What Say You? (@ the centrists in Congress)









A reliably brilliant piece on the economic mess by Doug Henwood titled "Gloomy, w/ a 15% chance of depression". He always includes great photos of the major personalities involved.

LBO has often described the U.S. economy by invoking the old Timex watch slogan from the 1950s, "Takes a licking and keeps on ticking." Crash follows upon panic follows upon bust, and yet the thing keeps getting up again to binge some more. These remarkable feats of renewal, though, have always come with big help from the U.S. government, either multibillion dollar bailouts or long rounds of indulgent monetary policy from the Federal Reserve. But revive it always has, despite the forecasts from the hard left and the hard right that this time it was different and the medicine just won't work.

Will it work again? Will the megadoses of stimulus do the trick? Or is the jig up? Will what’s widely touted as the greatest financial crisis since the 1930s be a prelude to Great Depression II?

As this is written, the punters on the Intrade betting site - who have an uncanny history in predicting elections - are giving depression a 15% probability. That seems about right. [Note added for web: the value of the web contract soared in the weeks after these words were written. As this note is added, the contract is at 53. That seems too high, but you never know, do you?]

Also, an interview with Henwood by Steve Perry.

Henwood has a new blog where he writes in typical literary fashion:

The IMF, which was off the scene for many years, is, like a vampire salivating at sunset, returning to action. It's already developed a program for Iceland, which is being put through the austerity wringer; apparently being white and Nordic doesn’t earn you an exemption. It's likely to lend some money to some countries that it deems virtuous on easy terms - among them Brazil but not Argentina. More on all this in the coming weeks.

I agree with Martin Wolf of the Financial Times that IMF reform is needed in the medium to long term.

Paul Krugman notes that Obama has ratched up his rhetoric:

Now, in the past few days I've heard criticisms of this plan that echo the very same failed theories that helped lead us into this crisis - the notion that tax cuts alone will solve all our problems; that we can ignore fundamental challenges like energy independence and the high cost of health care and still expect our economy and our country to thrive.

I reject that theory, and so did the American people when they went to the polls in November and voted resoundingly for change. So I urge members of Congress to act without delay. No plan is perfect, and we should work to make it stronger. But let’s not make the perfect the enemy of the essential. Let’s show people all over our country who are looking for leadership in this difficult time that we are equal to the task.

Larry Summers warns "deflation is a real risk for the economy."(again, noted by Krugman).Despite all of this I am much more Pollyannaish than Henwood or Wolf or Krugman. Maybe it's a generational thing, although I wasn't much surprised by the crisis after years of neoliberal-Republican misrule, unlike say Bush or McCain or Phil Gramm were.