Wednesday, October 22, 2008

Worst recession since St. Reagan?

I was struck by this article, US faces worst recession in 26 years by Krishna Guha Financial Times 10/19/08:

The US economy appears to be plunging into what many experts believe will be its worst recession since 1982.

Senior officials at the Treasury and Federal Reserve are confident that the rescue plan for US banks will succeed in preventing a financial system meltdown and ensure there will not be a repeat of the Great Depression. But they know that a sharp economic downturn is already baked in the cake. They do not,however, know how deep or protracted it will be. ...

“The actual deterioration in the data in the last few weeks has been much more severe than anyone was expecting,” said Frederic Mishkin, a professor at Columbia university and former Fed governor.

Consumers, who account for 72 per cent of the US economy, are pulling back amid a brutal tightening of credit conditions on everything from car loans to credit cards and home equity lines. Meanwhile, foreign demand is also weakening.

Alan Blinder ... said it was all but certain the US would face a recession worse than in 2001 or 1990-1991.

"The game is now about making sure this recession is less deep and less long than the 1982 recession." [my emphasis]
It's worth remembering that St. Reagan who the Republicans all idolize induced a sharp recession with his drastic cutbacks in domestic economic stimulus when he took office as President. Republicans have a way of bringing on economic disaster.

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