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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

September 16, 2009 at 10:00 AM

So what will a recession ‘very likely’ over look like?

Fed Chairman Ben Bernanke said Tuesday that the recession “very likely” is over. It’s also very likely most of us won’t feel better for quite some time.

Joblessness will keep rising, at least for awhile. A jobless recovery awaits. Debt levels are still too high. Foreclosures continue and credit-card defaults are rising. Commercial real estate remains troubled. Growth, such as it is, will be slow. There will be no easy restarting of the massive real-estate sprawl/debt machine that powered so much of the mid-2000s. The nation is poorer from the crash, yet it is more in hock to the world than ever, with our room for maneuver equally constrained.

Inflation remains a big unknown. The Fed pumped dollars into the system to avoid deflation. A slow-growth recovery should — in theory — protect against all that new money coming back to bite us as roaring inflation.

As we mark the year anniversary of the collapse of Lehman Brothers, and soon of Washington Mutual, it’s disheartening to see what had seemed like inevitable reform start to fade. The banks “too big to fail” that they posed a risk to the financial system are even bigger. Wall Street is starting to “innovate” again. The accountability for billions in taxpayer money used to bail out the banks is murky at best.

The fiscal mess in Washington, mostly inherited by the Obama administration, further constrains action, whether on providing health care for all or addressing looming crises from climate change and the competition for scarce resources. Many states are in terrible fiscal shape themselves, sucking away stimulus money that otherwise could have gone to investments in new industries and modern infrastructure.

At least the frantic improvisation of Bernanke, Hank Paulson and Tim Geithner avoided a panic that would have brought on a new great depression. But the anticipated “reset” much discussed last winter and spring seems as illusive as ever. It may well be happening, but how will it manifest itself, who will be the winners and losers, and what kind of “new normal” can most Americans expect?

Bernanke doesn’t know. What do you think? The comments field awaits.

Today’s Econ Haiku:

Washington’s jobless

A trailing indicator.

The pain still leading

Comments | More in Macro/Big picture, Outlook

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