Monday, December 01, 2008
The Economy: I'm so glad they cleared that up
The National Bureau of Economic Research has made it official: We're in a recession. I suspect this may matter in some important, technical sense; maybe it even matters practically to put a label on the state of the economy. But am I the only person on the planet who wants to shout: Tell me something I don't know!
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According to Keynes, the root cause of an economic downturns is an insufficient aggregate demand. When the total demand for goods and services declines, businesses throughout the economy see their sales fall off. Lower sales induce firms to cut back production and to lay off workers. Rising unemployment and declining profits further depress demand, leading to a feedback loop with a very unhappy ending.
90% of the time you can make statistics show whatever you want 50% of time
http://nomedals.blogspot.com
It seems to me that we need a different term for this particular recession. I heard Ben Bernanke speak on Monday and he strongly stated that the current problems were not in any way like those of the Great Depression. He's probably right that things are different -- we do have FDIC and a few other safety nets -- but this is clearly worse than just a recession. In fact, it's amusing that people have been so reluctant to use the "R" word, given that calling it a recession seems a little comforting, if you ask me.
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