Results tagged “recession” from Economic Alert

 

Now that some economists are saying our almost 2-year-old recession is over, I think it's time we name it something. You know, like we name hurricanes...Katrina, Andrew...Rita.

 

Maybe we should even have a national center that names them - like the National Hurricane Center names hurricanes -- we could have a National Recession Center to do the job.

 

Each year, the center could put out a list of names in alphabetical order. If that year has a recession, we just check a name off that list.

 

Students reading about economic history would have an easy way to remember the worst recession since the Great Depression. Government leaders, policy makers and businesses would have a ready made reference point to separate all the recessions we've had.

Psychologically, by putting a name on it, maybe it would be easier to box up and leave behind.

 

Turns out, there may be some value in that.

 

"(A name) would have a different meaning for each person," said Joann Moran, a cinical psychologist who teaches a class in San Marino with her husband on coping with the financial crisis.

People would rename it to be "less overwelming, where they can frame it in the context of something they have some power over."

And maybe the name could even have some accountability built into it, she said.

 

Some ideas come to mind.

Howabout Subprime Recession , after institutions that ran wild with adjustable rate and low-documentation loans that led to the housing meltdown, which in turn led to the fall of the financial system?

 

Howabout Recession Lehman - for the fall of Lehman Bros., the biggest bank failure in history?

 

Recession Greenspan?

Hmmm.

I don't know. I guess the name depends on who you are talking to.

What we do know is that this is the worst recession since the Great Depression.

That's why a lot of people are calling it the Great Recession, said Jack Kyser, founding economist for the Los Angeles Economic Development Corp.

It's not quite a depression, but it's the worst of the recessions, he said.

 

That works for me. Only one problem...Nothing about 12.7 percent unemployment - over 15 percent in some valley areas - is particularly great...not great at all.

But anything, anything to look back during better times and to give the last two years a name.

It's not so much so that we can remember it. It's more about putting a name on something that has harmed us, so we can beat it back, punch it, beat it and hope to God we learn from it and never see anything like it again.

 

By the way, if you've got any ideas for a name, feel free to pass them along...just make sure they are something that we can publish in a family paper.

Treasury Secretary Henry Paulson isn't exactly taking the blame.

But he did express regret for a lot of errors that led to the biggest financial crisis in seven decades. Still, he insists the Bush administration is pursuing the right course in addressing these problems.

In an interview on Fox Business Network, Paulson said, "We're not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here."

Truth be told, there's plenty of blame to go around.

You could start with the over-eager lenders who threw rules - and sane thinking - out the window in their rush to give loans to people who in many cases didn't have jobs, let alone the ability to make mortgage payments.

Other more marginal borrowers who did have jobs were also given loans. But many of them were certainly not able to keep up with their monthly mortgage payments once those payments began to reset at higher levels.

And a large piece of the blame goes squarely on the shoulders of borrowers themselves. Granted, some may have been issued loans without getting a full explanation as to how they would eventually ramp up with higher payments.

But others - many of whom should have known better - simply jumped in without any kind of due dilligence. They just saw a piece of the American Dream and grabbed it.

And now we circle back to the lenders. As increasing numbers of these loans began to default, mortgage lenders saw their revenue streams - and their liquidity - begin to dry up. Federal regulators should have jumped in long before all of this hit the fan. And when they finally did jump in, it was too late.

Now taxpayers are footing the bill for a massive bailout plan and a dire economic situation that has sent economic shockwaves throughout the financial world.

Great way to head into the holiday season.

Congressional Democrats are considering new economic stimulus legislation.

This from Rep. Adam Schiff's weekly e-newsletter:

Congress to Explore Additional Economic Stimulus Measure
On Monday, the House leadership convened an economic forum with some of America's leading economists many of whom urged new recovery measures that focus on creating jobs and helping those struggling to make ends meet. Chairmen of several House committees will be holding hearings next week to reach a consensus on legislation designed to speed the recovery effort. The new proposal could be brought to the House floor in November, although the date has not been finalized.

As Congress wrangles over the details of a proposed $700 billion market bailout, much of the debate has centered on whether taxpayers should foot the bill for bad decisions made by Wall Street executives and homebuyers who got in over their heads by taking out mortgages they couldn't afford.

The government plan is intended to give the economy a shot in the arm by taking bad debt off the balance sheets of banks and other financial institutions, thereby loosening up credit so that the economy can grow. Mostly, this means buying up troubled mortgages and mortgage-backed securities, but it could also include credit card debt, auto loans or just about any kind of debt that none of the big banks and Wall Street firms feel good about carrying in these troubled times.

While everyone's weighing the need to protect and preserve the nation's economy against the unpleasant possibility of rewarding those who endangered it, no one seems to be thinking of those people who lost big chunks of their savings accounts when their banks failed earlier this year.

What about them?