Hard Times Ahead
Mar 21st, 2008 at 11:34 am by Susie
Now that it’s starting to spread, even obtuse economists are starting to notice:
The broadening of the slowdown, the plunge in home prices and near-paralysis in the financial system are fueling worries that what most economists now see as an inevitable recession could end up being especially painful.
Indeed, some economists fear it will last longer and inflict more bite on workers and businesses than the last two recessions, which gripped the economy in 2001 and for eight months straddling 1990 and 1991. This time, these experts say, a recession in which economic activity falls over a sustained period and joblessness rises across the board could even persist into next year.
“It’s not hard to construct very dark scenarios, primarily because the financial system is in disarray, and it’s not clear how to get it all back together again,” said Mark Zandi, chief economist at Moody’s Economy.com.
To be sure, there are many places where talk of recession still seems as out of place as a diner trying to score a table at a trendy Los Angeles restaurant without reservations on a Saturday night. First-class cabins of airplanes are jammed. So are spas, cigar bars and children’s clothing boutiques selling upscale dresses.
Unemployment, meanwhile, still remains at a relatively low 4.8 percent.
But even after the Federal Reserve’s extraordinary efforts to prevent the collapse of Bear Stearns from spreading to other financial institutions, the danger still lurks that banks will grow even tighter with their funds and will starve the economy of capital.
Indeed, some economists fear it will last longer and inflict more bite on workers and businesses than the last two recessions, which gripped the economy in 2001 and for eight months straddling 1990 and 1991.
Why this pussyfooting around? It’s painfully obvious that this will be the worst financial meltdown since 1929, and may even exceed that economic implosion.
Where can I buy some Kruggerrands?
IT IS THE DEFICIT!! brought on by the Iraq war.
The chickens are coming home to roost. You cannot borrow $1 trillion and not suffer the consequences. Of course the credit crisis is the immediate cause - but the deficit is what keeps us from really addressing it. And then, when we do do something about it (tax refunds) it just digs us deeper into the deficit hole.
The country is going bankrupt - Bush’s policies always were.
Welcome to the Republican Recession!