Still Suffering from the Bush Economy

The Labor Department announced today that 651,000 new unemployment claims were filed in February, raising the national unemployment rate to 8.1%. Unemployment has been on a steady rise since December of 2006.

The stock market has lost 53% of it’s value since peaking at over 14000 in October of 2007.

The FDIC reports that 43 banks have failed since February of 2007.

RealtyTrac reports that 1 in every 466 homes nationwide received a foreclosure filing in January of 2009.

Despite this steady decline that has been going on for quite some time, though largely unnoticed until last September, fringe elements in the media are starting to organize themselves to lay blame for the crisis on the 45 day old Obama administration.

Really, it’s ridiculous to even mention the Obama administration in the same breath as the financial crisis in any way other than to address the merits of the plans. A new administration is not like replacing a fuse. The problem didn’t get to this point in a day, and it won’t be fixed in a day.

There are some legitimate points to debate in the current Obama plan. We can argue about the stimulus, or the housing plan, or if the healthcare plan would have any appreciable effect on the economy. We can talk about how TARP funds should be distributed and what rules should apply, or any number of other things, but ultimately we’re not going to see the effects of ANY of these things before September or October, and the truth of the matter is, even then the loss in confidence may not be restored, not to mention the nearly 6 million jobs that have been lost since the end of 2006.

Further, there are some things that have yet to be publicly addressed that desperately need to if confidence is ever to be restored. Regulations regarding the markets, the agencies that provide credit ratings, and lending practices, perhaps the things most responsible for steep decline in September, must be addressed before anyone will feel comfortable investing their money. This problem is deep and wide, and the only solution is to treat the disease, not just the many symptoms.

Of course, that takes time, and doesn’t fit into a 3 second sound bite. Systemic solutions will be picked apart, and a great deal of focus will be given to obscure specifics, with the intention of damning the entire program over the minutiae, rather than looking at the broader impact of the whole. This is the nature of the beast, but if we REALLY want to fix the problem, we have to be ready to swallow the bitter pill.

As uncomfortable, and disturbing as this whole mess is, it’s only going to get more uncomfortable before it gets better. We, as a nation, have to “sweat out” the fever in order to get better. This means we’re also going to have to do some things that we’ve been told by pundits and conventional wisdom are “bad” for us. Of course, these are the same people who said everything was fine and the system was working until the pressure of reality became so great they could no longer feed us their line of bull.

In the end, we will continue to suffer from Bush’s economy, until Obama’s plans have time to germinate. This won’t stop the TV talkers from trying to tie Obama to the problem, but until his plans have been proved a failure, they’re far better than the “nothing” being fed us by the right.

0 thoughts

  1. Excuse me, but wasn’t it the Democrats who took over Congress in 2006?

    The unemployment rate has gone up precisely along with Democrat control of Congress, and the passage of the Minimum Wage increase.

  2. Eric,

    The minimum wage increase passed in May of 2007 (Source).

    The sharp uptick in unemployment started a year after passage of the minimum wage bill, and had more to do with failing financial institutions in April of 2008, along with a bubble economy on the verge of bursting.

    The notion that an increase in the minimum wage somehow is solely responsible for the increase in unemployment ignores the reality that the economy as a whole has suffered from the collapse of financial institutions and the tightening of credit markets as the result of over leveraging. These two conditions have contributed far more to the staggering increase in the unemployment rate than a $1.45/increase in the minimum wage.

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