Carmen Reinhart and Vincent Reinhart have authored a paper examining the historical record of economies that experienced a major financial crisis over the ensuing decade. And the results are rather sour news for anyone expecting the U.S. economy to bounce back from the Great Recession rapidly.
Indeed, their major takeaway is that the weak, slow recovery the U.S. has experienced over the last year is well within the historical norm for nations that experience a deep crisis.
They analyzed the economic results following three global financial crises--the aftermath of the 1929 stock market crash, 1973 oil shock, and the current experience--and 15 crises in both advanced and emerging nations.
The results: Among advanced economy, per-capital gross domestic product is now about 2 percent lower than it was in 2007, which is comparable to the experience three years after the onset of the 15 severe financial crises studied.
Meanwhile, Krugman at least gives me this:
Now, it’s arguable that even in early 2009, when President Obama was at the peak of his popularity, he couldn’t have gotten a bigger plan through the Senate. And he certainly couldn’t pass a supplemental stimulus now. So officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism. But they’ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody. And the likely result in November — big gains for the obstructionists — will paralyze policy for years to come.
Krugman in a nutshell: Yeah, even though the Obama Administration could have never passed the Stimulus of the size I wanted, it's still their fault for not passing it. And worse, they're trying to put their best face on the fact that credit recessions are notoriously slow to come back from, even though my recent commentary is ignoring that. Never mind the fact that the President said on the night of his election that this was going to hard-sledding for the next few years.
