) leads to heart attacks. But when someone has a heart attack and is in ICU, you don't prescribe a diet and fitness regime until the patient has recovered.
Obviously, he said a lot more than that (giving me a good Keynesian lesson in the spreading, stimulus effects of government spending) and it made sense to me at the time... but the logic upon retrospect frequently eludes me. Mostly, I go by this heuristic: people who I think are very smart (Paul Krugman at the NYT, my left-wing economist friends and even a few of the right wing ones) all agree that stimulus spending is necessary *for now*.
But that stupid fucking "bad bank"/TARP? NO ONE thinks it's a good idea. It's not stimulus spending--it's a give-away to banksters.
I don't care if this makes me "unpatriotic". I think it's bullshit that our economy's health is based on people spending more than they can afford and I refuse to participate.
ReplyDelete"you don't prescribe a diet and fitness regime until the patient has recovered"
ReplyDelete-yeah, but you don't continue to pump 'em full of greasy fast-food either!
"It's not stimulus spending--it's a give-away to banksters"
-did you see where B of A (I think it is) is planning a junket to Vegas with some of that money?
I know--I have trouble wrapping my brain around it, too. So again, mostly I just defer to my "smart people I trust say this is the right thing to do." Though really, it *does* make a certain amount of sense to me. You can contract easy, or you can contract hard. Nobody, I think, really argues that the economy doesn't have to backpedal; we have been misallocating investment and labor BADLY for years. But if you backpedal quickly, it really is like heroin withdrawal--you can kill the patient. Sure, the heroin was killing him, but winding down is better than free fall.
ReplyDeleteHadn't heard that about B of A. These stories really, really get my blood boiling. Seriously make me want to take up a pitchfork and torch.
http://online.wsj.com/article/SB123371136824046167.html?mod=googlenews_wsj
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