CNN: Slowdown could have been avoided

[MiniMe]

A well-respected economist says the U.S. is now in a recession...and that Congress and the Federal Reserve could have stopped it

By Chris Isidore, CNNMoney.com senior writer
Last Updated: March 20, 2008: 12:39 PM EDT
NEW YORK (CNNMoney.com) -- Congress and the Federal Reserve missed their chance to keep the country from falling into recession by acting too slowly, according to a well-respected economist.

Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, said the economy has now fallen into what he calls "a recession of choice."

He argues that the economic stimulus package passed by Congress this year is too late to help many consumers and businesses and that the Federal Reserve was too timid when it started trimming interest rates last fall.

Since then the Fed has aggressively cut rates, most recently lowering them by three-quarters of a percentage point at its meeting Tuesday.

"If they had done all this in the fourth quarter, I think we'd be having a different discussion," he said. "We might not have had Bear," he added, referring to the fire sale purchase of brokerage firm Bear Stearns (BSC, Fortune 500) by JPMorgan Chase (JPM, Fortune 500) that the Fed helped arrange over the weekend to avoid a collapse of Bear Stearns.

http://money.cnn.com/2008/03/20/news/economy/recession_forecast/index.htm?cnn=yes


:banghead:

[Zynx]

1. I'll go a step further. The housing bubble could have been stopped and so could the excesses

of its bursting so far. We needed constant and serious intervention and we didn't get it.

[DemocratInSoCal]

2. FUCK YOU CNN, AND YOUR LAME BULLSHIT

Boil all the problems down to the Fed not crashing the dollar sooner. Yeah, that's the ticket.

LOOK HERE.....NO, OVER HERE.....SEE THE SHINY OBJECT? Don't look over at those other causes, nothing to see there.

[MiniMe]

8. Thats pretty much what I thought too

Thats why i had to post that article. That is un-fricking believable.

[nashville_brook]

9. phew -- was worried there for a sec.

:hi:

[MiniMe]

13. I guess I should have made it clear that the head banging was because

I think the article is pure BS. That "expert" was probably one of the many "experts" who kept saying there is no recession.

[nashville_brook]

15. it was the head-banger that threw me -- :)

[Warpy]

3. Aw, bullshit

The only way to have avoided this would have been to re regulate banking to prevent abuses like extending jumbo liar mortgages; to have raised wages consistently over the past sad 14 years; to have instituted parity in tariffs with the countries we trade with to stop the hemorrhaging of US jobs; and to have taxed the wealthy enough to pay for their wars of corporate convenience.

[nashville_brook]

10. i *wanted* to say this, but couldn't formulate a coherent sentence.

makes me too angry.

[DS1]

4. a recession of choice

I do kind of like that, even if it's not used correctly here

[nashville_brook]

5. not giving junk paper AAA rating would have been a better intervention.

[MiniMe]

6. Well, if the Fed had stopped printing new money to dump it wherever...

That part I think fits. But what could Congress have done? That article just got my blood simmering, at least it isn't to a full boil.

[baldguy]

7. Don't bail out the banks - let them fail. Bail out the homeowners they scammed instead.

That would end the housing crisis immediately.

[Mountainman]

11. I said this in another tread and got shot down

"He said low business inventories at the end of last year gave policymakers a chance to avoid the recession, because any spur to spending by businesses or consumers would have resulted in a quick pick-up in production.

"There was an opportunity that was wasted by policymakers because they didn't understand those dynamics," he said. "That is one aspect of how the policymakers have goofed and why this recession is a choice, not something that happened by bad luck and chance.""

Instead of worring about Wall Street we should worry about Main Street! Spending drives the ecomony not investment!

[MiniMe]

12. Except the manufacturing is done in China, not in the US

That is a big part of the problem, those companies who's stocks were low are buying overseas, not in the US.

[Supersedeas]

14. War of choice, recession of choice -- just another day in Bush World

[benld74]

16. A shitpile of useless collateral still stinks no matter when you try to fix it

[Javaman]

17. Sure it could have been avoided, by firing greenspan back in the 90's.

and not deregulating the industry AND not invading and occupying a country for no reason other than some bizarre "my*-father-didn't-give-me*-any-attention-growing-up-so-now-I*-have-to-invade-a-country-to-show-him-how-much-of-an-adult-I*-can-pretend-to-be" complex.

but alas the repukes, like always, think they know better.

[Mike03]

18. I think Achuthan is right, and I blame Greenspan in large part.

But there's a sea of blame to go around. This fiasco has been years and years in the making, and it's going to be years and years in the fixing, unfortunately.