BLINDERS IN ECONOMIC HISTORY

One type of blindness is temporal: the inability to see, to remember, what came before in time, a particular affliction of Americans as a nation. Let's review: One major cause of the current economic crisis was the repeal of the Glass-Steagall Act (1933) which wisely separated investment banking from commercial banking activities. Glass-Steagall was repealed by the Gramm-Leach-Bliley Act (1999) during the period (now hopefully deceased) of market fundamentalism. Each of the sponsors (the heavy pushers) was Republican as were the majority of its supporters. This led to the economic pathologies of the casino capitalism we saw during the Bush years (most likely we still have the same system with the next bubble now being formulated. Hey! There's fortunes to be made on the backs of ordinary people!).

Second, some simple facts: The national debt increased during the Bush adm. by 71.9%, mushrooming by more than $4 trillion, the biggest increase in U.S. history at that time. If you believe that the debt is a problem now (I'm skeptical as to the morbidity of debt), then you will want to remove the temporal blinders

Next, your taxes were cut whether you realize it or not. See Wall Street Journal (not your liberal rag): <http://online.wsj.com/article/SB123111279694652423.htm>. The tax cut was massive, perhaps $284 billion, and probably the largest tax cut in U.S. history. Why do the blinkered not know this? Perhaps because Faux News decided to cover more important news at that moment, such as Michelle Obama's whisper of "whitey" that no one seems to actually have heard. But, oh, what an absorbing, emotive news item the rumor made that went on and on for about two weeks with the patriots at Faux News.

"Frail economic recovery"? Yes, absolutely! Many things were not done in the best manner, as Paul Krugman, the harshest critic (from the left) of the Obama adm. writes in nearly every one of his columns in the NYT. Krugman says we are in a depression. Taking the simple definition of a depression as a recession that lasts longer and has a larger decline in business activity--then one criterion (deeper decline) is certainly true. Since the current recession began at least as early as December 2007 under Bush (some push it further back into spring 2007), then the 14 months at the end of the Bush adm. added to the 18 months of the Obama adm. gives us about 32 months. Which brings up the depth of the decline: 700,000 job losses as Obama came to office. Yep,
Depression! When Obama says "avoided depression," I think he means we avoided the horrific scare of a total financial meltdown and the near total stagnation of the economy that would have ensued--an instant depression that would have gone global and possibly lasted an entire generation. All economists that I have read say this is true. I personally think we should have nationalized ("restructured" might be a term you would prefer) the top banks ("too big to fail" should mean too big to exist) and broke them up and sold them to private interests. No, the Geithners et al. (including probably every single Republican and most Democrats) were not of that mindset. Perhaps you and I could have agreed on this point. But, would Faux News have cooperated? Ha!

But, Don, the article you supplied also quotes a senior economist who points out that a different indicator--the drop in continued unemployment claims--"is an encouraging sign....it's not all bad news." In fact, from hemorrhaging job losses at 700k per month, Obama's statement is at least partly factually true. There has been job growth in manufacturing and other areas.

So, has the financial system been stabilized? Yes, it has. Maybe not to my liking, but stabilized, yes.

We are right on course for the usual capitalist progression during a deep downturn: Corporations are making record profits and instead of investing in jobs, they are taking their huge reserves and buying up other corporations. Today, Intel announced its biggest profits in 10 years and buys McAffee for $7.68 billion. Yep, the Bush-Obama adms. saved capitalism. The rest of us can wait while the titans of capitalism continue to rake in billions and consolidate power as they adjust to the new conditions. It has always been so.