A fair enough economic statement, I think. But watch your back, odo, all those women Gloria liberated from the servitude of under-maximized lives as simpleton household managers apparently didn't think to read the memo on not over-extending themselves.

They might not be happy, and they might believe in the Second Amendment.

Just looking out for your health.

2. There is considerable regulatory uncertainty in banking and finance. [Well, duh, and our confidence in the regulators is........]

And further, confidence in the pols to support those regulators?? All anyone has to do is watch those CSPAN tapes of hearings with pol after pol, including my least fave - Barney - just viciously castigating the Fannie regulators while the regulators tried to call BS on what was going on. Barney, Maxine Waters et al basically called the regulators a bunch of racists. This does not build confidence.

"Not only that, but also uncertainty in terms of bailouts. Banks don't know what to do. Do we act now and make painful decisions, cuts, write downs, or do we wait and see if the government is going to throw more money out there that we can get our hands on and put off the day of reckoning? I'd say this has to be at least a factor in the seizing up of credit markets...yet many of the commenters and writers here have argued precisely the opposite."

Ah yes. When you have been a fiduciary, investing in, owning, sitting on company Boards - and after you have had a lawyer or two wave the fiduciary responsibility card in your face a few times, when you have been sued by corporate ambulance chasers - you get sober really quickly as to the tough, iffey area business decisions, and potential for legal second guessers to feast on all decisions you make. It has, as they say, "a dampening effect."

3. There is a negative wealth effect from lower home and asset prices. [The prime problem. I have posted as such many times. And I ask, what in the currently proposed policy mix would alleviate this??]

"If home prices are over-priced or were over priced then we shouldn't fix this. That was part of the problem, IMO."

Oh, I agree. It just means that the recovery will be of the traditional kind: a long, hard grind of investment, risk taking, increasing productivity, increasing wealth etc, etc. No quick fix based upon an asset bubble to lean on. Obama is not giving me vibes he understands what this really takes. Politically easier and expedient to just promise handouts of free stuff, tax the rich etc. But now, perhaps more than ever in the last 25 years, we need to encourage entrepreneurial behavior. "Spread the wealth" is a populist, class warfare concept, not an entrepreneurial one. And it is not productive.

6. Fear and uncertainty are high, in part because they should be high and in part because Bush and Paulson spooked everyone. [Bush and Paulson? I must be on Vicadin. Barack "The World is Ending Press Conferences Like a Gatling Gun" Obama is not spooking people??.]

"Absolutely..........."

I guess this is where we hug each other. But I have serious concerns that this crass political approach Obama is taking will result in a significant "ratchet up" of govt control. As always, the regulators will be no match for the smart private enterprise guys, who will figure it all out and prosper no matter what. Same as it ever was. But the Little Guy? Good F'g Luck. (Further, I have been critical of voters who supported Obama who don't have a clue what he would really do once in office; they have no track record to rely upon, or real campaign testing. Obama got a campaign pass. And these voters just guessed. Initial signs are not good. Some appointments good. Some not so much. But this fear mongering is just ludicrous, and absent of an ounce of leadership. I hope I am flat damned wrong. And if so, I'll gladly take the arrows from commentators on the board................but I'm not too worried right now.)

Interesting observations. Back in the the 1950s I wonder how much imputed income a wife/mother contributed to the household? That is she would cook, clean, and act as a baby sitter/day care service. That in and of itself has value although I wonder how much of it is was something women didn't want to do. In other words, is the two income household of today a result of the push by women to enter the workforce? Once the family gets to enjoy the dual income giving it up is hard thus creating the "necessity"?

The "two income trap" is encapsulated thus: With one earner you have the chance of one lay-off and financial crisis. If you have two incomes, while living on one, you halve your risk. On the other hand, if you expand your consumption (base your mortgage payment) to fully use two incomes, you've placed yourself at greater risk.

Now if one or the other wage earner loses income, a household may enter crisis.

This becomes a very interesting question. One could also argue that the modern economy requires a two-income household for folks with families, whereas in earlier generations, a working man could generally support his family. Let's also figure in how the divorce rate has affected the equation. A single mother usually has to work. Divorce was not all that big of an issue in the post-war years.

Interesting observations. Back in the the 1950s I wonder how much imputed income a wife/mother contributed to the household? That is she would cook, clean, and act as a baby sitter/day care service. That in and of itself has value although I wonder how much of it is was something women didn't want to do. In other words, is the two income household of today a result of the push by women to enter the workforce? Once the family gets to enjoy the dual income giving it up is hard thus creating the "necessity"?

The core question is how bad is todays unemployment trend when compared to historic levels? And are we prepared to give up economic progress made over decades?

Historically it isn't that bad. It isn't good, but it isn't as bad as many politicians and pundits are making it out to be.

We aren't going to have to give up economic progress just live with reduced growth for a period of time. As Drew has pointed out this is not armaggeddon...I advise you stop reading Krugman.

When I started working in the mid 70s in the restaurant business, we had guys with the education and intelligence to be college professors or successful corporate career types making salads because there simply were not enough good jobs to go around. I don't really want to go back to those days.

Ahh, the horrible 1970s. Let me see, average unemployment rate of 6.2% with a max of 9%, a min of 3.2% and and average unemployment rate of 5.4% in the first half of the decade and 7.1% in the latter half.

Of course, things changed when the tax code was simplified, tax rates lowered, we moved away from Keynesian models in terms of the unemployment-inflation trade off, and inflation was brought under control after a sharp severe recession.

But to get out of the mess we are in we need to go back to the 1970's in terms of policy. Okay.

Drew,

2. There is considerable regulatory uncertainty in banking and finance. [Well, duh, and our confidence in the regulators is........]

Not only that, but also uncertainty in terms of bailouts. Banks don't know what to do. Do we act now and make painful decisions, cuts, write downs, or do we wait and see if the government is going to throw more money out there that we can get our hands on and put off the day of reckoning? I'd say this has to be at least a factor in the seizing up of credit markets...yet many of the commenters and writers here have argued precisely the opposite.

3. There is a negative wealth effect from lower home and asset prices. [The prime problem. I have posted as such many times. And I ask, what in the currently proposed policy mix would alleviate this??]

If home prices are over-priced or were over priced then we shouldn't fix this. That was part of the problem, IMO.

6. Fear and uncertainty are high, in part because they should be high and in part because Bush and Paulson spooked everyone. [Bush and Paulson? I must be on Vicadin. Barack "The World is Ending Press Conferences Like a Gattling Gun" Obama is not spooking people??.]

Absolutely and why is this? This is exactly what the Higgsian model of government expansion predicts. During a crisis the politicians want to use it to scare everyone into getting more power and a larger government. After the crisis passes the government does not return to its previous size...a ratchet effect.

That makes one of us intellectually honest. And one of us criticizing about 5% of the problem.

Eight reasons why we are in a depression
1. We have zombie banks. [What? We have banks with compromised balance sheets...behaving rationally.]

2. There is considerable regulatory uncertainty in banking and finance. [Well, duh, and our confidence in the regulators is........]

3. There is a negative wealth effect from lower home and asset prices. [The prime problem. I have posted as such many times. And I ask, what in the currently proposed policy mix would alleviate this??]

4. There is a big sectoral shift out of real estate, luxury goods, and debt-financed consumption. [See 3.]

5. Some of the automakers are finally meeting their end, or would meet their end without government aid. [Bullshit.]

6. Fear and uncertainty are high, in part because they should be high and in part because Bush and Paulson spooked everyone. [Bush and Paulson? I must be on Vicadin. Barack "The World is Ending Press Conferences Like a Gattling Gun" Obama is not spooking people??.]

7. International factors are strongly negative. [Indeed.]

8. There is a decline in aggregate demand, resulting from some mix of 1-7. [He must have meant 'confidence.' Anyone inspiring confidence?]

My spleen is now clean.......any advice for my liver??

;->

To me it is not a coincidence that personal debt, wall street leverage, and national dept all took the same path. Saving became a vice.

These bastards like Barney Frank delivered this economic mess and are taking no responsibility whatsoever.

No doubt both parties played their part, but I never seem to hear you calling for Phil Graham or Rick Davis to take responsibility, which does make you sound a bit partisan.

Somber note, from the cautious Tyler Cowen: Eight reasons why we are in a depression

I repeat: Are any of you commentators really interested in policy as it affects the Average Joe..........or just in winning political points for your faves?

Being an average Joe is the reason I ask the questions I have on the matter.

I agree with odo, it is the (unemployment)momentum that is creating much of the consternation. (I said my post was hyperbolic.)

But take your partisan hats off, people. Do LEADERS talk doom?? What in the world is Obama doing people?

Of course, he is playing politics. If the economy continues down...........its "I told you so, and Bush's fault, and you should have passed my spending bill." If it improves...."I'm the savior." Heads I win, tails you lose. Duh.

The politics is easy to figure out. But I thought he was "a different bread, new politics an such." Further, by talking down the economy, what does he say to those who lose their jobs as he plays this self serving political game???? (Self serving prick if you ask me.)

I repeat: Are any of you commentators really interested in policy as it affects the Average Joe..........or just in winning political points for your faves?

Obama has shown me no indication that he is anything more than a garden variety political opportunist.

I'm sorry Joe, good luck.

My post was intentionally hyperbolic - as many - to raise attention and debate.

You are incorrect, I am not partisan. In fact, I call out partisans most of the time in my posts.

Here is reality: the economy has performed fabulously for about 25 years - most of my working lifetime - under Reagan, two Bush's and one Clinton. Why? Low inflation, a relatively low tax environment, and a low trade barrier and entrepreneurial friendly environment. In short: globalism.

Credits? Carter for appointing Volker. Reagan for letting Volker finish the inflation mission, and for avoiding protectionism, forcing corporate America to get competitive. Bush I for maintaining the status quo. Clinton for passing NAFTA and reducing the cap gains tax rate. Bush II for reducing the OI tax rates after the economic shocks.

Now. Does that sound partisan?

Here is my issue. The primary jeopardy to the 25+ years of economic prosperity - GDP growth, equity growth and employment growth - that you and I have experienced in our lifetimes is BS populist crap: kill the rich with taxes, regulate the entrepreneurial economy, replace private market with govt spending.

My concern? Obama says: Higher taxes on the productive. Govt is the favored spending entity. Govt regulate more. That worries me.

It is not the subject of this thread. But regulatory failure re: housing and the current crisis is a Democrat policy failure/issue period.. full stop. See Clinton CRA pressures and Glass Steagal/Barney Frank/Chris Dodd regulatory frauds etc.....

I know this is not the way it is portrayed in the press. I know it is not the popular view. But it is true. And if you want to have at it, then let's go, point by point.

But if you REALLY CARE. If you really care about those who have been hurt. You set aside politics. You deal with reality. These bastards like Barney Frank delivered this economic mess and are taking no responsibility whatsoever. Its just easy to blame Bush because he's here right now and an unpopular President. But these guys are filthy mother effing bastards. It is the Average Joe who is being hurt by their actions. And that is who I care about. Barney Frank? Chris Dodd? Just assholes........who don't give a damn about the Average Joe. Just their political objectives.

That's reality. Its sad. But that's reality.

If you want to set me straight.........let's go.

That's untrue, anjin-san. Assuming the rate of population increase is the same (it isn't), it requires the same rate but a greater number.

This becomes a very interesting question. One could also argue that the modern economy requires a two-income household for folks with families, whereas in earlier generations, a working man could generally support his family. Let's also figure in how the divorce rate has affected the equation. A single mother usually has to work. Divorce was not all that big of an issue in the post-war years.

The core question is how bad is todays unemployment trend when compared to historic levels? And are we prepared to give up economic progress made over decades?

When I started working in the mid 70s in the restaurant business, we had guys with the education and intelligence to be college professors or successful corporate career types making salads because there simply were not enough good jobs to go around. I don't really want to go back to those days.

Pretty simple really. A trillion dollars pumped into a $13 trillion US economy could have a pretty damn big effect for the US, especially factoring a standard multiplier of 1.5.

But being a global economy I would guess that even if the stimulation worked here in the US it would be temporary as global trade would still be down. We may get a positive bump but being the worlds economies are dovetailed as they are I still don't see how this is the fix.