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Long Slog or Snapback?

Neil Irwin has written a very good survey of the different theories about the shape that the economic recovery will assume. The basic argument appears to be between people who look at the fundamentals of our situation and see no obvious engines for a rapid recovery, and people who look at the historical record and argue that America has always roared back from recessions and will thus do so this time, as well.

I'm trying to write some shorter posts, so rather than quote a big chunk of it, I'll just link. It's also worth taking a second to savor the moment. Eight months ago we were talking about a possible depression. Now we're talking about the likely speed of recovery. Somebody did something right, or at least did a lot of things not-wrong.

By Ezra Klein  |  August 17, 2009; 12:21 PM ET
Categories:  Financial Crisis , Solutions  
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Comments

I am not impressed by Irwin's article. He throws quotes and numbers at you, almost in a random fashion, but is strangely hesitant to say what the implications are. Except that this time it's going to be different.

Posted by: pneogy | August 17, 2009 12:40 PM | Report abuse

The end of a freefall does not mean recovery is coming now. I see a long period of high unemployment and very weak growth. That is why we need another stimulus, with no tax cuts, just extending unemployment, public works, and more aid to states so they can maintain what is left of the safety net under the needy. without this we could be in for a doubledip "W" shaped path of economic growth with another extended downturn starting in 2010.

Posted by: srw3 | August 17, 2009 12:54 PM | Report abuse

i give Obama credit. He brought us from the precipise of economic collapse that I don't know that McCain could have. His policies though seen to be of the type that will make the recovery a prolonged one. I'm thinking unemployment will remain at 9+% (i love how they get themselves backed into a corner of a percentage by the media) and employers are not hiring right now. At least none of the ones that I know. They're waiting this healthcare debate out to see where they'll be at that time and seemingly waiting for the next shoe to drop.

Posted by: visionbrkr | August 17, 2009 1:32 PM | Report abuse

"Eight months ago we were talking about a possible depression. Now we're talking about the likely speed of recovery."

And judging by the fact that White House isn't out there harping on this daily, I'd say the stage is set for yet another Democratic failure in the face of overwhelming success. Just how many times will they leave the narrative wide open for days, practically begging the GOP to come in and frame it in the least-positive light? By the end of the week it will be common knowledge that we were saved from economic disaster by the 40% of the stimulus that was tax cuts.

Posted by: BigTunaTim | August 17, 2009 4:03 PM | Report abuse

The government's paying interest on a subset of mortgages for a time would be a different but probably better way to ease the crisis.
It would get us out a mare's nest of foreclosures that have enormous externalities, provide a consumer stimulus by raising what mortgagees could spend, and banks' clean up toxic assets temporarily, as I have said since the crisis began.

Posted by: jhansonecon | August 17, 2009 5:17 PM | Report abuse

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