Sunday, August 15, 2010

What kind of recovery should we expect?

For most Americans, a full economic recovery means returning to full-employment and to a GDP close to what it used to be in 2006 and 2007. The reality may be starkly different as the high-numbers attained prior the this “great recession” were already the by-product of an economy on “steroids,” essentially based on real estate speculation and delusional financial schemes. So the question that has not been answered yet, nor even tackled, is what is a reasonable, sustainable and achievable economic performance, taking into consideration a significant amount of deleveraging, a drastic change in consuming habits and a return to savings by household and individuals.

Another way to say it, is can we regain the high watermark of 2007 “economic prosperity” or if not, how high can it be? Does it also factor in a roll-back in manufacturing that until now was systematically shipped abroad? Then are we as serious about pursuing a new “moon shot” like new energy development and other innovations that should have been made a true national cause? These are essential questions that until now have seemed willfully ignored and swept under the rug. My sense is that we ought to lay all of these cards on the table and look at the entire picture so we don't delude ourselves into a fake sense of where an achievable economic recovery really stands.

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