Saturday, January 31, 2009

A Different Recession

Absent a large stimulus package, most economists expect the nation’s output to shrink not only in the first half of the year, but in the second half as well. In April, the recession would become the longest since the 1930s. Until now, the record, 16 months, was shared by the severe recessions of 1974-75 and 1981-82. This one began in December 2007 as employment peaked and began to fall.

It's weird, but given that I was 23 and 30, respectively, during the previous recessions, I have no memory of there being a recession at the time. I was simply not aware of it. It didn't affect me, I guess. In the first case, we were in Greenville, PA, where Mary Beth was finishing up her college degree and I was working at the local hospital, and in the second, we were in Syracuse, NY, where I was going to graduate school.

But this recession is not like those at all. They were not preceded by bubbles, at least I don't think they were. This one seems to be fundamentally different. But do our brilliant economists, who never saw this one coming, know that it is different and must be solved differently? I doubt it. They seem to be stuck in a box of neo-liberal economic theories, oblivious to common sense. (And after all, they're not hurting financially themselves of course.)

But Obama has the kind of pragmatic, curious mind that he'll probably figure it out himself and singlehandedly explain to his economists, whose 'eyes will be opened.' At least I hope so.

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