Economic Notes

Economic perspectives worth noting:

Putting the recession in historical context;

Two foreseeable stages in the financial crisis yet to come are further mortgage problems and the credit card mess;

One increasingly likely near-term (next decade) outcome is that the U.S. will look like Japan in the 1990s - a pathetic outcome but not a disaster, because even though Japan lost its economic superstar status it avoided starvation and revolution;

Unemployment still far short of Great Depression levels;

Bad governance is still the issue:

Now, in most parts of the country, a TARP is used to cover unneeded things, usually a pile of stuff nobody wants, far in the back yard. This is essentially the plan articulated by Bernanke and Geithner: Buy the bad assets, invest more capital in the zombie banks, and hope asset prices eventually recover. This is not a plan to do anything but buy time and extend losses. The scary part is that nobody else in the Obama White House seems to know enough about finance to argue the point.