Can anyone still doubt our national (perhaps global?) economic distress? Runs on the banks. A tank of gas edging toward Benjamin territory. Someone you know (or mayhaps many someones you know) out of work and/or looking. Or giving up looking. Starbucks (Starbucks!) closing 600 stores.
Let’s have a show of hands: How many of you (U.S.) readers believe that this Spring’s tax refund “stimulus” could have been an order of magnitude larger (that’s 10 times), and still not been enough? Two orders (that’s times 100)?
It doesn’t go away, our concern with the dire state of the economy.
Paul Krugman, economics professor and columnist of the NYTimes has been consistent in identifying our present financial dismay, and he has some grim news — it’s not going to get better very quickly.
L-ish Economic Prospects
By PAUL KRUGMAN | Published: July 18, 2008
Home prices are in free fall. Unemployment is rising. Consumer confidence is plumbing depths not seen since 1980. When will it all end?
The answer is, probably not until 2010 or later. Barack Obama, take notice.
It’s true that some prognosticators still expect a “V-shaped” recovery in which the economy springs back rapidly from its slump. On this view, any day now it will be morning in America.
But if the experience of the last 20 years is any guide, the prospect for the economy isn’t V-shaped, it’s L-ish: rather than springing back, we’ll have a prolonged period of flat or at best slowly improving performance.
This is the real deal, folks, upper case ‘R’ Recession. And our next president is going to find it’s why he was elected, and is going to be under the gun to do the many substantive actions (as opposed to the laughably symbolic “stimulus” just handed down by George III — let them eat cake, indeed!) necessary to kick the economy back into gear.
American consumers propped up the economy (that was hemorrhaging manufacturing capacity and blue color (and trade union) jobs at a ferocious rate) for most of George III’s benighted presidency by using the ever increasing value of their home equity as an ATM.
Housing prices continue to plummet, and Prof. Krugman believes that they will continue to do so for no less than three more years. The colorful economic term for that ugly state of affairs, where one’s mortgage obligation is larger than the home’s new value, is “upside down.” It feels like that large red arrow plunging into tender flesh.
Many of us have stopped spending on anything more than the basics: food (how high is up?); shelter (oh my God, I owe more than it’s worth!); gasoline for our guzzlers. No wonder Starbucks has suddenly become a luxury to be done without, rather than a daily necessity for so many.
When voters find themselves (in record numbers, if trends can be believed) confronting their presidential and legislative choices in their polling places this November, their economic well being will more than likely drive those decisions, more than any other issue.
Paul Krugman believes that their logical decisions will result in the election of Barack Obama, who represents a change, no matter of what degree, from those failed and the fraudulent custodians of the national economy who need to be swept out of power (my characterization not his!).
One can only hope that he and his brain trust aren’t so focused on the short term (i.e., November 4) that they’re not ready to start immediately to set their new government on a path that leads directly toward economic recovery, stat.
Hiring on expert, articulate, wise men like Paul Krugman would be an excellent beginning.
It’s it for now. Thanks,