The IMF has understood the definition of economic crisis:
International Monetary Fund Managing Director Dominique Strauss-Kahn said Monday that there won't be an end to the global economic crisis until there is a significant drop in unemployment.
"So this idea that the crisis is already behind us is certainly a wrong idea," he told reporters at a joint IMF and International Labor Organization conference on generating jobs in the recovery. "Growth is very important, but growth is not enough--you may have growth without jobs."
The IMF has got it.
Why not governments?
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Governments do get it.
But they also know what their voters have mandated them to do.
The left is in a state of complete denial over this, but every single major election in the West since the beginning of the crisis has returned a clear mandate for centre-right governments to conduct policies based on a re-sizing of the state, fiscal responsibility and an end to the stimulus and bailout policies.
These are the policies that the democratically elected governments of Germany, Britain, France have been tasked to implemet. And the spanking of biblical proportion about to be inflicted to Obama will only re-inforce this trend.
Some do not like this, but it is democracy at work.
@Jason
If this really is democracy at work then plainly democracy doesn’t work. Taking the UK as an example, a hobbled together coalition of centre-left and right is hardly a “clear mandate” for the enormous pain about to be inflicted on the economy. Never mind the fact that the public at large were in no way properly educated about the scale of the cuts to be carried out, nor the speed at which they would be.
We have been hoodwinked, plain and simple – the nonsense arguments put forward by Messrs Osborne, Cameron and Co hold no water whatsoever yet somehow the electorate agrees with them. Are we all thick? Do we all revel in the misery of others? Do we seriously want people to be put out of work? (I exclude Daily Mail readers from ‘we’ as it’s quite plain they want to see an end to public sector employment, immigrants and anyone who isn’t in the high-income, red cords and a redder nose brigade).
The financial crisis took years to brew and the solution to the problem will likewise take years to have its full effect; unfortunately in the UK the fruit of the massive stimulus will be spoiled by the massive cuts and even if it isn’t the condems will take the credit for the impact of prior action by Labour. So if Obama does take a spanking it will be because a year or so of action hasn’t been able to correct the eight previous years of horror inflicted on the USA.
SFL,
I am not knowledgeable enough about domestic UK politics to reply to you with any authority. However, from the little I know it appears that all parties agreed on the necessity for deep fiscal consolidation, and spent considerable time during the latest election campaign explaining the reason. Nobody can argue that they did not know what would happen, and the voters’ choice was well informed.
As for Obama (and Pelosi-Reid), they promised that the stimulus was necessary to keep unemployment under 8%, and that without it unemployment would fly into double-digit.
Well, we had the stimulus (all $2 trillion thereof), and unemployment is firmly above 10% and not showing any sign of improvement.
That is 2 trillion reasons for many Americans to make sure that Obama will spend the last couple of years of his presidency cutting. Ribbons during opening ceremonies or sorting out faraway conflicts (preferrably without American handouts) while someone else goes about fixing the Federal finances.
Jason
I think it would be fair to summarise that the Conservatives argued for an urgent tackling of the deficit, Labour intended to cut government spending to deal with the deficit, but in a controlled and long-term manner that would ensure the economy wouldn’t fall into another recession and the Liberal Democrats argued for pretty much the same, albeit with a stronger emphasis on cutting the deficit, again with the emphasis on control. Crucially, the Liberals and the Conservatives entered into a bizarre coalition that has seen the emphasis of the government switch to enormous cuts to everything, at a speed which is terrifying. From being ‘told’ that dealing with the deficit is necessary, we are now faced with cuts to everything from public toilets to benefit payments to disabled individuals. It seems all too ideological for many peoples’ tastes.
The shock has come in the speed at which the cuts will be made, which puts the recovery in massive jeopardy and will in all likelihood push us into another recession – double-dip as they call it. There is no way that the private sector can suddenly grow to fill the gap.
As for the stimulus in the US, I’m not well enough informed to comment but I would say from our experience that we stared over the edge of a financial abyss and were pulled back by the massive amount of government help. Had that not been in place I dread to think what would have happened to the economy on both sides of the pond. There was a weekend here in the UK where it was (apparently) the case that pretty much all high banks were about to fail – the UK economy would have stopped on the Monday morning when cash stopped coming out of ATMs, transfers stopped….
What do you think would have happened had the stimulus not been put in place? 15% unemployment? 20%? Is that a price worth paying? $2trillion seems quite cheap by comparison. Are we also to assume that the massive bailouts made to Wall Street et al under GWB were wrong? Should they have been refused?
@Jason
And all he analysis shows that the deficit and unemployment would have been much worse bar the intervention – and things would have been better still but for Republican blocking
In other words – and as ever – you ignore the facts