Tuesday, December 07, 2010

No End In Sight
To U.S. Economic Crisis

... as 'scariest jobs chart ever' shows post-recession unemployment is at its worst since World War Two.

by Staff - December 6th, 2010 - Daily Mail (London)

As unemployment in the U.S. nears the dreaded 10 per cent mark, it is a chart to chill the bones of any job hunter. Comparing previous recoveries from all 10 American recessions since 1948 to the current financial crisis, the stark figures show almost no improvement in employment figures in the past year.

The dot com bubble burst during the Clinton Presidency and the recession was under way for 20 months when 9/11 hit. The tax reductions of 2001 and 2003 worked to reduce the damage of both the Internet bust and the huge financial damage from 9/11. During that entire period the press constantly hammered Republicans about "their" horrible unemployment. Neither the dot com bust nor 9/11 were the fault of Republicans yet that is not what the press said. Still the tax reduction response worked to keep the recession fairly mild even though it was hysterically opposed by the main stream media. It would have worked sooner and better if the reductions had not been phased in slowly and been set up as temporary.

The sub prime mortgage crisis triggered the recession that started at the end of the Bush years. Though is is arguable that Bush did not support the actions that led to the sub prime bust, neither did Bush really fight against them. His response - to create a huge corporate stimulus bailout - was the worst possible response and did nothing to reduce the damage. Since Obama backed the plan it is intolerable that he still tries to tie the problems solely to Bush. The constant harangue that this Obama supported bailout "prevented" an economic collapse but the failure to fix the problem was Bush's fault is idiot economics at its worst. Allowing some Wall Street failures would have had little impact on the actual productivity of our nation, since Wall Street produces nothing but derivative scams, credit default swap jokes and other pyramid schemes to rip off unsuspecting investors. Wall Street has long since abrogated its job of finding and funding good companies with top management. Today the little funding Wall Street does is to create monopolies by merging giant corporations.

What is interesting is unemployment was not as bad under the Bush recession as it had been under the Clinton recession - UNTIL the Bush-Obama stimulus! That is when unemployment increased and reached the horrible levels we still see. History is a good teacher. When you do the opposite of what has worked before and the results are worse than other times, it is idiocy to claim that what you did worked and people just don't realize how bad it might have been.

What we need right now is a tax rate reduction (which will as it always has increase tax receipts). All we are getting according to today's news is the tax increase is delayed two years paired with a one year extension in unemployment benefits. I do not believe the response to that is going to be the huge and rapid recovery that is traditionally the response to a recession. Look at the graphs. The last two recessions have been the most damaging of all since the war. All the rest ended with a huge surge in employment! There is a reason the last two have been different. It is the way these two have been handled. We need that huge surge in employment.


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