Harold Meyerson: We're facing a different kind of recession

http://www.dallasnews.com/sharedcontent/dws/dn/opinion/viewpoints/stories/DN-meyerson_18edi.ART.State.Edition1.37ca0a4.html

The tried-and-true remedies won't work this time around

06:16 AM CST on Friday, January 18, 2008

In a normal recession, the to-do list is clear. Copies of Keynes are dusted off, the Fed lowers interest rates, the president and Congress cut taxes and hike spending. In time, purchasing, production and loans perk up, and Keynes is placed back on the shelf. No larger alterations to the economy are made, because our economy, but for the occasional bump in the road, is fundamentally sound.

This has been the drill in every recession since World War II.

Republicans and Democrats argue over whose taxes should be cut the most and which projects should be funded, but, under public pressure to do something, they usually find some mutually acceptable midpoint and enact a stimulus package. Even in today's hyperpartisan Washington, the odds still favor such a deal.This time, though, don't expect that to be the end of the story – because the coming recession will not be normal, and our economy is not fundamentally sound. This time around, the nation will have to craft new versions of some of the reforms that Franklin Roosevelt created to steer the nation out of the Great Depression – not because anything like a major depression looms, but because we face an economy that's been warped by two developments.

The first of these is the stagnation of ordinary Americans' incomes, a phenomenon that began back in the 1970s and that American families have offset by having both spouses work and by drawing on the rising value of their homes.

With housing values toppling, no more spouses to send into the workplace, and prices of gas, college and health care continuing to rise, consumers are played out. December was the cruelest month that American retailers have seen in many years, and, as Michael Barbaro and Louis Uchitelle reported in Monday's New York Times, delinquency rates on credit cards, auto loans and mortgages have all been rising steeply for the past year.

What's alarming is that this slump in purchasing power doesn't appear to be merely cyclical. Wages have been flat-lining for a long time now, the housing bubble isn't going to be reinflated anytime soon, and the upward pressure on oil prices is only going to mount. As in Roosevelt's time, we need a policy that boosts incomes and finds new solutions for our energy needs.

FULL article at link.

And May the Force be with you!

people need more income and a sense of security that the income is secure.

I haven't felt secure in my income ever since Bush has been in office.

In addition, we need to feel that we have secure health benefits, and secure pensions.

I've had "the best" health benefits, without interruption, for years but, somehow they really don't cover much and we pay a fortune. It's like a mirage!

I think that most people are just praying that they don't get sick.

That word sportsfans is called DEPRESSION! Can you say "Brother can you spare me a dime?"

They must be vetted by strong regulatory agencies. People have been talking about sub-prime bundles for years. And still it went on.