Breaking on NPR: Recession officially over in France and Germany

[HamdenRice]

This does not mean that everything is great or that employment has rebounded. It means that these economies are no longer shrinking and posted very small positive growth.

That said, I've always thought that this was an unusual recession that had technical solutions. It was driven almost entirely by the financial sector (with a big boost from the rapacious energy sector). But it was not a classic recession based on "business cycles" and accumulating inventories which require business to shut down production in order to clear them. Nor was it like 1929, which actually was in part a resource driven depression based on hundreds of millions of farmers world wide living in chronic rural poverty pushed into desperation by widesread global drought and crop failure.

There was an underlying mortgage default problem based on real families have real difficulty paying their mortgages (a result of long term stagnant wages and unfair mortgage terms), but this was exacerbated by securitization of mortgages in mortgage backed securities. As former Treasury Secretary Paul O'Neil analogized it, it was like a drop of poison in one bottle of bottled water in a store full of bottled water made the entire inventory of bottled water worthless. Tens of billions of defaulted mortgages turned into trillions upon trillions of worthless bank assets.

This was an avoidable economic crisis created by wreckless financial engineering and commodity (energy) speculation -- the perfect economic crisis to punctuate the end of the era of George W. Bush, an era of unbridled greed and unleashed mega-incompetence.

Despite the fact that this crisis was caused by the financial sector, solving the financial crisis went a long way to solving the recession. Now it's time to make sure these idiots are not allowed to cause anything like this again.

[BlooInBloo]

1. That's cool. There's still more shit waiting to hit the fan here though...

Commercial real estate, specifically.

[HamdenRice]

2. It's going to be bad, but as bank assets, those are mostly already written down

It's part of the strange way banks do accounting. Because those commercial real estate mortgage backed securities are already judged by the markets to be in trouble, they have been written down. The mortgage and rent defaults that are going to happen, have already been priced in.

Once the wave of defaults is over, many "worthless" assets will be found to still be valuable, and will swell bank profits.

[fasttense]

3. Yeah, the banks are saved...now what about those pesky JOBS? n/t

[HamdenRice]

5. Hopefully, the stimulus will begin to affect jobs before the private economy begins hiring

But there are millions of civil servants who WERE NOT layed off because of the stimulus.

Unfortunately, it's impossible for most of the public to appreciate that people KEPT jobs because of the stimulus.

[seabeyond]

4. i just heard that. wait adn see. nt

[RainDog]

6. Germany also had fewer problems during the recession

across the board for its citizens because it has universal health care and enough of a social safety net in place to make people less fearful and therefore more ready and able to stimulate the economy via purchases, etc.

this was covered in the news earlier in the year.

so, a mixed economy appears to help create a more stable democracy by diminishing the problems associated with the American approach that the richest should been treated like kings while the rest are treated like serfs.

they also do not have the huge disparities that the U.S. does between CEO and worker salaries.

it is so apparent that what the U.S. needs reform that will benefit the majority of citizens. the rich will still be able to have fancy cars, multiple homes, nice vacations... but the middle class and poor do not need to lose all for the comfort of the rich.

I'm so freaking sick of the fundies... market fundies as well as the talibornagains.

[TexasObserver]

7. Yes, we're coming out of it.

Unfortunately, we won't see net new jobs for a while yet.

I realize those who want everything to be well now will be disappointed, but you can't turn around a mess like the Bushies created in six months.