...Recessions...imply a very particular economic phenomena: a business-cycle recession, in which the drop is quick, and the recovery is usually similarly swift. That is not what we’re in. That is not what financial crises are. And mistaking one for the other has, in his opinion, cost us a fortune.Read the entire essay HERE. I'm no fan of Klein's, but I think that he has some valid points in that essay.
Financial crises are not about the business cycle falling out of whack. They’re about debt. Lots of it. And that’s why they’re so resistant to efforts to speed a recovery. Whereas you normally get out of a recession by lowering interest rates and persuading consumers to spend, the period after a financial crisis is marked by consumers trying to dig out from under a mountain of borrowed money. You can accelerate that process, but it’s hard to do. But first you must correctly diagnose the problem.
Rogoff has suggested we call this period the “Great Contraction” in order to distinguish it from more normal recessions. You may or may not like the name, but consider this: When we talk about double-dip recessions, that implies, as the National Bureau of Economic Research has said, that the recession ended in summer 2009, and we’ve been recovering ever since. The Great Contraction, conversely, suggests we have been, and remain, mired in an ongoing financial crisis. Which better describes the economy you see?...
Of course, what we call this disastrous economic situation doesn't matter. But how our so-called leaders analyze it DOES matter because the economic policy for addressing a recession and a depression is different.
Clearly, what Obamanomics has done is not the proper way to address the depression we're in.
I keep referring to the term "depression" because, in my view, we are indeed in a great depression — not a recession.
If our policy makers cannot use the "d" word, then let them use the term "contraction." I, for one, am sick and tired of hearing the words "recession" (or whatever euphemism the Obama regime is using) and "shared sacrifice."