Recession YTD, Brain Damage Already Done

It's official. We've been in a recession since December... of last year. 12 months already. CNN reports that most US recessions last 8-10 months, and global recessions average 16-18 months. Obviously we're in a global recession, which means somewhere around another 8-12 months, if history is any indication. The tangible impact of a recession are clear; layoffs, unemployment rises, downturn in spending, failed businesses, etc.

Now I'm no economic expert, don't play one on TV and I didn't stay at a Holiday Inn Express last night, but I have to ask, what additional deep damage has our federal government done by heralding the coming catastrophic financial, banking and credit crisis. By getting on TV and announcing we're facing a dire financial situation, Henry Paulson and George Bush perform the equivalent of yelling fire in a crowed theater while not owning a shred of fire fighting equipment.

Just as tangible as the impact of job losses are, economies are just as much about how we perceive them - we often describe this as "confidence in the market". If we believe the markets are going to be in the tank, they will be. It's a self fulfilling prophesy. The reverse is true when we're bullish about the economy - somehow we make our predictions come true. I believe Bush and Paulson have done us all a huge, huge disservice, making things even worse by all their aimless handwaving of warnings and non-specific dark cloud predictions.

The best things Bush and Paulson can do for the economy is to:

• stop talking
• stop appearing on TV
• focus on transitioning to the Obama administration

Comments

[Amber]

I am not sure if this is the direction you are taking this article, but how I interpret this is that the continuous interference by the government tends to cause more harm than good. They focus time towards further injecting unnecessary assistance while losing a handle on the matters that demand this involvement.

I am in the south and a few months back we hit a gas "shortage". Unfortunately our governments involvement really made matters worse. If they had stepped aside to allow a little "pain" we would have overcome the shortage faster versus their regulation that drug the matter out. With Obama's transition, government should be focusing on making this switch as seamless as possible versus concerns of popular appearance. Excellent article. If this was not your intention I do apologize and hope I have not ranted too much!

[Dave]

While I see where you are coming from with the certain statements made by this current administration, I also have to wonder whether or not you have been listening to President Elect Obama? Well first of all I will say that Bush and Paulson, primarily Bush, stayed away from the cameras for as long as possible until they were being called upon to address the matter. Now, as for Obama's statements he has been touting the same tune as Bush, if not making it sound worse. Over the past few weeks I have heard nothing from him, but we are in a once in a lifetime financial crisis, worst economy since great depression, and so on. While I can not say which was is best to handle this situation I will say that no matter what a public official does during a time like this, it most likely will not be the right move in the eyes of the public. My recommendation would to be stop talking about what has happened and start talking about how we are going to fix it and what will happen.

Dave