I don’t know about you, but reading Paul Krugman’s latest editorial/OpED in the New York Times is both scary and somehow, reassuring (who those can be combined – I don’t know); the editorial by Paul Krugman its titled: A Long Story:
“…The problems now facing the U.S. economy look a lot like the problems that caused the last two recessions — but this time in combination.
On one side, the bursting of the housing bubble is playing the role that the bursting of the dot-com bubble played in 2001. On the other, the subprime crisis is creating a credit crunch reminiscent of the crunch after the savings-and-loan crisis of the late 1980s, which led to recession in 1990.
Now, you may have heard that those recessions were short. And it’s true that the last two recessions both officially ended after only eight months.
But the official end dates for those recessions are deeply misleading, at least as far as most peoples’ experience is concerned. There’s a reason that the Bush administration, in its (increasingly strained) efforts to tout economic performance on its watch, always talks about jobs added since August 2003. It was only then — two and a half years after the recession began — that the U.S. economy began to experience anything that felt like a recovery.”
I think the pain is that many people will be lose jobs and what they’ve gained over the last several years – meanwhile – we all knew a crash of sorts was coming – and it looks like we’re closer to that now then we’ve ever been – and it’s emanating from the United States – not some third world or european or asian failed economy – the economy that is falling apart is our own – and threatens to bring down a lot of world economy with it.
“…And some highly respected economists are issuing dire warnings. There has been a lot of buzz about a new paper by Carmen Reinhart and Kenneth Rogoff that compares the United States in recent years to other advanced countries that have experienced financial crises. They find that the U.S. profile resembles that of the “big five crises,” a list that includes, for example, Sweden’s 1991 crisis, which caused the unemployment rate to soar from 2 percent to 9 percent over a two-year period.”
Just like a doctor who tells us we’re really sick and need to take perscribed medicines or treatemants to get better, we now know our economy is really sick – in a way that’s comforting – at least we get to acknoledge the problem.
But while we can acknologe the problem, the leadership in this country that had a large part in making this happen, won’t and can’t admit to it. One one hand The Creators of Credit Crisis Revel in Las Vegas:
“…At times, the unease here was palpable. During one panel discussion, a money manager stood up and denounced credit ratings agencies, which many investors have criticized for underestimating the risks posed by securities backed by subprime loans. In the last 12 months, the ratings firms have downgraded many securities they had awarded high marks to only a year or two earlier.”
“In my 38 years this has been the worst capital destruction and the worst rating decline in history,” Robert L. Rodriguez, the chief executive of First Pacific Advisors, a mutual fund company based in Los Angeles, said to a panel of four executives from ratings firms. “All of you should be ashamed of yourself.”
On the other hand with Congress Voting for a Stimulus of $168 Billion that leaves out ..
“…Mr. Reid also suggested that some Republicans would pay a political price for voting against extended unemployment benefits, home-heating subsidies and other initiatives he had pressed. Almost immediately after the vote, the Democratic Senatorial Campaign Committee issued a statement criticizing Senator John Sununu, Republican of New Hampshire, for opposing new home-heating subsidies.
Mr. Sununu, anticipating such an attack, had already issued a statement saying that his “steadfast” support for the heating program was well known and accused Democrats of “back-room dealing” he called “disgraceful.”
Part of our problem is the Economy, but worst problem of all is the ideological blindness of many of the political leaders – who are so rooted in fundamentalism, they can’t see beyond their own positions.