The Great Recession, Part II. The second dip cometh?

Yakking blogging about Ecuador, it turns out, was a wonderful distraction from depressing stuff, like Joseph Stiglitz's column, in which he writes that instead of putting "America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich" the fanatical free market ideology of the right is instead:

pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection that put the future of the U.S. economy in peril and that shred what remains of the social contract. Meanwhile, the U.S. financial sector has been lobbying hard to free itself of regulations, so that it can return to its previous, disastrously carefree, ways.

When Stiglitz writes thus, it is time to worry. To really, really, worry.

So, what are the Democrats and President Obama doing to counter this ideological offensive from the right?  Mark Thoma is utterly disappointed:

We can do better than this, but it takes leadership and a willingness to fight rather than acquiesce, traits that are far too short in supply in the current administration.

 Hmmm ... so, does this mean that Europe, which doesn't suffer from the ideological right, but is cursed by the ideological left, any better?  Yes, Professor Stiglitz?

But matters are little better in Europe. As Greece and other countries face crises, the medicine du jour is simply timeworn austerity packages and privatization, which will merely leave the countries that embrace them poorer and more vulnerable. This medicine failed in East Asia, Latin America, and elsewhere, and it will fail in Europe, too. Indeed, it has already failed in Ireland, Latvia, and Greece.

Oh, come on.  "Can't anybody here play this game?"

 Stigltiz says there is a way out, but that path is blocked by the ideologues from the right:

an economic-growth strategy supported by the European Union and the International Monetary Fund. Growth would restore confidence that Greece could repay its debts, causing interest rates to fall and leaving more fiscal room for further growth-enhancing investments. Growth itself increases tax revenues and reduces the need for social expenditures, such as unemployment benefits. And the confidence that this engenders leads to still further growth.Regrettably, the financial markets and right-wing economists have gotten the problem exactly backward: They believe that austerity produces confidence, and that confidence will produce growth. But austerity undermines growth, worsening the government's fiscal position, or at least yielding less improvement than austerity's advocates promise. On both counts, confidence is undermined, and a downward spiral is set in motion

I was positive Paul Krugman would have a succinct bottom-line, and he didn't fail:

what we now have is a political drive that will, in effect, undo all those institutional changes that prevented the Great Recession into turning into another Great Depression.

It is a good thing I do not have to worry about stuffing my money into the mattress--have nothing to spare after paying the bills!  Not complaining though--at least I have money to pay those damned bills ...

No end in sight to this unemployment? The reincarnation of supply-siders

I am flummoxed that unemployment has not become a big time political nightmare despite all the horrendous trends.  President Ronald Reagan Barack Obama continues on his supply-side path, writes Robert Reich:

we’re not hearing any of these sorts of demand-side solutions from the White House. In seeking Republican votes, Obama is putting forth Republican supply-side ideas – lowering the employer costs of hiring, cutting corporate taxes – that have nothing to do with this demand-side crisis. He may attract some Republican votes for these, but what’s the point if they’re irrelevant to the real problem?

WTF is wrong with Obama, Democrats, and our elected officials?

Fellow Oregonian, and uber-blogging economist, Mark Thoma adds:

Obama and his advisors mayd believe supply-side polices are optimal at this point, in which case I just want to throw up my hands and give up. And he may believe that negotiation over the policies would simply delay getting needed help to the unemployed without changing the policy in the end. On the last point, the fact that the administration waited until there was little time to negotiate when so many people were urging them to tackle the unemployment crisis months, if not years ago is their own fault (and the time crunch seems to be more about getting re-elected than helping struggling families anyway). Perhaps if the administration hadn't wasted so much time figuring out how to cut make the emplyment problem worse by cutting the deficit and had targeted unemployment instead, they would have had the time to negotiate properly.

Paul Krugman notes after reading "Zachary Goldfarb’s deeply depressing piece on Geithner’s role in the internal economic debate:

Also, when I read this from the Goldfarb piece:

The economic team went round and round. Geithner would hold his views close, but occasionally he would get frustrated. Once, as Romer pressed for more stimulus spending, Geithner snapped. Stimulus, he told Romer, was “sugar,” and its effect was fleeting. The administration, he urged, needed to focus on long-term economic growth, and the first step was reining in the debt.

I get really depressed. Whether he knew it or not, Geithner was making the Mellon-Schumpeter-Hayek argument that any effort to push up demand was somehow artificial and unsound. Not what anyone should be saying in the modern world, least of all a top official in an allegedly progressive Democratic administration.

Progressive? Progressive Democratic?  There are only two parties in the country: Republican and Republican Lite!

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