It's the Housing Stupid by Dean Baker
In a Washington Post column today, Kevin Hassett and Glenn Hubbard, two of the top economists on Governor Romney's economic team, rightly take President Obama to task for blaming the weakness of the economy since the downturn on the financial crisis. They cite a recent study from the Federal Reserve Bank of Cleveland as showing that recoveries following financial crises tend to be stronger not weaker than other recoveries.
While there are some questions that can be raised about this study (was the financial crisis in the 1990 recession really comparable to what we saw in the fall of 2008?) the basic point seems right. After all, we do know how to set an economy in motion again following a financial crisis. Argentina managed to regain all the ground lost after a complete financial meltdown in December of 2001 in just 1.5 years. Our financial policy crew can't be that much less competent than the folks calling the shots in Argentina. The idea that a financial crisis puts a mysterious curse on an economy was always more than a bit suspect.
Ultimately we will need an increase in foreign demand, meaning a lower trade deficit, to fill the gap. This will require a lower valued dollar which will make U.S. goods more competitive internationally. Unfortunately neither candidate seems willing to make the case for a lower valued dollar, which means that we can probably expect a weak economy for many years into the future, regardless of who gets elected.