Gloomy Outlook from Business Experts

By Dave Lindorff

Amid the news that retail sales have fallen for the fourth straight
month, that housing prices continue to slump, and that another 600,000
workers were laid off in the month of January—the largest number in one
month since 1974—comes word from some experts in the business community that things are not going to be getting better soon, and that when they
do, they will not get back to the way things were in 2006 or early
2007, before the recession began.

In an interview I did for the trade publication Investment Management Weekly
on Thursday, Putnam Investments’ global asset allocation head Jeffrey
Knight said that while the stimulus could “help to prevent a Great
Depression sequel,” at the same time “Those who measure prosperity
against the Faustian opulence of the last 10 years may find that
stability, equilibrium and even recovery will still feel like a deep
depression.”

Another fund manager, Ron D’Vari, co-founder and CEO of a new fund
management firm that specializes in so-called distressed assets—the
very things that have the nation’s banks reeling on the edge of
failure—says the economy has fallen into “an L-shaped recession where
it’s hard to say how long it will be down at the bottom.” D’Vari also
told me, “We think we will have a sort of subsistence economy—not like
North Africa, but it could look like just getting by for some time
before you see the start of a real recovery.”

Now these guys were all talking about how things look to them assuming passage
of the so-called stimulus package. In other words, the stimulus package
is not going to turn things around. In fact, D’Vari pointedly referred
to the close to $1-trillion package as ‘just a pain-killer, not a final
cure.”

President Obama would do well to heed these kinds of hard-nosed
views. He’s not likely to be hearing them right now. To date, he has
chosen for his economic team mainly retreads from the Bush and Clinton
administration—people like Larry Summers and Tim Geithner who helped
set the nation on its current disastrous economic course by promoting
globalization and the flight of jobs overseas as well as the
deregulation of Wall Street, by advocating a shift of the tax burden
from the wealthy to the working classes, by urging the gutting the
safety net for those who lose jobs or can’t find them, and by
advocating measures to artificially pump up asset values, whether real
estate or the stock market.

These are clearly not people who are going to want to call
attention to the economic and social train wreck that their own
policies have produced.

Nor does Obama’s latest announcement of his new Council of Economic
Advisers look much better. Headed up by Paul Volcker, the Carter and
Reagan choice for Federal Reserve Chairman, and a close associate of
the Rockefeller family and the Chase banking empire who helped bring us
the heretofore worst recession since the ‘30s during the early 1980s,
that panel includes Jeffrey Imelt, chairmen of mega-defense contractor
General Electric, Jim Owens, chair of Caterpillar (a firm that just
sacked 20,000 employees and during it’s recent contract disputes with
the UAW hired scabs and locked out employees, racking up a huge number
of labor law violations), William Donaldson, President George W. Bush’s
SEC chair, who had to resign that position in disgrace in 2005 after
his agency missed the Enron and Worldcom meltdowns and collapses as
well as some early hedge fund disasters, Martin Feldstein, the head of
Ronald Reagan’s Council of Economic Advisers and an adviser to Obama’s
opponent, John McCain, and Austan Goolsbee, a senior economist with the
Democratic Leadership Council, a strong proponent bank deregulation and
of the job-killing NAFTA and the World Trade Organization treaties.
True, the panel does include some token labor representatives like
former Mineworkers Union president Richard Trumpka of the AFL-CIO and
Anna Burger of the SEIU, but wholly absent are more progressive
economists in line with the likes of Nobel laureates Paul Krugman and
Joseph Stiglitz, or former Clinton labor secretary Robert Reich, much
less left-leaning economists like James Galbraith or Dean Baker.

Before Obama was inaugurated, there was much blather in the
mainstream press about his selection of conservative Democrats and
Republicans for his cabinet, as a strategy of having a “team of
rivals.” But clearly, where economic policy is concerned, those
“rivals” are pretty much all on the same side of the fence. (The same
can be said, by the way, of his defense department and state department
teams.)

What the country really needs at this point is straight talk and
creative new ideas—not returns to policies of the ‘90s, ‘80s, ‘70s or
perhaps even the ‘30s.

Obama needs to hear from experts who know that the economy of the
United States is not going to rebound to anything like where it was in
the last few years, and that drastic new programs and approaches are
needed if the US is not to continue a slow slide into third world
status. And the American public needs to hear the same honest news.

An economic “team of rivals” is a great idea, but to get that,
Obama would have to be willing to reach over to the left side of the
spectrum, not just the right.
___________________
DAVE LINDORFF is a Philadelphia-based journalist. His latest book is
“The Case for Impeachment” (St. Martin’s Press, 2006 and now available
in paperback). His work is available at www.thiscantbehappening.net