Time to Say It: Double Dip Recession May Be Happening

[WestVirginiaRebel]

NY Times:

It has been three decades since the United States suffered a recession that followed on the heels of the previous one. But it could be happening again. The unrelenting negative economic news of the past two weeks has painted a picture of a United States economy that fell further and recovered less than we had thought.

When what may eventually be known as Great Recession I hit the country, there was general political agreement that it was incumbent on the government to fight back by stimulating the economy. It did, and the recession ended.

But Great Recession II, if that is what we are entering, has provoked a completely different response. Now the politicians are squabbling over how much to cut spending. After months of wrangling, they passed a bill aimed at forcing more reductions in spending over the next decade.

If this is the beginning of a new double dip, it will have two significant things in common with the dual recessions of 1980 and 1981-82.

In each case the first recession was caused in large part by a sudden withdrawal of credit from the economy. The recovery came when credit conditions recovered.

And in each case the second recession began at a time when the usual government policies to fight economic weakness were deemed unavailable. Then, the need to fight inflation ruled out an easier monetary policy. Now, the perceived need to reduce government spending rules out a more accommodating fiscal policy.
________

Inflation was beaten when the Fed stopped printing money under Reagan, IMO. Stimulation did not end the current recession; it was a band-aid at best.

[pollyannaish]

I don't believe there will be a double dip recession.

 

Because we've never been out of the first one. The "earnings"'we saw was the impact of the transfer off money from the governmnent to favored corporations.

[Casino67]

I don't believe there will be a double dip recession.

 

Because we've never been out of the first one. The "earnings"'we saw was the impact of the transfer off money from the governmnent to favored corporations.

 

S&P just lowered credit rating to AA+. May spook the markets into the second half of the recession.

[Saltbag]

I'm just waiting for the predictable media response that the belligerent tea party congressmen are the root cause. They invoked doubt and fear in the market.

[Casino67]

I'm just waiting for the predictable media response that the belligerent tea party congressmen are the root cause. They invoked doubt and fear in the market.

 

I think the MSM has already blamed the downgrade on the R's. Took them all of 30 seconds to do so. Almost as if they had it all planned out ahead of time.

[Saltbag]

As if there was any doubt.

[pollyannaish]

The thing that gets me is that they act like the downgrade is all arbitrary. But if you spend more than you make you deserve the rating. And raising taxes might have helped temporarily...but would have made things worse eventuAlly. Like getting another crept card to pay a credit card. What does it take for people to understand that spending money you don't have is a huge problem?

[Casino67]

The thing that gets me is that they act like the downgrade is all arbitrary. But if you spend more than you make you deserve the rating. And raising taxes might have helped temporarily...but would have made things worse eventuAlly. Like getting another crept card to pay a credit card. What does it take for people to understand that spending money you don't have is a huge problem?

 

I think history proves that the more the D's tax, the more they spend. It has been almost thirty years since any effort was made to pay down the national debt. It was made by Clinton of all people and was a paltry $30 billion and was done as an election ploy.

[Argyle58]

The thing that gets me is that they act like the downgrade is all arbitrary. But if you spend more than you make you deserve the rating. And raising taxes might have helped temporarily...but would have made things worse eventuAlly. Like getting another crept card to pay a credit card. What does it take for people to understand that spending money you don't have is a huge problem?

 

The only way that raising taxes would show even a temporary net gain to the government would be to pass the law now, and then make it retroactive to the first of the year. Increases after that point are harmful in two ways. First, investors will put more of their liquid capital into tax exempt bond funds, thereby reducing revenues to the government. Second, the increase in taxes puts more money into the government's hands, thereby removing those dollars from the economy, which needs all the help it can get.

 

Of course, I never attended Harvard or Yale, so I would not be listened to, regardless of the soundness of my argument.

[pollyannaish]

I agree with both of you Argyle58 and Casino67.

 

I am continually amazed by the sycophants Krugman manages to maintain. Gotta be the degrees.

[Evad]

I'm just waiting for the predictable media response that the belligerent tea party congressmen are the root cause. They invoked doubt and fear in the market.

saltbag!

Didn't take long at all.

The tea party now owns it...The Tea Party Downgrade

http://blogs.wickedlocal.com/holmesandco/2011/08/06/the-tea-party-downgrade/#axzz1UIjjpGGI