MarketWatch: Double dip looks doubly certain

[marmar]

July 20, 2010, 12:54 a.m. EDT ·

Double dip looks doubly certain
Commentary: The economic recovery is just an illusion

By Robert P. Murphy


NASHVILLE, Tenn. (MarketWatch) -- Economists and financial analysts are currently arguing whether the economy will experience a "double dip," a recession followed by a short recovery, followed by another recession.

Some think the worst is behind us, and that output and employment will slowly but steadily increase during the next few years. Others believe we are headed for another crash. The lessons from the last business cycle favor the case for pessimism.

It has been said that if one laid all the world's economists end to end, they wouldn't reach a conclusion. Even so, a surprisingly large number of economists now agree that then-Federal Reserve Chairman Alan Greenspan made a tragic mistake. After the dot-com bubble burst in 2000, Greenspan opened the monetary floodgates.

Specifically, Greenspan allowed the "monetary base" to increase 22% from June 2000 through June 2003. The monetary base, also called "high-powered money," is the base upon which bank loans are pyramided, expanding the total amount of money held by the public.

During the same three-year period, Greenspan cut the federal funds rate -- the interest rate commercial banks charge each other for overnight loans -- from 6.5% down to 1%, the lowest federal funds rate in more than 40 years.

The rationale for Greenspan's easy-credit policy was to provide a "soft landing" for the economy in the wake of the dot-com crash and Sept. 11 attacks. And for a while, it seemed he had succeeded. People marveled that housing prices continued to rise, even amidst the recession of 2001. Indeed, people referred to Greenspan as "the Maestro." ...........(more)

The complete piece is at: http://www.marketwatch.com/story/double-dip-looks-doubly-certain-2010-07-20

[sendero]

1. It's not a double dip..

... the first dip never really ended, overly optimistic folks looking at trivial variations in the numbers proclaimed a recovery that did not exist.

[xchrom]

2. Recommend

[HughMoran]

7. Source doesn't matter

So long as it's doom and gloom and is an attack on the Administration?

[DailyGrind51]

3. Looks like low bank interest for the foreseeable future too!

GNMA bonds are giving 4.25%!

[JoePhilly]

4. The author is from Pacific Research Institute ... hummmm ...

From PRI's "vision" statement ...

"The Pacific Research Institute for Public Policy promotes the principles of individual freedom and personal responsibility. The Institute believes these principles are best encouraged through policies that emphasize a free economy, private initiative, and limited government."

Sounds like a Tea Party slogan to me.

edit:typo

[HughMoran]

5. WSJ commentary by a right-winger - nice job

"It makes no sense to "rescue" the economy by having politicians borrow and spend trillions of dollars. It also makes no sense to fix the horrible mistakes of the housing-bubble years by having the Fed create electronic money out of thin air to buy "toxic assets" from investment banks that would otherwise be insolvent. "

Anti-Keynesian garbage.

___________________

The writer?

Robert P. Murphy is a senior fellow in Business and Economic Studies at the California-based Pacific Research Institute.


Pacific Research Institute
From SourceWatch

The Pacific Research Institute (PRI) or officially the 'Pacific Research Institute for Public Policy', is a think tank founded in 1979 whose stated vision is the promotion of "the principles of individual freedom and personal responsibility. The Institute believes these principles are best encouraged through policies that emphasize a free economy, private initiative, and limited government." The institute is a 501(c)3 non-profit corporation, and had $4.9M in revenue in 2005. <1> The Pacific Research Institute has associated with other think-tanks like the American Enterprise Institute and the Cato Institute.

[seabeyond]

6. we already had double. wouldn't it be triple or quadruple dip or something? nt

[HughMoran]

8. Septuple dip

brazillion dip

[seabeyond]

9. lol. nt