I think if folk in certain social sub-groups find a way to hand this global economic contraction to our president of 2 months, I can remind them of the 8 years leading up to those 2 months.

FWIW, I've said I think the stimulus bill is more a "split the difference" than most people will admit. I also think it is smaller than most people admit.

Here was a headline today:

Pensions: Another Trillion Dollar Bailout?

Yes absolutely it hurts to see debt run up, but apportioning it and fractioning it so that this part is "bailout" so that another part can be "obamas" as some do ... isn't really capturing the big picture.

Some here like to only talk about "stimulus" so that they can play a certain kind of blame game, without engaging with the big picture.

2) I first heard of the The Letter “L” back on December 27th, 2008, when we had another President on the watch."

I think our point of departure is that you seem intent on apportioning blame. I hold no brief for Bush. His spending habits were awful. His reaction in the Fall to events not to my liking.

But that is now ancient history. Now we must evaluate whether or not Team Obama is behaving in a manor that will help or harm. I say harm. The "stimulus" bill is his (and Pelosi's), and a pitiful wreck. The regulatory framework is now his, and misguided. Tax policy is now his. Don't get me started. Handling the banks is now his. When will he start???

They seem to be running Japanese FUp Part II.

Not encouraging.

We diverge on our opinions of the Bush administration. I think Drew is correct that Bush did not make the crisis, certainly not by himself. I fault him for being asleep at the switch (at best) and possibly fanning the flames (at worst).

Obama was elected, and arrived at the scene of the accident.

Many conservatives did indeed start by denying that there was an accident, and only now are getting angry that this clear accident has not been cleaned up.

Let's fault the new guy, because markets have further to fall.

1) that the PREVIOUS administration shaped this trajectory more that Obama could, in those two months. (And anyone who squawks about Pelosi, look up who put Bernanke and Paulson in place, and tell me who took the lead.)

2) I first heard of the The Letter “L” back on December 27th, 2008, when we had another President on the watch.

Now on Japan, one of the interesting things in the last year has been to read th 1001 news articles looking at parallels and differences. The agreement seems to be that we are moving very much faster than Japan, but yes we face a similar problem.

Outcomes might be similar in the best case.

Just the same, it is a logical fallacy to say that since cases might be dire, my favorite solution is best.

(At this point we might insert the failure of macroeconomics as a discipline, and their split into the same party politics that plagues this and so many other forums!)

"why can't Obama fix it in 2 months?"

Lot's of convenient - and BS - arguments here today.

The issue isn't whether the economy was going to suffer a severe recession, or whether "Obama could fix it in two months." The issue is whether this recession was to be a standard to severe issue U recession, like 1982 or somewhat worse.........or a real debacle, driven by the Admin's policies.

From where I sit the Administration is making precisely the same mistakes Japan made in the 90's, and has now opened up the real possibility of an L.

Equity markets are taking note.

No news here. The Bush economy is built on credit cards, both at the federal & houshold level. Sooner or later, the bills come due...

Darn it Pilot, if you hadn't talked us down we'd be fine right now!

President Bush keeps saying that the economy is strong and that the tax cuts have done their job. The problem is, for how much longer is this going to be true and how hard is the landing going to be? My own view is that the notion of a “soft landing” is quite unlikely.

Thing is, the spirit of your post above is very much "why can't Obama fix it in 2 months?"

Not to mention this totally new invention that it is all psychological anyway (the economy "talked down" by the Democrats .. who said that?)

As for "Who here has argued that [there is no economic crisis]?" I believe the initials you are looking for are SV.

Steve tends to argue against extreme takes on the economy. He was writing "the economy isn't in nearly as good a shape as you think" posts back in 2003 and 2004.

That sort of thing is hard to search for but see this Recession in 2006/7? (8/05) and Housing Permits, Starts, Recessions and the Economy (9/06).

We have had massive, unprecedented levels of foreclosure. This in turn has caused real estate prices to fall dramatically. This in turn has caused financial instruments that are based on real estate to fall dramatically. It has also wiped out financial instruments that are derivatives of that above. It has also left under-capitalized financial instruments that leveraged on the above. This under capitalization has left most large financial institutions under capitalized. This in turn has reduced credit enormously because financial institutions do not know who they can lend to safely _and_ because they need to increase their reserves to recapitalize. Because almost every company relies in some way on credit, this has been a gut hit to the broader economy.

None of the above takes into account whether politicians & pundits have said that this is or is not a large recession. Yes, consumer confidence is impacted by the statements of politicians and pundits. However, we clearly have substantial structural problems in our economy right now. I have seen no numbers indicating that "Much of it is a crisis of confidence." In particular, that the crisis in confidence is driven predominately, or even substantially by pronouncements rather than by our factual economic problems.

Best,
Scott

The only way you can make this a naysayer's crash, one that was purely psychological, it to take the opposite position, that houses (and the stock market) always go up. You have to take a "bubbles forever" flip side.

I get that some in the ideological binding of conservatism and free markets do that. Kudlow was famous for that, right? The government should do everything it can to keep the markets booming ... never mind that such a treatment only makes bubbles more extreme, precarious, and when they finally crash, more damaging.

BTW, if you think that do "think our leaders, of both parties, have exacerbated the problem with inflammatory rhetoric" then you probably don't yet grasp the nature of the problem.

Much of it is a crisis of confidence. Stocks and houses are worth what people will pay for them. Cries of "irrational exuberance" and "bubble!" are useful in sounding alarm bells but they also create a self-fulfilling prophecy.

I don't doubt that AIG, Citi, and the rest were horribly managed and over-leveraged. But even prudently run banks and insurance companies are being trampled in the ensuing panic.

Your core mistake, in my mind, is to start with the supposition that "that government isn't able to fix the problem." Government policy can be better or worse. I wish for it to be better, and I do not assume that better government policy always means less government.

As for "Who here has argued that [there is no economic crisis]?" I believe the initials you are looking for are SV.