For the Economy, Help Is Not on the Way
July 16, 2010 - 10:39am
TORONTO--Twenty years ago, in 1990, the American economy was in the third year of a deep recession. It was impossible to find a job. The 1980s housing bubble had popped; high-end housing prices in New York City dropped by 80 percent. Then, as now, the president seemed oblivious, aloof and clueless. Two years later, with no recovery in sight, angry voters turned him out of office.
But help was on the way. Something called the World Wide Web appeared in 1991. Two years later, Mosaic--the first graphic web browser, which would evolve into Netscape--was introduced. The Internet boom began. It flamed out seven years later, but in the meantime tens of millions of Americans collected new, higher paychecks. They spent their windfall. Consumer spending exploded. So did government tax revenues. When Bill Clinton left office in 2001, the Office of Management and Budget was projecting a $5 trillion surplus over the next ten years--enough to pay off the national debt and fund Social Security for decades. Unemployment had fallen to four percent. United States GDP accounted for a quarter of the global economy.
It's different this time. We are in a deep depression: calculated the same way as it was in the 1930s, the unemployment rate is the same as it was in 1934. Global credit markets have stalled. Investment has ceased.
And help isn't coming. more