Via ABC News: Majority of States Now in Recession
What started out as a housing problem in a few states has now exploded into a full-fledged recession with a majority of states now in or dangerously close to recession.
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27 states are in recession and another 14 are near recession.
Not surprising and not good news, to be sure.
In terms of political implications, it can’t help McCain that most of his “must win” states (Ohio, NC, Florida) are in recession. Colorado, a red state likely to turn blue is in expansion, but that appears not to be helping him, as CNN reports: McCain camp looking for way to win without Colorado>
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October 21st, 2008 at 3:19 pm
I’m not sure why it is such a surprising thing for the US to have a recession. Free markets have times of boom and times of bust, and historically, the bigger the boom, the bigger the subsequent bust.
Considering how big some of our recent booms have been, the recession that we are experiencing (as of now) could be much worse than it is.
An economic contraction or correction (or if you want to call it a recession, a recession) is a necessary component of a free market economy. If you keep that in mind when you are investing and saving for the future you can actually do quite well for yourself in a recession.
To be perfectly, selfishly honest - I hope it lasts a few years. My wife has a great deal of seniority at the school where she works, in a district that has continued to grow in the face of the housing bust; and I don’t think the government will stop paying veterans benefits unless it is completely and totally pennyless - which is possible in the long term, but probably won’t happen right away.
The only economic impact the recession/crisis/whatever has had on my household is to decrease my monthly expenditure on gas, which has increased the amount of money I can put into savings every month. It’s a good deal for me - and as long as this place doesn’t go totally socialist or otherwise implode, those deflated share prices will recover between now and the 20-30 years when I’ll be taking them out of my IRA. It’s a buyer’s market and if you’ve saved some money, it’s a good place to be.
October 21st, 2008 at 3:52 pm
Well, as I said “Nothing surprising”…
Speaking as a tenured professor, my prospects of losing my job are pretty slim, and yet I can’t say that I find a recession to be a good thing, despite my generally positive circumstances.
October 22nd, 2008 at 11:35 am
I guess for me it’s a good thing, but overall I look at it as sort of a neutral thing - it’s neither bad nor good, it’s something that has to happen for our economy to work, has always been a part of our economic history, and is impossible to avoid on a permanent basis. Sooner or later, the economy will have a period of contraction, just like if you stand on the beach, sooner or later the tide will go out. Then it will come back in.
While economies are not as predictable as tides in terms of their timing, I think that they always correct themselves, given enough time. I’m not sure that government intervention is always a good thing. I think that in our efforts to stave off a recession, we sometimes artificially prop up markets and institutions that shouldn’t be able to stand; it may lessen the impact of a failed market, institution, or investment class in the short term, but long term - those institutions continue to function in unsustainable ways, and when they fail again (and this is inevitable no matter how much oversight the government tries to put in place) it will be on a much larger scale.
I guess in a nutshell, it’s my belief that cycles of boom and bust are natural; that goverment intervention is rarely helpful in the long run; that it is not the function of the government to make sure everyone has a job; and that it is up to the individual investor (if you are an individual investor) to keep your finger on the pulse of the economy to make sure your future doesn’t go south when the economy takes its inevitable turn to the bear.
This is more of my personal responsibility diatribe. People don’t like being responsible for themselves, and will do anything to avoid it, and to get the government to take care of them instead.
Blame for the state of the economy as it is can be spread all over the place. I think it’s fair to say that the policies of at least the last four presidents, the last five or six congresses, the federal reserve, and lending institutions all contributed in some way to the mortgage meltdown that has precipitated this particular recession.
BUT - the stupidity of all of those people could have been trumped and vetoed by the people who signed up for the bad loans in the first place if they had just had the discipline to say “no”, to realize they were living beyond their means, and that the responsible thing to do was wait.
My generally pessimistic outlook on things in this country comes in part from believing that there is an enormous lack of personal responsibility in every aspect of most Americans’ lives. This has ultimately impacted the types of politicians we produce, and the way government is run - every year we turn more and more power over to the government, and every time we do that, we become less free. And I think most of the time, it’s out of sheer laziness, and lack of willingness to take personal responsibility.
Whether that comes in the form of knowing you live in hurricane country and having your own plan to get out safely in the event of a storm; in the form of livign within (or better still, below) your means; in having financial discipline and saving money; or in watching the markets carefully and protecting your nest egg appropriately, it all comes down to personal responsibility - and it’s evaporating. Just evaporating.
I think that’s sad.
October 22nd, 2008 at 6:20 pm
Hey Captain D, don’t be so hard on the people who accepted the good deal loans. When my wife and I went for our first house we figured the bankers knew what we could afford based on our income. The real culprits here are our elected officials who pushed the banks to lend to financially unqualified borrowers. If they let the bankers use the same rules that applied to me when I got a mortgage maybe there wouldn’t be so many foreclosures.
Go to http://www.nytimes.com/ and search Clinton Fannie Mae. You’ll see who started this mess. If you’re good a Google check out Obama sues Cithbank. Interesting stuff and the first step of his distribution of wealth agenda.