The high cost of the ‘R’ word

As he has several times weekly since the onset of the financial crisis, President Bush appeared on the South Lawn of the White House to give a brief statement on the economy, taking no questions.

As per usually, he reiterated the steps his administration is taking to pump up the financial and housing markets and he did again but this time with a difference: A year after the downturn was officially deemed to have started, the president admitted the country was in a recession.

It was a day of grim economic news, including the monthly unemployment report. "Today’s job data reflects the fact that our economy is in recession." The job data he referred to showed that the economy shed 533,000 jobs in November, far worse than anticipated and the biggest one-month loss of jobs in 36 years. That brings the total number of jobs lost in the year to date to 1.7 million.

The unemployment rate rose from 6.5 percent to 6.7 percent and is forecast to get as high as 8.5 percent next year.

Bush called on Congress to redirect $24 billion in previously approved money to Big Three automakers and to do so next week. At times Bush has seemed curiously detached from the financial crisis — perhaps because in barely six weeks it will be someone else’s problem and showed that by adding, "And it’s important to make sure that taxpayers’ money be paid back if any is given to the companies." If there was any guarantee the money could be paid back, the automakers wouldn’t need a bailout from Uncle Sam.

Uncle Sam is having problems of its own with bailout investments in supposed blue chip financial institutions. The Associated Press reports that the $27 billion in stock intended to eventually earn taxpayers a profit as part of the Bush administration’s massive bank bailout has lost a third of its value — about $9 billion — in barely one month.

The Treasury’s explanation is that it is not day trading but in for the long term.

It could be a very long term. The Congressional Budget Office said the government ran $408 billion deficit in just the first two months of the current fiscal year. The government ran a deficit of $455 billion for all of last year and that was a record. Between the bailouts and slumping revenues, the government is currently on course to run deficit of over $1 trillion.

However long this recession lasts — and the two longest postwar recessions both lasted 16 months — we’re going to be forever paying for it.


  1. storky

    Its the “D” word.

    Depression. It took the National Bureau for Economic Research a year to declare a recession that started last December. We are in a Depression and that probably won’t be officially acknowledged for another year.

  2. spartacus

    Just this month, they FINALLY acknowledged we have been in a recession for a year, since last December. That wasn’t news to anyone (except for maybe George Bush, George Will – who still doesn’t want to admit it – and a few other deniers), but it was going on long before that. The conditions under which it was acknowledged found: rising foreclosures; failing banks; closing factories all over the country affecting all kinds of industry; rising unemployment; the stock market falling wildly; lifetime savings disappearing overnight; what was rising inflation, now turning to deflation; in short, all the ingredients of the Great Depression are alive and well here and now, although they are very quick to point out that unemployment is not at 25% yet. However, one must remember that unemployment figures don’t accurately reflect what’s going on, given that many people out of work drop off the unemployment roles once they stop receiving benefits, so there’s no way to count them (therefore, the figure is bound to be higher than the official tally).

    In other words, the appropriate word is DEPRESSION, because we’ve passed the point of recession.