In December of 2008, eleven million people were out of work, the culmination of twelve straight months of rising unemployment. In December 2007 the rate was less than 5%, twelve months later it was 7.2%.
So where were all those jobs again?
The cut taxes and spend money like crazy plan put us on the highway to the mess we’re still crawling out of.
I will readily agree that previous administration bobbled some things economically. But I don’t think the worst can be blamed on it.
The tax cuts were before the wars. The deficit certainly increased with the wars. But then, it steadily decreased until 2008. In 2007 it was about 1/10 what it is now, annually.
We were probably due a recession. I accept that. But what made it so very much worse was that there were all of those bad derivatives out there, in large part due to FNMA and FHLMC buying bad loans; loans that almost anyone could tell were bad. It’s not that derivatives were new. They weren’t. But the proliferation of derivatives that were bad at the core were a huge part of the exacerbation. That led to TARP 1(b) which was basically a device by which the bad banks could be acquired by the good banks, since the government could see that TARP 1(a) was not nearly enough to buy all the bad securities.
And, since insurers are dependent on return from fixed income securities, with only premiums with which to make up the difference, health insurance jolted sharply upward.
Bush tried to reform FNMA and FHLMC, but was stoutly opposed by Dodd, Frank, Schumer and Obama. Should he have tried harder? I will always think so.
So, 2009 started with this country in recession. So, what did the administration do? They raised taxes via Obamacare, promised that energy would cost more, that taxes would be higher, that they would “put coal out of business” (thus the cheapest energy). And, of all things, FNMA and FHLMC are still buying bad loans. Part of my business is closing loans, and I can readily see it. If I can see it, so can others. And now we’re almost four years later and still businesses won’t hire or invest, because nobody has a clue what his costs are going to be; knows this administration has a radical agenda and that it has placed itself such that it acts suddenly and arbitrarily and in unexpected ways.
I realize that recessions and depressions have their technical definitions. Personally, I think of depressions in terms of the way my grandfather described the Great Depresssion. It had its ups and downs, but its major characteristic was extreme caution on the part of those who might have hired or invested and a chronic, institutionalized high unemployment rate. It was as if the economy had lost a limb. In my opinion, that’s what we have now, and I don’t think we’ll be out of it until a LOT of curative work is done. Trouble is, the longer it goes on, the harder it will be to fix, because people adapt to even a bad economy. Unemployed people become deconditioned to work. Underemployed people often don’t learn more advanced skills. Some get used to the idea of just not trying anymore. Some get set in extremely cautious states of mind. Businesses just don’t do the “forward looking” things they might do if they had more faith in the economy, so the whole thing gets behind where it should be. Failure to do things that are forward looking is extremely bad for the economy, because productive capacities don’t increase. Technologies are not invested in. People are not hired for the future.
