Getting out of the Great Recession

In some interesting ways, history is repeating itself when comparing the current economic mess to the Great Depression.  Just like in the 1930s when Germany came out of the Great Depression first but Sweden was a close second, Germany's recent good economic quarter has been followed by Sweden's.

Borg: Strong economic recovery continues

Sweden appears to be making a spectacular recovery from the deep recession its export-reliant economy experienced during the global financial crisis.

"It's pretty fair to say that the sun is shining over the Swedish economy currently," Swedish Finance Minister Anders Borg told reporters after the latest figures were published.

Economic growth in the Scandinavian country accelerated in the second quarter by 4.6 percent on a 12-month comparison and by 1.9 percent compared to output in the previous quarter, according to revised numbers from the national statistics agency. more

Of course, it should not be so surprising that Sweden's economy tracks Germany's.  They are so similar in many ways and historical ties between the two nations extend back for hundreds of years.  Both are serious export nations.  And both have long histories of tackling major problems with coordinated public action.  For example, here's an in-depth examination of how Germany intends to tackle their energy problems.

Green Visions

Merkel's Masterplan for a German Energy Revolution

By Stefan Schultz

Giant windparks, insulated buildings, electric cars and a European supergrid: the German government on Monday unveiled an ambitious but vague blueprint to launch a new era of green energy for Europe's largest economy. SPIEGEL ONLINE has analyzed the plans.

The debate about the German government's energy policy has centered on the extension of nuclear reactor lifespans. Opposition parties, analysts and environmentalists have heaped criticism on the decision of the center-right coalition on Sunday to postpone the phase-out of the country's 17 nuclear power stations by 12 years on average beyond 2021, the date by which the last of the reactors had originally been due to close under legislation brought in by a previous center-left government in 2002.

It is true that the big power companies will profit from the lifespan extension. But the draft energy plan presented by Chancellor Angela Merkel on Monday isn't just about nuclear power. It also provides a blueprint of how Germany is to manage the transition to a new age of green energy. The nuclear reactors are only significant for one of three sectors of the energy economy -- power generation. They are irrelevant for the heating industry and transport. Besides, nuclear energy accounts for just a fifth of household energy needs -- coal-fired power generation still makes up half. Nuclear power correspondingly fills just one of the 39 pages of the energy plan.

On the remaining pages the government presents ideas and concepts for gigantic wind farms in the North Sea and Baltic and for the role of biofuels in future power and heat generation. It unveils proposals for motivating people to improve the insulation of their homes and encouraging industry to become more energy efficient. It also outlines planned incentives for buying and developing electric cars and a vision of a European super grid. more

The Chinese are employing similar methods and have gotten so serious about renewable energy, we are being told that they are breaking some "sacred" economic rules to get their green energy online.  Of course, the guardians of economic "morality" at the New York Times will do their best to keep the USA from ever instituting such a crash program.

On Clean Energy, China Skirts Rules

By KEITH BRADSHER

Published: September 8, 2010

CHANGSHA, China — Until very recently, Hunan Province was known mainly for lip-searing spicy food, smoggy cities and destitute pig farmers. Mao was born in a village on the outskirts of Changsha, the provincial capital here in south-central China.

Now, Changsha and two adjacent cities are emerging as a center of clean energy manufacturing. They are churning out solar panels for the American and European markets, developing new equipment to manufacture the panels and branching into turbines that generate electricity from wind. By contrast, clean energy companies in the United States and Europe are struggling. Some have started cutting jobs and moving operations to China in ventures with local partners.

The booming Chinese clean energy sector, now more than a million jobs strong, is quickly coming to dominate the production of technologies essential to slowing global warming and other forms of air pollution. Such technologies are needed to assure adequate energy as the world’s population grows by nearly a third, to nine billion people by the middle of the century, while oil and coal reserves dwindle.

But much of China’s clean energy success lies in aggressive government policies that help this crucial export industry in ways most other governments do not. These measures risk breaking international rules to which China and almost all other nations subscribe, according to some trade experts interviewed by The New York Times. more

Meanwhile, back in USA where centralized industrial planning is still considered an evil Commie plot, where multibillion dollar trade deficits are considered acceptable, and our economic debates are controlled by the same fools who crashed the economy, the outlook does not look so hot.

The Recovery is Dead

The Backward Slide Into Recession

By MIKE WHITNEY  August 31, 2010

The economy is sliding backwards into recession. Ongoing deleveraging has slowed personal consumption and trimmed 2nd quarter GDP to a revised 1.6 per cent. As Obama's fiscal stimulus dries up and the private sector slashes spending, demand will continue to collapse pushing more businesses and households into default. The economy is now caught in a reinforcing downward cycle in which dwindling fiscal and monetary support is shrinking the money supply triggering a slowdown in activity in the broader economy.

Far right policymakers have shrugged off increasingly ominous economic data, choosing to pursue their political aims through obstructionism. Their goal is to block countercyclical measures that will boost activity, lower unemployment and narrow the output gap. By torpedoing the recovery, GOP leaders hope to take advantage of anti-incumbent sentiment and engineer a landslide victory in the midterm elections. But the timing could not be worse. The economy is in greater peril than most realize and badly in need of government intervention. As the current account deficit continues to widen, the global system inches closer to a major currency crisis. Ballooning trade imbalances signal that a disorderly unwinding of the dollar is becoming more probable. If the dollar drops precipitously, US demand for foreign exports will fall and the world will plunge into another deep slump. more

So why aren't we coming out of our economic mess.  One obviously valid answer--crazy economists.

Being an Economist Means Never Having to Say "Whoops"

Incompetents at the IMF

By DEAN BAKER

The IMF has a new set of studies out that warn the United States and other developed countries about their deficits and growing debt burdens. This raises the obvious question of why on earth do IMF economists still have jobs?

Just to remind everyone, the reason that we have 9.5 percent unemployment and the reason that the United States and other wealthy countries are running large deficits is that we had a huge housing bubble that burst and sank the economy. The boys and girls at the IMF somehow could not see this $8 trillion housing bubble. They thought everything was just fine back in 2002-2007.

This was not a minor mistake. It was an act of astounding incompetence with disastrous results.

This history raises the obvious question, if the IMF totally missed it in seeing the crisis coming, why would think they have any more clue on dealing with its consequences? Have they instituted better quality control for their economic analysis? Did they have a house cleaning in which all the incompetent economists who missed the bubble were sent packing?

No, nothing has changed at the IMF. So, we have the same group of people who could not an $8 trillion housing bubble giving us advice on our debt and deficit -- telling us to cut our Social Security program. more

And over here in the corner we find the unsinkable Ellen Brown suggesting that things are so bad we need SERIOUS monetary reform because even IF we decide to build our way out of the mess we find ourselves in, we still need a way to pay for things.

How to Reverse a Deflation

It's Time for Helicopter Ben to Drop Some Money on Main Street

By ELLEN BROWN

In 2002, in a speech that earned him the nickname “Helicopter Ben,” then-Fed Governor Bernanke famously said that the government could easily reverse a deflation, just by printing money and dropping it from helicopters. “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent),” he said, “that allows it to produce as many U.S. dollars as it wishes at essentially no cost.” Later in the speech he discussed “a money-financed tax cut,” which he said was “essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.” You could cure a deflation, said Professor Friedman, simply by dropping money from helicopters.

It seems logical enough. If there is insufficient money in the money supply (deflation), the solution is to put more money into it. But if deflation is so easy to fix, then why has the Fed’s massive attempts to date failed to do the job? At the Federal Reserve’s Jackson Hole summit on August 27, Chairman Bernanke said he would fight deflation with his whole arsenal, including “quantitative easing” (QE) – purchasing longterm securities with money created on a computer. Yet since 2008, the Fed has added more than $1.2 trillion to “base money” doing just that, and the economy is still in a serious deflationary spiral. In the first quarter of this year, the money supply actually shrank at a record annual rate of 9.6%. more