Global Recession Near, Some Economists Say

Washington Post ^ | September 26, 2001 | Steve Perlstein

[liberallarry]

".....There is little doubt that the scale of the destruction of economic value, combined with the loss of confidence, will precipitate one of the most severe global recessions in recent memory," declared David Folkerts-Landau, head of global markets research at Deutsche Bank, adding that only an unprecedented effort by industrialized countries to stimulate their economies could avert such a downturn."

[liberallarry]

I think we should be discussing this, even if it is only a possibility. If the terrorists launch a second attack, which is predicted, it will become a certainty.

[Azrael]

We have been in a recession for the past 12 months or so. Undoubtedly this will lead to further economic problems--however, I believe the foundation of our economy to be strong. If Bush is smart, he will submit a package of further tax cuts to congress that must slash capital gains taxes. If we keep cutting taxes and lowering interest rates, our economy will pick up next about 2nd or 3rd quarter next year.

[Azrael]

Every time this country sees recessionary economic data people wip out the "D" word. Please, a depression is very unlikely. The recession of 91 everyone was howling about depressions-as well as in 81, and in the late 70's etc. Although anything is possible, it is highly unlikely that we will fall into a depression.

[Eric in the Ozarks]

When the socialist paradise of California offers incentives for new business ($29,000 per every new employee) you know things are slow.

[billybudd]

Again, the old mentality that a government "stimulus" is the only thing that can save the economy. What a crock. Nobody seems to realize that the only stimulus the government can provide is directly taken out of the taxpayers' pockets. The government does not create wealth. It only shifts money around from one person to another. Besides national security matters, who is better at deciding how to spend money: private individuals spending their own money, or the government, spending other people's money?
The sheer absurdity of the "stimulus" mentality is staggering. It's just like people who say that the attacks will boost the economy because the affected companies will be forced to replace lost equipment and infrastructure. Of course, the economy will not benefit - replacing something that was destroyed is a drain on resources, not a positive thing. Those resources could have been devoted to other endeavours. Instead, we have to clean up this mess.
I hope people start seriously thinking about calls for more government power and influence, especially by the mooching traitors seeking to make a buck off the taxpayer by exploiting the feelings of patriotism (e.g., proposed $70 billion increased funding for Amtrak).

[mrsmith]

It's hard for me to believe the bad economic news is not caused by government imposed economic inefficiency, but by the destruction of two office buildings.

But I must believe the WashPost, and after all, government imposed economic inefficiency never makes the front page.

[untenured]

Recessions happen because unexpected events necessitate resource reallocation. The attacks have brought about all kinds of as-yet uncertain changes. We will travel less, the time it takes to fly will be greater because of more security, and so on. Businesses that used air travel extensively will use it less, and have to substitute other techniques in their production. More resources will be devoted to security in a wide variety of fields, at the expense of other activities. Etc.

Sorting out the new best use of resources after 9/11 will be a tangled and bumpy process. A recession (or aggravation of the already existing one) from this adjustment is highly probable. I'm not sure there's that much the government can or should do about it, other than to do its best to insure our safety from more of these attacks. The more quickly the adjustment to the new environment happens, the more quickly growth will resume.

IMHO, anyway.

[Azrael]

You are right, things are slow. They will get slower in the next 12 months, but our manufacturing inventories are liquidated, existing home sales are still fairly strong and the foundation for recovery is there. We must get capital gains taxes reduced as well as deeper tax cuts. If this occurs we will see a turnaround in Q2 or Q3 next year (as long as this country takes no more major hits and the military engagements that the US has embarked on are successful).

[liberallarry]

Congress Gets Plea to Widen Economic Relief is a related piece from the New York Times.

[membrsince]

That's a pretty common multiplier used in economic development nationwide -- one "good" job created is worth between 20-40 K of direct economic aid up front to the company creating / bringing the job.

Nationwide, of course, if the job moves from another state, then it begins to be a zero-sum game. There are some sleazeball companies that leapfrog around the country, running with leased equipment and sucking state, local and federal aid from a series of "economically challenged" areas in different states.

[jwa3]

IMF....US economy in freefall, dollar overvalued. http://news.bbc.co.uk/hi/english/business/newsid_1564000/1564612.stm

[billybudd]

Ok, then YOU can give money to Amtrak if you are so confident in that business. But don't force me to. Amtrak is a disaster as far as I am concerned.

[liberallarry]

Billybudd: If the recession is mild you could be right. If it's bad you'll look like Herbert Hoover.

Mrs. Smith: You greatly underestimate even the physical damage. At least 3 buildings have fallen and 2 more are so badly damaged they may have to be taken down. These are huge skyscrapers. Many more have been less seriously damaged. Utilities are not fully restored. This is right in the heart of downtown Manhattan, where people run much of the world's financial system.
Then there are the four airplanes.
And the damage to the airlines and related industries. People will not just resume flying and the security upgrades necessary to restore confidence are expensive.

[mrsmith]

five buildings and four airplanes.

The actual physical damage to our economy is less than inconsequential.

Cold-hearted but true.
Sure there's a psychological pathology present, but I'm not participating in it.

[habs4ever]

You are assuming the policy mavens in Washington are like minded.They are not.Witness, still, an inversion of the yield curve on the short end.The markets are starved for liquidity, and yet the Fed neeeds more information before it can act.Unfathomable folly on their part, wedded to Keynesian theories that always require just that little bit more of data to make a decision.Bush has very bad advisors, who were crappy before 9/11, and are lethal today.

[justshutupandtakeit]

Thanks to the policies of the Clintons we have seen the economy take a gigantic hit on resources. Rather than playing around with interns we needed a president who understood foreign affairs (not with babes) rather than one elected bragging about his ignorance in the field.

Now we can add to Slimey's legacy of attacking the rule of law and the destruction of intelligence and military capabilities the destruction of up to 100 billion of America's financial resources.

Thanks Bill you were such a great president. I hope your brain dead supporters still love you.