Their Great Depression

http://online.wsj.com/article/SB10000872396390444873204577537232812750926.html?mod=WSJ_Opinion_LEFTTopOpinion

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"The word impossible is not in my dictionary." (Napoleon Bonaparte)
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Mort Zuckerman kicks off his "Opinion Journal" article (7/23/12) by quoting Ben Bernanke (Federal Reserve Chairman) that the U.S. economy is "stuck in the mud."

Zuckerman's interpretation of that remark is the same as mine: "...there has been no recovery since the theoretical ending of the recession in June of 2009."

I am part of a very small generation of babies born during WW II. As a child and adult, I have experienced (or read about) pretty much everything that has happened in the U.S. since WW II.  So, I can relate to Zuckerman when he says that "For the 80% of Americans born after WW II, this is the Great Depression."

If you don't think so, check the numbers. Again Zuckerman: "The most recent signal of a weakening economy comes from the U.S. consumer, with the Commerce Department reporting last week that retail sales fell 0.5% in June, far below the expected 0.2% increase. A stunning 70% of U.S. retailers missed their sales targets in June, the third consecutive month that sales have weakened and the worst showing since November 2009."

So many numbers get thrown around by so many people (and there will be more since this is an election year) that it's almost impossible to look at the subject of what I call "true unemployment". But, let's go with Zuckerman: "...official unemployment rate - 8.2%," add "discouraged workers" (who have dropped out since the recession began in early 2008 - nearly 8 million) - 12%," add "part- time workers" who would like to be full time - 14.9%. So, true unemployment is 15%.

One of the most stunning statistics I've ever read is Zuckerman's statement that "Fewer Americans are working today than in the year 2000, despite the fact that our population has grown by 31 million (!) and our labor force by 11.4 million." He goes on: "Today, a record number of Americans have been out of work for more than 6 months, and a record number of households have at least one member looking for a job."

Unfortunately, all of these numbers get politicized but facts are facts. I have pointed out for years now that getting Paul Krugman (a decorated economist whose blog has been the most widely read in the world) and Warren Buffet (a dedicated and highly successful capitalist) to agree on what time it is would be an achievement. Yet, they both agreed at the start of the U.S. recession, and since, that not enough money was spent to get the economy back to life. Spending on infrastructure (as Mark Zandi has continuously pointed out to Congress and anyone else who would listen) here in the U.S. is much needed (roads and bridges) and creates jobs where the spending from those workers adds more jobs (or, as Zandi calls it, a 1.5 multiple). That spending should be larger than it was and could have supplied taxable income to support municipalities currently facing bankruptcy.

I have no fear of this type of spending "causing" inflation. Once the spending (large and careful) starts up again, jobs and taxes will support what's needed without inflation (there's way too much slack in the economy - just watch the "Fed" - they're promising to hold interest rates down thru 2014, or is it thru 2016, or later than that?). Once the GDP growth rate is back up around 4% to 5% again, cut back wherever it's appropriate in big government - nobody will object.

Spending on infrastructure worldwide in a public/private partnership is a recommendation from one of the most respected economists in the world: Justin Yifu Lin, chief economist of the World Bank and one of the architects of China's dramatic economic growth. Lin, a University of Chicago PhD in economics suggests that infrastructure spending in developing economies circles back to demand for the products made by developed economies (like construction equipment, etc.). I simplify, but to read more, read "Bridges to Somewhere" by Lin in "Foreign Policy" (September 1, 2011).

Every idea and every hope has to start somewhere. We need to do something.