Robert Shiller is saying that things are still going downhill. Robert Pollin is just about as bleak. For example:
* The US economy is in a recession, based on shrinking GDP.
* Since January, the US economy has lost 760,000 jobs. Layoff announcements are occurring minute by minute.
* State governments are facing massive shortfalls, and since most have laws against running deficits, they are going to have to lay off state employees and cut back on everything.
The Bush administration attempts to fix things have been incredibly expensive and so far not successful:
* In April they tried a $150B stimulus package.
* The $700B Paulson bailout has already spent over $170B, but has not yet stabilized the markets.
* The Fed has committed an additional $540B for bailing out the money market.
* There seems to be no limit on the bailouts of Fannie Mae, Freddie Mac, and corporations like AIG that are "too big to fail."
Everything looks bad, yet the country is in a state of bliss over the election of Barack Obama - and that's where the solution may lie. Recessions are all about lack of confidence - consumer, investor, business, government. Obama could restore confidence just by appearing at this important moment. The picture on the cover of this week's New Yorker said it all: a tunnel with a light at the end.
In addition, Obama is marching in with a whole new crew of advisors with a fresh outlook and new ideas. The pundits have been saying that Bush has made health reform impossible by leaving such an enormous deficit and fiscal mess, but the pundits are also saying the US must have a stimulus package. Why not make universal health care the stimulus package? Likewise, there is no reason not to tie together the needs for infrastructure rebuilding, environmental technology, social safety net and economic recovery. Economic policy that goes beyond protecting large corporations will probably be more effective.
The big question is: How much more damage can Bush do in his remaining two and a half months? His father bombed Iraq until an hour before Clinton took the oath of office. Anything's possible.