Congress might adjourn without acting on the deepening economic crisis, leaving Obama to inherit the catastrophe.
Free fall. The U.S. has lost private sector jobs for 10 straight months. One quarter of all businesses in the U.S. plan to cut payroll over the next year. Retail sales fell in October by the largest monthly drop on record. Auto sales have collapsed, driving the auto companies towards the precipice. Unemployment is up to 6.1 percent, with most analysts predicting it will soar past 8 percent over the next year. (That translates into unemployment among young minority men at rates of 50 percent or more). States are now facing $100 billion in deficits in operating budgets for the next fiscal year. Twelve million homes are "under water," worth less than their mortgages. The U.S. has joined Germany and Japan in what is becoming a global recession.
"The era of big government is over" is over. In the crisis, we are, as Richard Nixon once said, "all Keynesians now." Former Clinton Treasury Secretaries Robert Rubin and Lawrence Summers, until recently notable deficit hawks, now call for substantial fiscal stimulus -- deficit-funded federal spending -- to get the economy going.
Peacenik cannot overstate the severity of this financial crisis. Apparently this morning the Dow futures are modestly up. Asia didn't collapse more overnight. But no one thinks this is the bottom. Like Punditman, Peacenik is seriously considering stocking up on necessities. Is Peacenik crazy? Is today financial armageddon?
