The New Republic

We should be honest and call the crash a depression. It took a vast effort and many years to fix it and also, a world war ensued - heaven forbid that happens too but it could. Also, even Roosevelt couldn't keep the economy growing steadily, it faltered back then too. Nothing, nothing is going to make this go smoothly and easily and people should be more realistic. Plus, the "job creators" are actively working against us. That's a huge problem - huge. They're getting theirs because the stock market has gone from below 7,000 to over 13,000 and corporate profits are high. But, from them to us, nada.

- Sophia

September 7, 2012 at 12:51pm

I meant to say, the crash of 1929 took a vast effort, and this will too...people are so impatient and unrealistic because our hole in 2008 was extremely deep and also, it took decades of bad economic policy plus wars and greed (ahem) and offshoring and outsourcing and globalization to get into the mess. How on earth are we supposed to climb out easily?

- Sophia

September 7, 2012 at 12:53pm

If only we could shake our fear and loathing of Taxes, coming from that discredited Supply-Side evaluation, and just let the Bush Tax-Cuts expire. The resulting influx of revenue to the Feds, and resulting shower of gold to the States, would provide a lot of relief in the next four years. No more would Wisconsin have to fire half their teachers, police, and fire-fighters. No more would highway construction bills have to be bottled up in Congress. The other thing we have to do, is get those know-nothing, do-nothing Tea-Party members out of Congress. Having made "compromise" and "taxes" both obscene words, they're continuing to drag down the recovery. The good news is, Obama doesn't have to do anything to let the Bush tax-cuts expire -- except like Clinton, weather the firestorm of disaster predictions from Republicans. The sooner that process begins, the better. Because just like Clinton, the results for our economy will be outstanding.

- AllanL5

September 7, 2012 at 1:02pm

Sorry Sophia. But with appropriate policies the "climb-out" time would be about 18 months. That could have been done in 2009. In which case you would be looking at an FDR-type re-election rather than a Millard Fillmore-type. Would also be the case today. But that won't happen as BHO doesn't have the personality OR the policies. As for next year, I note that Dem-Keynesian economists (Krugman, deLong, Johnson) are suddenly changing their tune re the economy next year from decine to steady poor growth--- on the basis of no appropriate data ( They need learn from their own critiques of Mankiw nd other Hooverian/Austerian economists).. while the CBO calls it as it is likely to be. We have in Barack vs Mittens the inadequate vs the insane. It is not clear what is the better result if the party led by the inadequate receives the blame for what may be at best a downturn in the Great Recession that is currenly owned by Bush and BHO-- and will be owned by BHO and the Dems if that downturn arrives as predicted next year (that's assuming the EU/EURO or the Chinese economy do not in the meantime implode). Whom the gods would destroy they first made mad-- Dems are mad mostly in one sense of the word, Repubs in both. Whoever wins the Prez in 2012 is likely to be destroyed. Mark the words of this Cassandra with data.

- drofnats1

September 7, 2012 at 1:20pm

For positive change in the issues that affect our daily lives — not only food but also jobs, income, housing — we need active political leadership. But until President Obama is pushed more strongly by the left, the coming presidential election represents a choice between a full-fledged attack on government services and a continuing slide into the gloomy and depressing world of austerity economics. That’s a real choice, but it’s not a happy one.

- drofnats1

September 7, 2012 at 1:38pm

One wonders, IF Obama is re-elected, and I think he will be, does this mean the GOP might find someway to get past their invective hatred for Obama to work with him in the country's best interest to passing substantive & progressive stimulus bills that put investments in infrastructure, education and manufacturing (in order to create jobs and demand), reduce the deficit by letting the Bush tax cuts expire and improve Obamacare instead of trying to gut it? Maybe Bernacke will grow a pair and get the FED to do something more about unemployment instead of their (pressured) focus on inflation. But I bet we will get to see another 4 years of GOP intransigence in which they will freeze Congress by inaction, and turn America into a second-world nation by doing everything they can to speed up the race to the bottom. Just so long as we don't ask Americans to be citizens first.

- singlspeed

September 7, 2012 at 1:44pm

Unless more Democrats are elected to office, and the Democrats take over the House, and the Democrats change the filibuster rules a LITTLE in the Senate to remove those "anonymous holds", then yes, we'll see the same kind of grid-lock we've seen for the last two years. Perhaps worse, because at least the Republicans folded before they forced America into bankruptcy -- they might not be willing to fold again. Sadly, very few people in power are making this argument -- that the party that brought you The American Budget Hostage Crisis THREE TIMES in 2011, should be held accountable for that behavior. Otherwise, we'll get the results of the last 4 years of Clinton, once the Bush tax-cuts expire. Namely, grid-lock in Congress where the Republicans keep trying to do abysmally stupid things while the President vetoes them, allowing continuous growth in employment and the economy because of the increased revenues. I think we could all live with that.

- AllanL5

September 7, 2012 at 2:07pm

Great post Noam. Exactly right. We're looking at the new normal for unemployment for a long time to come. Also, shouldn't we be taking note of the quality of jobs being created as well as the quantity? Isn't it the case that the new jobs have a low wage bias and isn't that just as important as the amount of jobs?

- IggyPop

September 7, 2012 at 5:33pm

Get real. If BHO is re-elected, the Repubs will be more intransigent than ever and will control at least the House. Threy will be all the more intransigent because they will believe the CDC projections (for all the wrong reasons) about which ya'll have been in constant denial (for reasons unstated. Most folks ignore or wish away bad news). However, economically informed or no, you are not alone in your denial: major Keynesian economists (Krugman, DeLong, Johnson etc) are ignoring their recent agreement with CDC projections and don't wish to think beyond November.. Sophia. You ARE aware it took so long to fix the Great Depression in large part because it WAS worse for longer than 2008-2009 and that FDR went Romneyesque in 1936-37?? And would have continued indefintely, were it not for WWII. I strongly suspect that you are not counting on WWIII to fix the fix the current Great Recession. However, invading Iran might do the Keynesian economic trick--- another reason to vote for Romney, assuming he agreed to pay for it.

- drofnats1

September 7, 2012 at 6:29pm

"I’m in a strange place when I assess Obama and the economy these days. Having written a book that catalogues my disappointment in both, I’m the first to say their performance could be better. On the other hand, I long ago adjusted my expectations downward. When I see I jobs report like we got today—a middling 96,000 jobs in August, along with 40,000 worth of downward hits to June and July—it’s not a crushing blow. It’s a basic affirmation of where I’ve assumed we were for a while now. As with my take on Obama’s speech, this can have the perverse effect of making me sound somewhat bullish." Says it perfectly. Success defined downward and greeted by Dems as good news. Only a crushing defeat will save both parties-- and the US. Best to start with the Dems. It'll fix the whole mess sooner (like in 2014-2016 rather than waiting until 2024 or later).

- drofnats1

September 7, 2012 at 7:03pm

actually, Krugman is right. The further we get away from the bust the better things we become, Americans are deleveraging, getting rid of household debt, the economy is still growing, Latin America and Asia are still enjoying robust growth (China having five percent growth counts as a recession nowadays), the baby boomers are beginning to retire, productivity is increasing, meaning we can do more with less. Illegal immigration is at an all time low (at least as a percentage, with net migration from Mexico now zero) Provided Obama is re elected I am fairly bullish on the next 4 years.

- blackton

September 7, 2012 at 9:09pm

actually blackton, keep smokin whatever it is that keeps you happy and distanced from reality. Krugman is a better economist than politician. His economic analyses (not altered) predict a downturn next sping or early summer. As does the CBO. China's numbers are highly suspect-- even for 5% growth. And the EU is a ticking bomb. Which Krugman acknowledges on Monday, if not Friday, columns-- and consistently on his blog.

- drofnats1

September 7, 2012 at 9:57pm

Jeez drof are you working for Romney/Ryan or what? Seriously.

- Sophia

September 7, 2012 at 10:46pm

Here's what drof doesn't get, and what many of us have been slow to get: globalization and automation have changed the economic landscape tremendously. And, the hole we were in was huge, just huge - plus, there have been troubles worldwide and reluctance on the part of the banks and the "job creators," especially Republicans, to help out because they are, I think, trying to get rid of us pesky democrats. Yes the d is small on purpose. So, not to be wearing the tinfoil hat but in addition to the economic problems mentioned above, there appears to me also to be a serious attempt by some of our friends to drown us in the tub. They say they want to do this and I believe them.

- Sophia

September 7, 2012 at 10:51pm

Whatever growth has occurred in the United States since 2009 has come from Bernanke, the only person who knows what he is doing. Meanwhile, Barack Hoover Obama wants to raise taxes during a recession: that's smart.

- john336

September 8, 2012 at 5:54am

It wasn't fighting Hitler that ended the Depression. It was the enormous deficit spending to put EVERYONE to work building tanks, airplanes, and other war materiel -- followed by draconian "anti-Profiteering taxes", followed by "War Bond" investing, that ended the Depression. Just because the Republicans (and conservative Supreme Court) weren't willing to allow FDR to run a 20 Billion deficit to end the Depression, but WERE willing to allow that to defeat Hitler, doesn't mean creating yet another "unfunded war" would help now. As we're already running "enormous deficit spending", the missing piece is "adequate taxation" and "putting everyone to work".

- AllanL5

September 8, 2012 at 6:45am

And yes, raising taxes in the middle of a Recession on the wealthy, who profitted enormously from the Great Recession, IS a great thing to do. Unemployed people don't PAY many taxes, so raising taxes won't affect them much. People making $100K or above ARE making money, and so CAN pay taxes. End result? You don't have to cut services for the poor and unemployed, in fact you can invest MORE in putting people to work and jumpstart the economy, WITHOUT creating huge deficits. Hey, it worked great under Clinton, despite Republican declarations of disaster. Why not now? Just because you predict disaster again and again, doesn't make it true.

- AllanL5

September 8, 2012 at 6:51am

And no, it's Mitt Hoover Romney who wants to CUT SPENDING in the middle of a Recession. THAT is what's stupid. It didn't work for FDR in 1936, and it's not going to work now.

- AllanL5

September 8, 2012 at 6:52am

The investor class determines economic (in particular monetary) policy, and today's investor class, far more than the investor class of the past, isn't as dependent on a robust American economy. Indeed, America serves more as a safe haven to hold cash while seeking out far better investment returns elsewhere. In its role as safe haven, inflation, and concomitant high interest rates, are considered far more serious problems to be avoided than slow growth and high unemployment. With trillions in "safe" debt instruments held by the investor class, I'd expect snow in July in Florida before I'd expect a robust economic policy in America.

- rayward

September 8, 2012 at 7:44am