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« Previous Entry | Main | Next Entry » What Needs to Happen For the Recession to Be Short? Name:
Richard Smith
Question/Comment: I have heard guests on the NewsHour say that the recession will last into 2009 or 2010. What is it that is supposed to happen in this short time period that will result in happy days being here again? Paul Solman: What's SUPPOSED to happen is that low prices and low interest rates will induce people to buy once again - buy goods, buy services, buy stock. That in turn would induce companies to invest. And thus, the story goes, the economy turn around. "Look," those guests you are citing might say, "the economy will turn around sooner or later. Why not SOONER?" To which skeptics might reply: "Why not LATER?" The Dow Jones Industrial Average hit a peak of 381 in 1929. It didn't return to that height until late 1954. On the other hand, no recession since World War II has lasted longer than a couple of years. The honest truth? No one knows. Because the turnaround will depend on a revival of global consumer and investor confidence. Who could possibly know when that will happen? -- Posted December 19, 2008 | Comments (1) | Permalink
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I believe Paul's report tonight encapsulated why it will take a while. Folks cling to their beliefs even when proved wrong by the facts. That may be a good reason why there were four years between 1929 and 1933. Everyone was waiting for the next bubble. A little money is good, Money from the goddess Moneta, goddess of warning. A lotta money, as Paul reported, is intoxicating.
I believe the press has to wake up, smell the coffee, and agree that market fundamentalism is Wrong, and was repudiated by the silence surrounding the Bear Stearns bailout in March. Until there are words in fidelity with facts we will be waiting in bubblesville for the return of the bull..... that we have become so accustomed to swallowing.
When we agree that markets need rules and it is WE the People are who set them, and see that they are enforced and when the coming generation has a realistic chance to afford a home, the conditions creating the recession will be over, and a stimulus will then get us going.