Recession: Do We Need Another Word?

Generally where economic discussions are concerned, I tend to think that the last thing we need to better inform the public is more terms and phrases.  I said God Damn, but they just love the jargon, don’t they?

Still, with Senator Phill Gramm’s “Whiner” talk as context, it seems like perhaps there is a much wider chasm between the words we use to describe our economy and the reality.  Because the word “Recession” doesn’t quite cover what we’re seeing.

As Phil Gramm and George Will both correctly point out, we are not precisely in a recession: a recession is generally marked by economists as a period of two consecutive quarters where GNP falls.  We seem to be see-sawing our way through our current economic crisis, losing one quarter and gaining the next.  But whether or not that actual threshold has passed is immaterial to the pain felt by most average Americans as a result of our current economic situation.  See-sawing we may indeed be doing, but it’s been going on for the last eight years and the trend is generally downward.

One problem that might account for the disparity between economic indicators and public sentiment may be that since American companies produce oil all over the world, $145 a barrel pricing doubtless has some buoying effect on our GNP, obviously without the economic upside for the rest of us.  For the rest of us, that same boon to the oil industry is a hardship.  Another problem is that when the economy does well, we worker bees tend to expect pay raises and such.  But in the stagnant economy of the 21st century, many of us work in companies that have long-since frozen wages.

So, if we’re not in a recession by precise standards, what is it?  Clearly, Phil Gramm’s comments are not well-received, but perhaps more importantly, they depict a very real difference between how Wall Street tycoons and others see the economy as compared to those of us actually living in it.  On a purely political level, I think it’s fantastic that McCain’s camp had to dance around this issue, but it’s the truth of what he said that is most troublesome.

What that word aught to be, I don’t know.  Perhaps “Economic Orphanage” is more appropriate?


Where is Our “Thank You,” UBS?

Let’s all breathe a sigh of relief that multi-national banking firm UBS is signaling that the worst is over, for them:

AFP: UBS chief says worst is now over

“I definitely think that the worst is behind us,” UBS chief executive Marcel Rohner told Swiss newspaper Le Temps.

“There will certainly be plenty of things for banks to clear up over the next two years but as far as systemic risks are concerned, we’ve got over the hardest part,” he said.

So, where’s the “thank you” for the lack of regulation that made all this possible? There’s no indication of *how* the bank got the worst of it behind them, other than to say that they’ve “written down” 37 billion dollars in “bad investments.” Wonder what happened to that 37 billion dollars of homes? They don’t.

And neither does John McCain and his adviser, Phil Gramm, former lobbyist for UBS. In fact, it was Phil Gramm’s relentless deregulation of the banking industry during his time as Senator that partially set the disaster in motion, removing safeguards placed on banking after the Great Depression.

Way to go, Phil! We look forward to your ample guidance should John McCain win the presidency, and will remind people of it every single day till November.


McCain’s Subprime Troubles

Here’s a story I’ve been asleep at the switch on. One of John McCain’s chief economic advisers is none other than former Senator Phil Gramm. Phil Gramm was the father of the modern bank deregulation era that led to the subprime mortgage crisis. And more than that, he’s a lobbyist for UBS, one of the largest transnational corporations embroiled in the subprime mess:

Talking Points Memo | Great Company He Keeps

On the McCain/Gramm/UBS front (noted in yesterday evenings posts), it seems that not only is Sen. McCain’s top economics advisor, fmr Sen. Gramm, lobby and work for UBS, but according to today’s Financial Times the company is advising members of its private banking team not to step foot in the United States in order to avoid indictment.

The original story from MSNBC’s Countdown is here for your entertainment. Gramm was a tireless lobbyist against just about any reform measures or relief measures the Congress wanted to pass in the wake of the economic disaster he was largely responsible for. So now we know why John McCain’s economic policy where the subprime situation is concerned was, “you’re on your own, losers.”