Best I can tell, however, there are few economists who don't see it as the worst since the great depression and one that was on the cusp of taking us down. The economists I read differ only in the proper cure.
Let's say it is the worst since the Great Depression. To that I would have to say "so what"? There will always be a recession that is the worst since the Great Depression because each one varies in its length and intensity thus they can be ranked.
As you say, the most important consideration is how a recession should be handled. I'm firmly in the group that is basically non-interventionist, that believes the economy should be left to readjust and correct the excesses on its own. Let the weak go under and the strong companies will pick up the slack and rehire laid off workers. This is better than keeping all of them limping along not working at full capacity, imo.
The public, led by the media, has rolled the banking debacle and the consumer led recession all into one ball of wax. Actually these were relatively separate events. It's important to keep in mind that the banking crisis was brought on by the fact the banks, the brokers, and some insurers were interlocked with each other through multiple layers of derivative transactions, and not because of reduced consumer spending. This prompted the bailouts needed to keep them from taking each other down. But even so no depositor money was ever at risk as happened in the Great Depression.
The mortgage originators, such as Countrywide, that were indeed connected to the consumer were going under and their operations being absorbed by other institutions as normally happens in a recession. It was orderly and nothing that unusual.
And now the banks, more particularly the regionals, are experiencing the types of loan losses that go hand in hand with a consumer led recession but nothing of Depression era magnitude. The smaller regionals, usually community banks, that fail are being quietly absorbed by their larger counterparts as is typical in a recession.
I just didn't at the time and still don't see anything that atypical from the typical recession (excluding the banking debacle) that would require Depression era type stimulus. I'm willing to bet that revisionists will move toward me on this and a lot of economists and market folk will start asking how did this happen.
It could have been worse. Pelosi and Barney Frank would have handed the bailout money to the banks with no strings attached following just a couple of days of consideration. Fortunately, a mix of Republicans and Blue Dog Dems coalesced and slowed things down enough that some requirements were placed on the banks that have caused them to get the money repaid quicker and more easily than I would have thought possible. |
