Recession Finally Announced

by Deb Cupples |   I noticed for some time now that Bush Administration officials (and many politicians) simply did not want to use the R-word in public.  Only naysayers, doomsdayers, and God-awful liberals would actually use the word Recession.

Still, I found it odd that it took the better part of a year for our nation's recession to be formally announced.  A press release from House Majority Leader Steny Hoyer states, in part:

"Today the National Bureau of Economic Research announced that the U.S. economy has been in a recession since December 2007--but that will not come as a surprise to millions of Americans. With 1.2 million jobs lost so far this year, the most important question is how we can get out of this recession."

Better late than never, I suppose -- the announcement, I mean.  The last declared recession, according to the New York Times, was in 2001. 

The New York Times also said that the Dow Jones Industrial Average dropped 679.95 points (7.7%) and that the S&P 500 dropped 8.9%. 

As I've said before, stock indexes can drop for all sorts of reasons that have little to do with companies' actual value.  Ordinary investors can be driven by fear to sell off stocks, which drives prices down -- due to media stories or maybe even reports from their astrologers.

Institutional investors (e.g., hedge funds, mutual funds, brokerage houses) can have an even bigger effect on stock prices, because they tend to hold bigger blocks of stock than individual investors.

Then there's market manipulation.   It's hard to know that it's happening until we look back via hindsight.  In September 2008, the U.S. Securities and Exchange Commission expanded an investigation to include market manipulation by -- none other than -- institutional investors.

On a different topic, The Times stated:

"The Institute for Supply Management recorded the worst reading on the health of the manufacturing industry since 1982. 'However you look at the numbers, the message is the same: manufacturing is in free fall, with output collapsing,' Ian Shepherdson of High Frequency Economics wrote in a note to clients. 'We see no prospect for near-term improvement.'”

I have a suggestion for slowing down the manufacturing free-fall: drastically cut executive pay.  Seriously.  Every dollar funneled into an executive's or manager's pocket is one less dollar for buying materials or paying the workers who actually produce goods and services.  That and paying ordinary workers tends to result in increased spending, which tends to increase demand for goods and services.

Memeorandum has commentary. 

Other Buck Naked Politics Posts:

* Cutting Executive Pay Would Save Jobs

* Paulson's Op-Ed: Specious Statements and Omissions

*  Are Bailout Funds Being Misused?

* Execs Made Millions While Driving Companies into Ditch

* Senate Considers Another $25 Billion Auto-Industry Bailout: Why?

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