How to Fix a Recession

The American Thinker ^ | August 12, 2009 | Randall Hoven

[Scanian]

We are in a recession and our President has done something about it. What has he done? Spent well over a trillion dollars of other people's money, all borrowed. How well is that working now and how well have such "fixes" worked in the past?

There is no real indication that our current recession is ending. The NBER dated the beginning of this recession based almost entirely on payrolls, which last peaked in December 2007. Payrolls have declined every single month since then, including the most recent month, July 2009.

In July, payrolls declined by 247,000 jobs. That has been touted as an improvement, since we lost 443,000 jobs in June. However, 247,000 jobs are more than were lost in any of the first eight months of this recession under President Bush. A decline is a decline.

The same can be said for real GDP, which has declined for the last four quarters straight. While it declined less in the most recent quarter than in the previous, it still declined.

In January of 2009, before being sworn into the presidency, Barack Obama made a speech about this recession.

"If nothing is done, this recession could linger for years. The unemployment rate could reach double digits. (His economists more precisely predicted unemployment to peak at 9% without his stimulus, and at 8% with it.)

"That work begins with this plan -- a plan I am confident will save or create at least three million jobs over the next few years.

"There is no doubt that the cost of this plan will be considerable.

"At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe. Only government can break the vicious cycles that are crippling our economy."

How's his plan working

[nathanbedford]

I have often put myself in Bush's moccasins when he is told by his Secretary of the Treasury and the Chairman of the Federal Reserve that if he does not act within hours the entire financial system of the Western world will crash, that nation will be devastated, millions will be thrown out of work, that the implications extend even to starvation and rioting in the streets.

If one acts precipitously one sets a bad precedent and wastes a couple of hundred billion dollars. On the other hand, if one fails to act when required, the consequences are horrible. You cannot investigate the situation and determine who is right in a few hours available, you can only look into the eyes of the men who implore you to act and hope what your read is more accurate than when you looked into Vladimir Putin's eyes.

Given that scenario, I think I would have made the same choice Bush made.

Do you know of any studies since the events which come down one way or the other?

[dalereed]

Do nothing and drive it into a depression quickly.

When everyone living on credit is wiped out the economy will recover on it’s own.

[Scanian]

No, I haven’t heard of any academic studies at all, either about Bush’s reasons for promoting TARP or about G.S.’s intrusion into the federal government, just blogger speculation of the type that I and thousands of other FReepers love to engage in.

As far as G.S. is concerned, given the state of American journalism these days, probably the only investigating of its role in present-day government will be done by resourceful and patriotic investigators in the blogosphere.

Bush’s actions, on the other hand, will surely be sliced, diced, and microscopically scrutinized by left-leaning academics and journalists until hell freezes over.

[nathanbedford]

It may be that the real extent of the threat will not be known for years and perhaps is actually unknowable. While I have a great deal of ambivalence about the wisdom of the first bailout, I feel I am a much more solid ground in declaring that the subsequent bailouts were probably unnecessary and unwise. Certainly the porkulus package is a disgrace and the money should be returned. Even if the subsequent bailouts were necessary, they were corruptly done and I believe unconstitutionally and certainly undemocratically done.