Robert Kuttner writes that it will take more than lower interest rates to see America through this perfect economic storm.
Future historians are likely to look back on the final year of the Bush administration as a moment not unlike 1930, when government dithered while a financial crisis deepened. At every stage of this unfolding crisis, the official response has been too little and too late.I'm not predicting another great depression. Happily, the people who kept insisting that private business could regulate itself did not repeal the entire New Deal. We still have deposit insurance, Social Security, (reduced) bank regulation, the Securities and Exchange Commission, and a Federal Reserve given much stronger powers in the 1930s.And we still have a government capable of serious anti-recession spending -- if it so chooses. But as the credit crisis deepens, this particular government is still infatuated with free-market fables now thoroughly discredited by events. So we must wait another 13 months before a new government can begin digging out of a needlessly deep hole.America now faces an economic perfect storm: a weakened financial system, diminished consumer purchasing power, a swooning dollar and rising inflation.
Read the rest (and comment) here. --The Editors
