There's not a lot of point to this diary other than to collect some comments from fellow political observers who are equally astonished at what our country has become. Bernanke aired an interview with 60 Minutes on Sunday for which I found a transcript here
Q: How would you rate the likelihood of dipping into recession again?
A: It doesn’t seem likely that we’ll have a double dip recession. And that’s because, among other things, some of the most cyclical parts of the economy, like housing, for example, are already very weak. And they can’t get much weaker. And so another decline is relatively unlikely. Now, that being said, I think a very high unemployment rate for a protracted period of time, which makes consumers, households less confident, more worried about the future, I think that’s the primary source of risk that we might have another slowdown in the economy.
Below I rant on the lunacy of this statement (some nice charts and background info though) but that will be pedantic for many of you so feel free to skip and leave your comment.
From Heinlein's Job: A Comedy of Justice
Time is never a problem on the God level. Or space. Whatever needed to deceive you was provided. But no more than that. That is the conservative principle in art at the God level. While I can't do it, not being at that level, I have seen a lot of it done. A skillful Artist in shapes and appearances does no more than necessary to create His effect.
So let's walk very slowly through the illusion.
some of the most cyclical parts of the economy, like housing, for example, are already very weak
One problem here is that we use cyclical and weak to describe housing in the same sentence.
One can describe real estate as cyclic, in which case we are above the long term trend, or as weak since sales have recently plummeted but you can't accurately combine the long and short term views.
And they can’t get much weaker.
Let's stipulate that housing can't get weaker - this is a foolish assumption taken only for the sake of showing that this point is moot towards predicting a double dip. The further assumption required to make sense of this drivel is that both the housing market predicts the economy and that the nature of its prediction is an exact trend for trend. This is not the case in general predictors - a high price of oil can kill an economy without going higher as can high taxes or high unemployment. Bernanke is basically assuming the economy is stable and then using that belief to predict economic stability.
And so another decline is relatively unlikely.
Relative to what? Certainly high unemployment and high flying real estate are a worse combination for making double dip likely than high unemployment and not high flying real estate. But falling real estate values do not somehow protect from harm - The value of farmland falls 30 to 40 percent between 1920 and 1929. You doctor telling you that it could be worse does not mean you are in stable condition.
Now, that being said, I think a very high unemployment rate for a protracted period of time, which makes consumers, households less confident, more worried about the future, I think that’s the primary source of risk that we might have another slowdown in the economy.
I'm not sure how to even parse this part - the Fed's policies can kick the can far enough down the road that Bernanke will no longer be in charge and so he is unconcerned?
The problem with predicting protacted high unemployment is that a society can only keep stability during such a period if everyone believes the condition will end soon. As soon as everyone accepts the unemployment will stay high then the jig is up. Why hold real estate if you know for certain that it won't move up in the next ten years? Better to just sell and rent. Why hire new employees, start a new business, etc. when you know the economic doldrum continues for the long term. Sure a market economy experiencing this kind of long term unemployment is possible but only with strong and continued government intervention in the "market" as Bernanke is doing now.
You might point to Japan as an example of an economy that lives relatively (to American Great Depression) gracefully with long term depression. But there are structural differences between Japan and the US. The United States is increasing its work force by over 200,000 people each month. So while the whole world is playing job musical chairs the US version has the added misery of adding more people to the pool each month the music plays.
Working Force Population (in thousands)
Also though under severe pressure Japanese society is in some ways more civilized than America
In a written response to questions from The New York Times, Canon said it had underestimated the difficulties faced by the laid-off temporary workers in the current economic downturn and would offer them more aid, including help in staying longer in their apartments.
As a special bonus for being one of the very few to reach the end of this diary I give you a second Bernanke gem
Q: The gap between rich and poor in this country has never been greater. In fact, we have the biggest income disparity gap of any industrialized country in the world. And I wonder where you think that’s taking America.
A: Well, it’s a very bad development. It’s creating two societies. And it’s based very much, I think, on– on educational differences The unemployment rate we’ve been talking about. If you’re a college graduate, unemployment is five percent. If you’re a high school graduate, it’s ten percent or more. It’s a very big difference. It leads to an unequal society and a society– which doesn’t have the cohesion that– that we’d like to see.
Ah how wonderfully backwards. Backwards logic is a big theme in Bernanke's spin. What a pity Bernanke can't take up a less harmful word play hobby like rhyming - Report Card 9: The Children Left Behind
A small group of countries – Denmark, Finland, the Netherlands and Switzerland – are leading the way in promoting bottom-end equality in child well-being. Greece, Italy and the United States are on the other hand allowing children to fall furthest from the median, with large gaps between the performance of children in the middle of the distribution and children at the bottom end.
Bernanke would have us believe that poor education is causing income inequality when in fact the causality is the exact reverse. The rich of this country are stealing everything and the result is to banish an increasing number of citizens, starting with the poorest, into the "second society".
This is the real Bernanke / Geithner deception. It's not that printing money can't be a part of helping the economy. It's that they have ruled out any economic policy, like tariffs, progressive taxes, strong unions, etc., that might not preserve the oligarchy at the current near anarchy producing stranglehold level.