D-U-H-H…
Richard L. Hershatter
Contributing Columnist
hershatter@lbknews.com
“You must mind your Ps and Qs,”
Our teachers used to say,
But politicians do not use
The rule in the same way.
They’ll take an R and then a D,
Whenever they’re in session
And mix the two, ‘cause they can’t see
Depression’s not Recession.
News Item: On Dec. 1, The National Bureau of Economic Research announced that the U.S. economy has been in recession since December 2007.
Three hundred million Americans, more or less, have known for quite some time that something was not quite right with the American economy.
Millions of jobs were being irrevocably outsourced overseas, tens of thousands of workers were unemployed and running out of unemployment benefits, housing prices were plummeting and countless homes being lost to foreclosure as homeowners found themselves unable to keep up with payments.
Oh, and then, surprise, surprise, banks started to fail as mortgage debt held as assets turned out to be liabilities, and the houses utilized as security for the amounts owed dropped in value to less than the principal balance still due.
To some people, it sure looked like a recession.
The nation’s politicians, however, exhibited a hitherto unsuspected talent for semantics.
“There is no recession,” said the president. “We are just going through a bump in the road.”
The treasury secretary and Fed Chairman Ben Bernanke both warned that a recession may be coming, but it clearly had not yet been reached.
And the Republican candidate for president famously proclaimed that “the economy is sound,” just before the skies opened and the deluge of defaults and bankruptcy announcements threatened to drown the economies of the United States and other leading nations throughout the world.
It turns out that the experts, and the pseudo experts, have differing standards of measuring just how, and when, a recession has occurred.
Some say that it depends on the country’s business cycles and that a recession cannot be said to have occurred until there has been “a significant decline in business activity spread across the economy, lasting more than a few months and normally visible in production, employment, real income and other indicators.”
Others insist that a recession exists when there have been two or more quarters of declining real gross national product.
And then there are some who can confirm the existence of a recession and estimate the length and depth of it, depending on reading the entrails of a newly butchered virgin chicken.
Many of us, on the other hand, are like the United State Supreme Court Justice who couldn’t define pornography, but “knew it when he saw it.”
This writer doesn’t quite know how he knows it, but in his estimation the recessionary period is over, and we are entering the kind of catastrophic environment that was last seen in the late twenties and early thirties, when President Franklin Delano Roosevelt took over the reins of government from the faltering hands of Republican Herbert Hoover and instituted unparalleled, drastic measures to turn the country around.
It’s called a Depression, with a D.
Treasury Secretary Hank Paulson, formerly CEO of Goldman Sachs, has appeared before the television cameras in the company of President George W. Bush, in a tableau reminiscent of nothing so much as a pair of deer caught in the headlights.
Representing the Executive Branch of government, the two have managed in secure a seven billion dollar bail-out package from Congress, as a first step in turning the economy around.
Paulson then designated a former protégé from Goldman Sachs – a 35-year-old by the name of Neel Kashkari, to, in effect, carry the cash from the treasury coffers to key corporations on the verge of failure, such as Fannie Mae, Freddie Mac and AIG, the huge international insurance company.
No one disputes the brilliance of Mr. Kashkari, but the truth is that his total prior academic and professional experience was as a rocket scientist, working to develop latches for the next generation Space Telescope.
Not to overwork an old cliché, but should it take a rocket scientist to rescue the nation from the ravages of a depression?
Many observers have grave doubts as to the ability of the people who got us into this mess to get us out of it.
The incoming administration has promised to “hit the ground running” Jan. 20. There is every indication that the new leaders have taken pages from the examples laid down by Presidents Lincoln and Roosevelt.
Let us wish them Godspeed.
Richard L. Hershatter is a retired Connecticut lawyer and novelist who writes a column of interest to Floridians. He can be reached at hershatter@lbknews.com.
