The reality is that the economy is in serious trouble and the honchos like Bernanke don't really know what's going on. These folks completely missed the housing bubble as it grew to ever more dangerous levels. As the bubble has started to deflate, they now recognize that we have a problem, but they have no idea how bad it is or how to deal with it.

Ouch! No punches pulled here.

When quoting the predictions of economic 'experts', reporters should go over the track record of the expert. It is not much to ask. It would shed much light on the utter cluelessness of these experts.

I wish reporters would realize that the past is chock full of information that can be used to understand the present.

Since this topic is on the recession, I was wondering if any other American president has the onerous distinction of claiming two economic recessions while in office?

Mark,

i'm glad that you asked that question.

drum roll, please ----
Dick Nixon shares that honor along with our current president. There was a recession in 1970 and then again in 1974-75.

What going to happen when Bernanke ""SHOOTS"" all his rate cut bullets, and misses the target...
What ""SUBSTANTIVE ACTIONS", are they going to employe...

These guys are a total joke..
I mean this is funnier than going to a circus....REALLY!!

I find it amazing that the Rupublican answer is tax cuts for businesses so they have money to invest and create jobs. This is a perfect example of the failure of supply-side economics.

If a business owner sees demand falling for his products or services because of a contracting economy he/she isn't going to invest in more capacity no matter how big of a tax credit/cut he receives. The business owner will lay off workers to reduce supply to meet the expected demand.

You can only stimulate the economy through the demand side. Tax credits to middle and lower income folks will be spent and spur demand for products and services. Unfortunatly this short term stimulus is debt financed which is a tax shift to some future point in which it will decrease economic output.

A smarter stimulus in my opinion would be an immediate cash infusion into infrastructure investments such as roads and bridges. The immediate benefit is higher employment in the construction industry which has been battered by the housing bust. Long term benefits of this stimulus will acrue to the future taxpayers that will have to pay for it.

Roger Lowenstein, in his article in this coming Sunday's NYT magazine, writes of Bernnanke last August :
"Although he knew the experience of the 1930s in his sleep, he was, in truth, unfamiliar with the exotic mortgage instruments that were failing now. Bernanke has no ego about such matters, and he consulted extensively with Timothy Geithner, the president of the New York Fed, as well as with Kevin Warsh, a fast-rising 37-year-old Fed governor and former investment banker at Morgan Stanley,..." Is this believable? How could the Fed chairman not be familiar with how mortgages are financed?

R. Timm reply;
Seams to me, that your 'infrastucture' proposal, has smatterings of an FDR, 'NEW DEAL' work project...
It would give new meaning, for the term, working for the gum'mint...
Wages on one side, income taxes on the other...
Buy all your supplies @ PX

This morning, NPR was saying we're in danger of having a "self-fulfilling" recession, meaning, apparently, that all this talk about recession is what will make one happen. They were pushing "innovation" and corporate tax cuts.

I don't think there's an easy way out of this one. We have to let the excesses work their way out of the system or we risk even worse consequences. There is no such thing as a soft landing. Next year (post election) will be much, much worse.

As to the comment about building roads and bridges -- the people employed there are very different from those employed in housing/commercial construction. I don't know of anyone designing swimming pools and doing flooring work that would benefit from something like that.

Chris Farrel of NPR's Marketplace has made an interesting historical reference regarding our current state of economic affairs on is blog: http://www.publicradio.org/columns/marketplace/farrell/2008/01/john_kenneth_galbraith.html

I don't understand how tax breaks to corporations will help anything. Most corporations are flush with cash -- they have record amounts of cash sitting on their books. It's not like they need money. As time goes by they are generating even more cash by becoming more efficient - getting by with fewer workers, shopping the world for cheaper labor, etc.

Most infrastructure construction and maintenance is done by state and local governments. In hard times they are often forced to cut back because of legal requirements to balance budgets, so assistance to states may be necessary just to keep infrastructure activity from contracting. Congressional Democrats apparently are proposing grants to states, but Republicans are opposed, and to expansion of unemployment insurance as well. See WaPo today:

http://www.washingtonpost.com/wp-dyn/content/article/2008/01/17/AR2008011700851.html?hpid=topnews

It is time for economic reporters to level with the public on this fact and stop doing PR work for Bernanke and the rest assuring people that everything is okay.

Not all the press....Lou Dobbs, who holds an economic degree from Harvard and holds the second largest viewing audience on CNN, has been sounding the warning bell for a while now.

His LordShip: I agree the basic premise is the same as the work programs that helped the country out of the depression. I do not think the magnatude would be nearly as great. As skeptonomist said there is no need for the projects to be centrally planned and managed by a Federal entity. States generally have a large pipeline of unfunded infrastructure improvements already planned.

I fear the $800 checks will simply buy a few dinners at Red Lobster a couple of tanks of gas and maybe some itunes, and not provide any lasting economic benefits.

Tax credits to businesses will have very low velocity and little chance of any multiplier effects.

On a side note;
We were having some masonry work done on our interior fireplace, and I was talking to one of the workers, and commenting about 'things in general'...
He told me about his financial problems, etc...
Having problems with his credit card debt, and feels he is getting shafted, cuz the bank recently raised his APR to 29%...supposedly because he was late on his payments a couple of times....
He hasn't worked here in three days because of the snow & cold..

SOME OF THESE BOYS ARE HURTING BIGTIME!!!!

It is time for economic reporters to level with the public on this fact and stop doing PR work for Bernanke and the rest assuring people that everything is okay.

Not all are ignoring the problem.

Lou Dobbs, who holds both an economic degree from Harvard and the second largest CNN audience, has bee sounding the alarm for some time.

PeonInChief has an excellent method for predicting recessions. PeonInChief goes to the Macy's in San Francisco each August. She looks at the merchandise. She thinks, hmm, this stuff looks pretty good. (No recession.) Or she thinks, what a bunch of drek. (Recession.) This past August she made her annual sojourn to Macy's and reported to her husband that there would be a recession.

While listening to NPR in the car yesterday evening, Peon turned to her husband and said, "See, I was right. The Macy's test works." Peon's husband cringed.

For a good summary of what various policies would do to stimulate the economy, go to http:/www.cbo.gov//ftpdocs/88xx/doc8893/blog-econstimulustable.htm
Two things they could do to put money in the hands of those who would spend in on the economy would be to stop taxing unemployment compensation and social security retirement benefits.
I mean do you REALLY consider either of those to be "income" in the usual sense? If so, why not start taxing the patient for the amounts paid to the medicare doctor or hospital?

Why not have a WPA type program? The rest of the world is busy builing up their infustructure, education, and competiveness. The US? We're wasting tax dollars on bombs, war, and destruction. Bring the money home and put it to work building our economy.
As to recession, why belive the government figures, which are manipulated - look around your own community for signs. I live in San Diego, California. Rush hour traffic has been very light recently. This has always signaled recession in this area of the country.

"A smarter stimulus in my opinion would be an immediate cash infusion into infrastructure investments such as roads and bridges."

That does seem a bit smarter, though not as smart as choosing not to take on more debt and not to print more money in order to "stimulate" something that is currently overstimulated - or are we working under the assumption that it's not even possible to throw enough debt or inflation based dollars at the economy?

How about stopping the current war, cutting back on war spending in general, reintroducing prgressive taxation and putting money into infrastructure, unemployment insurance and social services? And I wouldn't mind having the WPA back. We need more art in our post offices.

Among other things, The WP editorial states that:
1. “Any stimulus package would have to kick in when economic data confirmed a recession...” Do they realize that NBER usually confirms recessions the year after they occur?
2. “It (the stimulus) would also have to be offset by future spending cuts or revenue (tax) increases.” Beyond being counter-productive, (money in one pocket and out the other), the $ 75 billion mentioned is less than 1% of the existing national debt. Talk about missing the forest for the blades of grass.

I want to say that the WP Ed. board should pass their drafts by their business columnists such as Steve Pearlstein or Harold Myerson. But then I realized that they probably do, but unfortunately use George Will or Robert Samuelson as their “proofreaders”.

BTW Dean,

I think the venerable Reagan presided over recessions in 1981 and 1984/1985, although we should give Carter credit for the first one. (Actually, there are many factors which cause recessions, with Administration policy only one. Although I blame Bush and his minions directly for this current one, which promises to be a doozy).

On the airplane to the New Orleans meetings I sat next to someone very high up, and I mean very high up, at the Fed, whose name I shall not say. However, this individual was clearly seriously freaked, and I mean seriously freaked (no, it was not Bernanke).

"The immediate benefit is higher employment in the construction industry which has been battered by the housing bust."

Why of course, think of all the illegals who need employment now that housing construction has failed--It'll be great for them.

The only thing more awesome that reading about how Globalization is STILL good for the average American worker and makes him a "Winner"

Is now reading the blog opinions from the well connected few who have won, and how they believe that the "Losers" of globazation should never be compensated---sort of like what they've been doing for the last 20 years.

Just awesome.

Bob Herbert's column for 1/19/08 in the NYTs is really good on this subject. He's calling for a "Marshall Plan" to fix our infrastructure and put people to work in good paying jobs. He's also calling for a "Manhattan Project" to work on all the industries that would bring us energy independence and help combat global warming. We really do need to be an economy that is about more than shopping. It just doesn't seem right that 70% of our economy is driven by consumers. How much stuff is even made in the USA for Americans to go buy with the money they want to rebate?

Bernanke and Friends had over five months (since the early August meltdown) to prove to the world that they understand the problem --- and are dealing with it.

They failed miserably. Wall Street CEOs are asking for foreign money to avoid insolvency. Bush went to Saudi Arabia, sold some weapons, asked for more oil, and came back with next to nothing.

The US can't bail out the economy. The bail-out will sink the dollar even more. This isn't just a recession....

"drum roll, please ----
Dick Nixon shares that honor along with our current president."

Wait... Bush gets blamed for Clinton's 2000 recession and then blamed for one you have predicted every year but hasn't happened??

It is a good thing Carter gracefully left office in early 1981, or he would have two recessions as well.

Were there any strong years from 1977 to 1980? Must have been one in there.

Gladstone,

welcome to American politics. If you're sitting there, you get the blame. That's how it works.

On the airplane to the New Orleans meetings I sat next to someone very high up, and I mean very high up, at the Fed, whose name I shall not say. However, this individual was clearly seriously freaked, and I mean seriously freaked (no, it was not Bernanke).

This is a very scary comment. Are we talking an inevitable, severe, and prolonged bout of stagflation? This is where we seem to be heading. For the regular folk, a bad job market -- meaning wage stagnation at best -- and dollars that buy less and less.

On another related note. Everyone is worried about the decline in American consumption. Given the way things are set up, it's a reasonable fear. However, haven't we been consuming too much for quite a while now?

There's something fundamentally wrong with a system that requires a growth that outpaces the ability of technology to squeeze more out of finite resources that we all but can't live without. A growth that leads to increasing pollution and destruction of wilderness areas. A growth that creates an ever increasing amount of people indentured because of their debt.

government intervention in the economy usually has its price.

40 years ago, prices were generally one-tenth of what they are now. That's right, a 1965 Chevrolet new was abou $2,500 and hamburgers were a $0.30. This means that the dollar has lost 90% of its value in those 40 years, all for the convenience of the government being able to manipulate the small ups and downs at will, some for purely political purposes. In whose pockets did that change in value go?

We pay a price.

Investing in alternate energy is theoretically a good idea, but unfortunately politicians are not capable of judging which technologies are really useful - their bottom line has to do with satisfying constituents and big-money donors, rather than judgement on scientific or engineering criteria.

Money is pouring into corn ethanol, which is not only not efficient in terms of reducing greenhouse gases, but distorts food markets. Many people get excited about hydrogen fuel cells, not realizing that there is no new source of energy involved, and that the ultimate efficiency of the whole process is very much unproven at this point.

Re: presidents with more than one recession during their time in office --

Eisenhower had three recessions, according to NBER, including a recession throughout 1960, which undoubtedly cost Nixon the 1960 election (I mean, without that recession, even Johnson and Daley could not have stolen enough votes in Texas and Chicago, respectively, to put Kennedy over the top.)

Reply to Skeptonomist;

People have this BOGUS idea, that we are running out of oil....
WE ARE ""NOT"" RUNNING OUT OF OIL...We are running out of ""CHEAP"" oil...
The stuff the Arabs are pumping out @ $5/brl, and selling to us @ $90 ..
{{{ YES }}}

""TAR SANDS"" in may countries hold ""BILLIONS"" of barrels of oil...

Is it cheap to extract???..""NO""

Is there a lot of it?? YES!!!
Please, please, please, put to rest this bogus idea of ""PEAK OIL"""

It's currently being re-named as "Peak Easy Oil" as we speak...

"The immediate benefit is higher employment in the construction industry which has been battered by the housing bust."

"Why of course, think of all the illegals who need employment now that housing construction has failed--It'll be great for them."

A big infrastructure program will attract more illegals and will do US citizens no good ... unless the borders are strengthened and employer sanctions firmly enforced.

I think much of the bubble is due to wanting to ensure that recent immigrants/illegals would not be denied the "American Dream", so bad credit was overlooked. To not overlook it would have been bigoted, nativist, and xenophobic.

Finally, Robert Shiller, even more famous than Dean, and with the ear of the Fed, saw the bubble but was not listened to. I think for the above reasons.

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