Whether the Economy Is in a 'Double Dip' or in Stagnation, It's Clear We're in a Downward Spiral

[unhappycamper]

Whether the Economy Is in a 'Double Dip' or in Stagnation, It's Clear We're in a Downward Spiral
NewDeal 2.0 / By Rob Johnson

~snip~

We’ve been hearing a lot lately about the possibility of a double-dip recession. I do not know if we will actually go to a double dip or just substandard growth given the high level of underutilized human resources. But that is beside the point.

It is a very sad feeling, one that I had during the aftermath of Katrina, when the government reveals that it does not intend to respond to a crisis. It is a cold, dehumanized feeling. The tolerance of 9.5 percent unemployment, which is in reality a much larger number (say 15 percent) than the official numbers, is a symptom of dysfunction.

The dysfunction arises in part because of a failed vision. Society needs public goods and their repair. Adam Smith identified this in the Wealth of Nations. Education, schools, roads bridges are the lubricant of a productive society and there is no better time to repair or upgrade them than when you have slack resources that can be hired to address the task. Denigration of government’s essential role has gone on too long. It is doing us harm. Yet it has roots in experience.

Our lockdown on spending is a symptom of lack of trust. It is also in part because our government is seen by the population as favoring large institutions and corporate power, not people. Given the choice between perceived corporate welfare that enlarges our future tax burden and curtailing the government, many people now opt for the latter. Not because people lack the desire for services, but because we do not trust our political system to deliver those needed services. See a recent Pew Reseach Poll, which illustrates the pervasive perception that government economic policies benefit Wall Street rather than Main Street.

~snip~

We are amidst a breakdown. An irrational macroeconomic strategy and a nonsensical growth strategy is being chosen in a way that is perfectly understandable in a money politics-driven collapse of trust in government decision making. Deterioration of government services is bad enough, but imposing austerity due to lack of trust in a time of high unemployment and slack resources is tragic. It is a means to accelerate the decline of living standards of those who have taken a beating since 2007. Double dip or stagnation is too subtle a distinction. We are amidst an unfolding collective choice to pursue a downward spiral. I do not for a minute believe this will result in a lower debt/GDP ratio. I do see deflationary risks as a prelude to an inflationary response. Our leaders, showing their fear by responding to the fearful polling results are not leading. Where will this end? As the Oscar winning song “Falling Slowly” from the movie “Once” by Glen Hansard and Marketa Irglova pleads with us:

[FreakinDJ]

1. Ever since Ronnie RayGuns and his Trickle Down Economics

We didn't get this Fucked Over with just 1 RATpubliCON President

it was a group effort

[ixion]

2. Big k/r

Spot on.

[deacon]

3. There's a bottom line here. We need more spenders. Part of the equation is when

you run an economy into the ground ala GOP, there are consequences - small and big business will fight for their very life, downsize and managing without extra help will be adopted. Some are afraid, some are "hey, the adjustments leave us with a profit margin that ain't so bad" - these things are the consequences, that why a snap finger situation was never going to happen.

We have to deal with what we have to deal with as a result of Bush and the now newly anti deficit GOP.

[xchrom]

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