RenaRF wrote a diary that made the Rec list about "The Republicans I Know." She talked about "Pragmatic Republicans" and "Doctrinaire Republicans."  Living in a heavily Republican area, as well as having relatives who are Republican, I can say that I agree with her.  Down in the comments was this from Bluecollarelitist about the Doctrinaire Republicans:

They all believe that every single American, no matter education level, opportunity, IQ, hard knocks or sheltered...they believe every one of us begins at the same starting point. And if you can't make tons of money in this country, then you must be an idiot.

I've met many of these, and debated even more of them over the Internet.  They have it good, and they sincerely believe it's the natural state of affairs.  What they don't know is how fast their lives of privilege can change.  How close they are to being broke and struggling.  How bad it can be if the "principles" they profess are applied to them.  It's been said that many are "one paycheck away" from it.  If it does happen, it'll change them -  into Democrats.  

   TGI Friday!  To celebrate, here is a break from the regular economic Gloom and Doom; and as it happens, there are reasons to think a little bit of hope might be justified.  Certainly the recession is here (and has been since last December), and it's going to hang around for a while longer at least.  And layoffs and unemployment are almost certainly going to continue to increase right through election day, which is bad news for the people who will lose their jobs, but at least has the silver lining that it will increase the chances of Democrats doing very well indeed this November.

    That being said, like seeing the green shoot of a crocus popping up above the ground at the end of January,  I am seeing the first nascent signs that the economy may enter a period of respite by the end of this year, either growing very slowly or at least the pace of contraction slowing down to a crawl.
   

Anyone who is currently arguing that we are not in a recession is simply proving how little they know about economics. The underlying facts and figures are clearly pointing otherwise.

There is one measure that the "there is no recession" (or as Barry Ritholtz calls them the Pervasive Pollyannas of Prosperity or PPP) crowd points to: we have not have two consecutive quarters of negative GDP growth.  Therefore, we're not in a recession.  The official organization that dates recessions (the NBER) answers that observation thusly:

In a paper recently released by the Center for Economic and Policy Research, The Impact of the Housing Crash on Family Wealth  (pdf), we find that the real danger of the drop in house prices is not simply that people's houses are worth less now.  The 'psychological factor' was that homeowners whose house prices were inflated and they felt the price could not/would not go down, tended to act as if the price of their house was money in the bank.  In short people acted as if they were wealthier than they actually were.

These bubbles made it extremely difficult for families to plan their savings, since they would have no simple way to distinguish bubble-generated wealth, which would prove ephemeral, from real wealth which could be expected to endure.  As a result, tens of millions of families likely ended up saving less than they would have considered prudent, had they recognized that their wealth was temporarily inflated by bubbles in the stock or housing market.

I live in the Seattle area, which so far has managed to avoid the worse effects of the current economic downturn. This makes it easier to think things aren't so bad. With the US dollar shrinking faster than a wool sock in the dryer, exports from companies like Boeing & Microsoft, along with our state's agricultural products, are looking like pretty good deals to foreign shoppers. Our property values have not yet collapsed as in many other parts of the country.

But no matter where you live, the extent of the rot in the US economy is being systematically hidden from you. After reading an article on the Globalization Research site, I'm starting to grasp just how dire things are.  Follow me over the fold...

Well done, all the way through, and to a point where no harm can come to him what cooked it.

   The US is no longer the engine, or at least the sole engine, of global economic growth.  That mantle is shared, at least, with Europe, and even moreso with emerging Asia, and nowhere so much as China, now the world's 4th largest economy and growing at a rate of 10% a year.
    That growth has run smack up against at least short term limits on the availability of resources -- metals, livestock, rice, and more than anything else, Oil.
    While growth in the US peaked about two years ago and has been generally declining since,most recently measured at about 1.9% (but perhaps in a year or three retroactively to be revised into negative territory, as Q4 2007 just was), China in particular has continued to have an Out of Control Inflationary Boom.
    What happens next runs through the intersection of China and Oil, and they've arrived at a crossroads too.

copyright © 2008 Betsy L. Angert.  BeThink.org

He is ninety years young.  Born in 1918, Alexander recalls the Great Depression.  He understands why some thought the Bush Forty-One years were worse than the days after the crash in 1929, although no one ever admitted to that.  Now, near two decades later, denial of economic despair remains intact.  Alex wonders if only history paints a truer picture.  Possibly, when he was but a boy, people did not accept that the crash was the big one.  In retrospect do we realize . . . Alex wonders aloud;  in recent months, each evening he dreams of realities that were during what was defined as the most dramatic, worldwide economic downturn.

It's becoming clearer and clearer that we need more stimulus.
I'm suggesting a three-part plan.

1. Suspend Social-Security withholding for the rest of the year. If that's too much, suspend some fraction of it. Instead of sending people checks some time in the future, at great expense, let them get more in their next paycheck.

2. Continue unemployment insurance to everyone now getting it until the emergency is over. Nobody goes off unemployment insurance payments unless

2a) they die, or
2b) they get a job, or
2c) the unemployment rate falls under 4%.

3. Federal support for state infra-structure repairs. States are facing a cash crisis; this will result in delays in such things as bridge repairs just when we need the jobs. Let the feds fund some significant share of it -- 50%?

The unemployment rate today hit 5.7%, the highest in 4 years.  This once again shows how the economy is weakening and probably in recession, but  not a severe one just yet.  Below I am going to explain as simply as I can how the job creation numbers/unemployment rate are calculated, as I consistently see misunderstanding here on these issues.

With bank failures, retail bankruptcies and pullbacks like Starbucks, it looks like all the gloomy things predicted are starting to happen. Yeah, yah - I know - gloomy & pointless.

I want to get specific, though, & try to generate some real numbers on retail business closures & job losses.

Well I knew it was coming, and it didnt fail to astonish me.  The writing is on the wall. The "last nail in the coffin" as the saying goes.  What am I talking about?

The parties are over.  The first 100 days have begun.  Half the country is under 3 to 25 inches of snow and hasn't seen temperatures above freezing since before Christmas.  The price of oil is still above $140 a barrel and home heating bills are higher than they've been in years.  The housing market while stable is certainly still in what every economist would consider a slump.  The band aid approaches from Congress have stopped the bleeding, but the gash needs stitches.  The Dow has dipped below 10,000.  Banks are doing better but not good; like a smoker who just quit after 30 years of a pack a day.  The health care crisis is still everpresent with nearly 50 Million without any health insurance.  Iran is saber rattling again.  40 soldiers have died in Iraq in January and a bomb just went off at a market in Mosul.  You're Barack Obama... What do you do?

I guess Republicans can learn something, if only a little. Becoming wise to the fact that "BOOGA BOOGA the terrorists are going to get you!" isn't going to fly this year, the McCain campaign has decided to transpose that tactic to the economy.

In comments to reporters today, Carly Fiorina made the following outrageous statement:

The reality is when an economy is slowing, if you raise taxes and you curtail free trade through isolationist policies, bad economic times become worse.

We know this from history... and that is precisely the proposal that Barack Obama is making... And that is why I say as a businesswoman, I hope Barack Obama continues to consult with experts because I think his understanding of the economy leaves a great deal to be desired.

There’s been a great deal of talk lately about the inflationary implications brought on by rising commodity prices and negative real interest rates.  Many smart people feel the Federal Reserve should substantially raise rates.  In fact, there is an impassioned debate going on at the Fed regarding this issue.  So far, those on the Fed who want to keep rates low have prevailed.  

There is another side to this issue though.  Deflation.  Yes I said the nasty "D" word.  While it’s true that commodity prices have soared mainly due to rapid economic growth from some developing economies, disinflationary pressures do exist and should be of concern to everyone.

The economic downturn continues.

Spain's finance minister Pedro Solbes has stunned the markets with an admission that his country faces the worst economic crisis in its history as the full effects of the property crash spread through the economy.

http://www.telegraph.co.uk/...

More below:

On the front page of CNN.com, I read two headlines this afternoon, in this order: "Paulson braces public for months of tough times" and "Batman dethrones Spidey as superhero king." Without having seen "The Dark Knight" but being reasonably familiar with the characters involved, I believe the two stories are related.

   I called the death of Indymac Bancorp on Monday, July 7th. The Federal Deposit Insurance Corporation seized Indymac on Friday, July 11th.

  I called the implosion of the two Government Sponsored Entities in the mortgage business, Fannie Mae and Freddie Mac on Wednesday, July 9th. Sunday, July 13th the White House announced a bailout for them.

  Want to know what happens next? It’s ape ass ugly and it’s going to happen to you, so don’t say I didn’t warn you.