Recess



Just like his daddy, it looks like Bush II will go out with a gigantic recession.

From today's New York Times (hat tip to this diary on DAILYKOS):

In the view of many analysts, the economy is now in a downward spiral, with each piece of negative news setting off the next. Falling housing prices have eroded the ability of homeowners to borrow against their property, threatening their ability to spend freely. Concerns about tightening consumer spending have prompted businesses to slow hiring, limiting wage increases and in turn applying the brakes anew to consumer spending.
But some economists think a recession may have begun in December. In the last two weeks, there have been signs that a substantial downturn may already be unfolding. The Labor Department reported a sharp slowdown in job creation in December. Retailers said that sales last month were extremely disappointing, capping the worst gain for a holiday season in five years. A widely watched index showed manufacturing slowing, despite a weak American dollar that has encouraged growth in exports. The construction of new homes has already fallen by some 40 percent since the peak in 2006. The sales of new homes have fallen even faster, suggesting that a large oversupply of places to live will continue to drag down prices.
Home prices have dropped by about 7 percent since the peak in 2006, but some experts suggest they could fall by another 15 to 20 percent before hitting bottom.

None of this is a surprise. Bush buoyed his popularity back in 2002-2004 by having incredibly low interest rates in order to prop up an ownership economy.

Once the government ceases to deny that there is inflation (how much do you pay for a gallon of gas? a gallon of milk? How much did it cost 8 years ago?), we will have to deal with the fact that we have been buoyed by a false sense of security and the chickens are coming home to roost.

I follow Bonddad's work on DAILYKOS also, as he writes a great deal about the economy. He wrote a great article today about the debt crisis. It makes me feel incredibly guilty about my outstanding credit card debt, and resolve more to deal with it as soon as possible (hoping for a giant tax refund this year).

So what will it take to fix it all? Here is my thought:
1. A levelled, progressive tax structure .... lets have real tax rates - higher on everything you earn over 100k.... families realistically need almost all of the first 50000 they take home, and can ill afford to part with very much of that at this point. These taxes will be needed for important coming government initiatives.
2. Major "Manhatten Project" for renewable energy - it is time to look at solar, wind, geothermal and whatever else we can devise to get off of fossil fuels so that we have a fighting chance of making it through the current energy crisis and possibly have a chance at reversing manmade climate change. The taxes that were raised on current energy companies and the unnecessarily wealthy will be used to fun this R&D.
3. Major infrastructure re-building : we have to put our levees, bridges, highways, etc back into working order, fund mass transit, and build the infrastructure for universal wireless broadband internet access so that we can accommodate our coming technology needs. Put folks back to work putting the infrastructure in and re-building decaying urban cores (not to sell as $1,500,000 loft condos, but to rebuild the schools and hospitals) so that we have a functional America again. The tax increases will be needed to do this work also.
4. Improve education - its time to really invest in education in our society - I say this all the time - we have to put our money where our mouths are. I'm not saying we raise teacher salaries in regions where they are already high - I am saying we adequately staff low-performing schools to give those kids a fighting chance at being economically self-sufficient as adults.
5. Improve the state of health in the US: After we create National Health Insurance, we have to put Americans to work in the health care industry - give them training so we no longer have nursing and EMS shortages, but rather we have well-trained people ready to care for our citizens. We also have to fund a massive preventive campaign to slow obesity, improve diets, encourage exercise, and get people on the road to better health in order to cut the costs of care. Again, higher taxes to get here.

Yup - I am a tax and spend democrat - because I think the government has done it right in the past and can do it right again - we had that during the new deal era - and we need it desperately now in the current crisis.

Posted: Sun - January 13, 2008 at 05:44 PM          
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