Monday, September 20, 2010

Climbing Out of a Very Deep Hole

As AP reports the National Bureau of Economic Research has deemed that the Great Recession ended in June 2009. While it is true that real GDP has inched upwards over the past 4 quarters, real GDP as of 2010QII was only $13,191.5 billion per year as compared to $13,363.5 billion as of 2007QIV. With 2007 witnessing a growth rate that was less than 2 percent and with negative cumulative growth since then – we are far below full employment today. AP also reports that the President isn’t exactly celebrating this NBER announcement:

President Barack Obama saw little reason to celebrate the group's finding that the recession had ended. Appearing at a town-hall meeting sponsored by CNBC, Obama said times are still very hard for people "who are struggling," including those who are out of work and many others who are having difficulty paying their bills. "The hole was so deep that a lot of people out there are still hurting," the president said. It's going "to take more time to solve" an economic problem that was years in the making, he added.

The problem, however, is that we still don’t see any bold and significant policy measures that would get us out of this deep hole.


TheTrucker said...

Where are the rebated import duties??? A 25% duty on goods from China with all proceeds building the "stimulus trust fund" seems to be in order.

TheTrucker said...

I get the silence of the shams. But failing tariffs then were are the Dean Baker stimulus suggestions (where the Fed buys the Treasuries debt so as to pump up the infrastructure) being ignored? Either devalue the currency by blasting a lot of money into the hands of the working class or do the rebated tariffs. Pick one.

And where is the complete takeover of Freddie and Fannie and a reasonable award of cash to the current bond holders amounting to a proper loss for them. After all, any interest on mortgages is good for the Treasury and any losses don't really matter because the Fed can never go broke.

We are all pretending that fiat money has intrinsic value. It doesn't. You use it to pay taxes. That is why it is valuable.