Economists are bouncing up and down with glee saying that the recession is over. I view all of this buoyancy with a great deal of skepticism, not it the least because few economists seemed to be able to predict the derivatives disaster that brought us to this pass. It would be nice if they are right, but the MacDoctor observes that the words “dead”, “cat” and “bounce” could be applicable here.
One of the hallmarks of the depression was that people kept thinking it was all over – and then things took a turn for the worst again. I am no economist, as I have repeatedly said, but it does not seem to me that the amount of correction that has taken place so far is anywhere near as large as the amount of imbalance that needed to be corrected. This is purely a subjective gut feel, but this just feels like the eye of the storm brought to you courtesy of Obama-nomics, Gordo-splurge and Ruddistribution.
And talking about these stimulus packages, much of the spending will cease at the end of next year and the rest will slow to a mere trickle at the end of 2011. At this time, the cat may give one final, plaintive miaow before plummeting into the depths. MacDoctor will be greatly amused if New Zealand weathers the second recession well, because we did not empty the coffers on the first occasion. Sadly, I think I will not be all that amused.
Regardless of my Jeremiah ramblings, Mr Obama seems to have forgotten that someone, somewhere is going to have to pay for the massive debt he has built up. Someone will have to pay for healthcare for all. Someone will have to pay for the baby boomers pensions (forget the 401(k)s if there is a second recession). So regardless of the outcome of the recession(s), the next generation will be earning less than the previous because they will be paying substantially higher taxes.
Now that’s a recession – maybe not in economic terms, but certainly in the eyes of the man in the street.
Which brings me to my final amateur economist point. All the markers in the world will not help you pick the end of the recession. Until the average New Zealand starts to open the storm shutters on their household budget, the recession will not be over, regardless of the economic indicators.
And that time still seems a very long way off.