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Wachovia: Obama Stimulus Won't Stop Awful Recession

December 10, 2008 RSS Feed Print

The Obama Boom may be a long time in coming, says the econ team at Wachovia:

"With housing and consumer spending struggling, we project that the severity of the current recession will be somewhere between the 1973-75 downturn and 1980-82 twin recession periods. Unemployment is likely to rise to 9.0 percent by mid 2010. Into the breach steps President-elect Obama with his own party firmly in control of both houses of Congress. The urgency of the current financial crisis combined with the honeymoon period typically granted in the early days of a new presidency affords the new president an opportunity for sweeping changes. Expectations are running high for the new president, which has many people wondering, “What can we expect in the way of policy initiatives and will those initiatives work?” ... Despite the help of fiscal stimulus, however, we believe real GDP will decline by two percent for all of 2009 with consumption and business investment remaining very weak."

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The problem is we haven't had a conservative President since Reagan, and he wasn't all that conservative.
Conservatism is based on principles
1. Self-reliance and self-responsibility of individuals
2. Minimal Governmental Interference
3. Competition
4. Freedom for All
It maybe true that the current administration exits at a low point on all of those. They tend to run in tandem and have served this country well. Deviation from these principles, not adherence to them, has caused the current crisis (and all our crises since the War For Southern Independence).

of TX 12:44AM December 16, 2008

Seriously?

Tom Hanna of MO 11:31AM December 10, 2008

If you were an appliance manufacturer, would you expand your facilities, hire more permanent employees, and ramp up production in response to a one-off boost in government spending?
And if you're a construction worker cashing those government project checks, are you likely to go out and spend that money on new appliances, when you know that the government spending spree will be over very shortly and those check might stop coming?
The money that people receive from a government spending stimulus is not equal to the money received from genuine free market activity. The latter is self-sustaining and perpetual; the former is only temporary and entirely dependent on the health of the free market.
A massive government spending program, given its inherent limitations, will have no lasting effect on economic confidence and the willingness to take risk. Savvy business leaders will look forward, one or two years down the road when the spending halts, and plan for that day.
If the tax, regulatory, and financial situation is the same or worse then than it is today, business activity will reflect that reality.
Business people deal in reality, and government spending is NOT economic reality. It is ersatz economic activity, and no businessman worth his salt would make permanent plans based on it.
Cut Taxes, Cut Spending, Restart The Economy

Dean of MN 10:57AM December 10, 2008

Wachovia: Obama Stimulus Won't Stop Awful Recession

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