Source: CNN Money


It is the silly political season, and while each side levels accusations at each other, neither wants to admit the simple truth: Both political parties helped to create the credit crisis (In Bailout Nation, I put it about 55/45).

The Obama administration underestimated the depth of the recession, and failed to respond appropriately. Instead, he put two wholly unqualified people into senior positions: Tim Geithner, who failed upwards from the President of the NY Fed to become Treasury Secretary; And Lawrence Summers, who failed upwards, well, for most of his career. When he was Treasury Secretary, he helped pass the ruinous Commodity Futures Modernization Act of 2000, and helped to repeal Glass Steagall. Both were proteges of Robert Rubin.

On the other side, of the political aisle, the Romney camp wants to blow up every negative data point into the world’s worst recovery. (Its not a typical recovery, and even by that standard its not the worst ever).

What we have is a typical post-credit crisis recovery. Sub-par GDP, mediocre jobs recovery.

As the monthly payroll chart at top shows, things have gotten better — just at a pace that is far less rapid than we prefer.

Unless we are willing to pull out all of the stops — huge overseas tax free repatriation plus a massive Keynesian spending surge, we should expect more of the same.

Category: Bailout Nation, Bailouts, Federal Reserve, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

40 Responses to “Our Typical, Mediocre Post Credit Crisis Recovery…”

  1. jb.mcmunn says:

    Neither Summers nor Geithner failed. They accomplished exactly what their Wall Street masters wanted. They failed us, the average Joes, but we will not be paying the fifth columnists their multi-million dollar salaries after they leave office.

  2. Tim says:

    “huge overseas tax free repatriation plus a massive Keynesian spending surge”

    Can someone please help idiot me understand what these mean, especially the second one. Thanks.


    BR: Tax free (or low tax) repatriation means giving a one time pass to companies to bring home billions held overseas. It can be structured so the more that they bring back, the lower the rates 20% for 500 million 15% for $1B, 10% for $10B.

    Keynesian stimulus are massive public works programs that create jobs and leave a lasting infrastrucutre improvement: Repair/Replace all the bridges/tunnels/airports/highways, add new high speed rails, upgrade entire electrical grid, etc.

  3. Wiggs says:

    Thank you for being a voice of reason in the election season maelstrom.

  4. techy says:

    There will be huge spending but only after Romney wins.. deficit only matters when democrats are in office. I will be glad though if Romney wins, they will work together and move this country forward. Tired of the scorch earth strategy of the republicans and their too stupid to exist constituents.

  5. lo574 says:

    I truly fail to see what another tax-free holiday is going to do when over 90% of the monies repatriated last time went to shareholders via dividend hikes and stock buybacks……..very little going to actual R&D or expansion [1]. I’d really love Congress to pass a true infrasture-loaded stimulus plan; not another ARRA where more money went to income distribution than actual infrastructure [let's fix the roads and bridges and get people back to work] spending. [2]



  6. Pantmaker says:

    I would love to see a hands off approach by government to all economic weakness in the future. Given the depth of this decline and the ridiculous solutions enacted to counteract it, I think the American people will be more open to the idea. This notion that recessions can be avoided by doing X,Y and Z is magical thinking. The Fed is in a tight spot here. If/when interest rates move against them they are going to get killed.

  7. super_trooper says:

    Neither of them “failed “? Both Timothy Franz Geithner and Lawrence Summers looked after their interests, protected them and maintain status quo. That’s not failure. It’s a skill that few moral people have.

  8. Brent_in_Aurora says:

    “Unless we are willing to pull out all of the stops — huge overseas tax free repatriation plus a massive Keynesian spending surge, we should expect more of the same.”

    That is your solution, not necessarily “the solution”; there may be other solutions. The sad truth may be that the only solution is working through the debt, delveraging and refinancing problems that will take another 5 to 10 years.

  9. tradeking13 says:

    Seriously, dude? Tax-free repatriation? Did you hit your head or something?

  10. krice2001 says:

    Barry – I second the thought about you being a voice of reason all the time, not just in the political season. That being said, people in general do hear and believe what they want to hear and believe. If one wants to blame the slow pace of recovery on a political party or President, they will consume the “facts” that support their preconceived notion. It’s largely who we are (as tribal humans) and very much part of why we’re so divided. You’ve posted many times about human biases and how they affect what we hear and come to believe.

  11. tradeking13 says:

    Repatriation = Corporate Welfare

    Don’t Fall For Corporate Repatriation

  12. James Cameron says:

    > What we have is a typical post-credit crisis recovery. Sub-par GDP, mediocre jobs recovery.

    The piece below (which I believe was posted previously) really helps to drive this point home, especially when time and again the current recovery is compared to recoveries for standard recessions:

    Comparing the Job Losses in Financial Crises

  13. eliz says:

    Couldn’t agree more about Geithner and Summers. Horrendous choices for “the small people.” Giving Obama the benefit of the doubt regarding having some intelligence when it comes to math and economics, I have to conclude he is another captured pawn of the financial elite. That he has kept these yahoos on for 4 years speaks volumes about Obama’s naivety or complicty – you choose.

    Recommended reading for more insight – Shiela Bair’s Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself

  14. DeDude says:


    It was not a normal recession it was a financial crisis and depression. If you compare employment loses in this depression with the previous US depression you see a frightening free fall, initially:

    However, in contrast to the first (great) depression the second (lesser) depression did not continue down to an employment loss of 19% it was stopped at about 6% loss. The difference was that in 1929 the “hands off approach by government” morons had the power and just let it things happen “naturally”. In 2009 we had just elected a new president who was not going to let the little guy suffer the consequences of the outrageous behavior of Wall Street – so he had a stimulus package passed that stopped the free fall and put the economy back on a slow growth path instead. For a financial crisis recovery we have had a remarkably fast turnaround, but if you want it to be faster you have to do more real stimulus (public spending on infrastructure).

  15. Robespierre says:


    “huge overseas tax free repatriation”

    Since you are a numbers guy (you know facts) show me where previous tax-free repatriation have helped create jobs or stimulate the economy because all I have ever read on the subjects says it doesn’t….

  16. tradeking13 says:


    Report: Repatriation Tax Holiday a ‘Failed’ Policy (WSJ)
    Repatriation Tax Holiday Push Shows Congress Turning Deaf Ear To Occupy Wall Street (HuffPo)

  17. DeDude says:

    Currently the economy is trapped in a lack of demand. This is what happens after a financial crisis, everybody get nervous about lending and borrowing, so money is used to pay down debt rather than to purchase products. The rest of the world is in a similar situation so we cannot produce for export either (we are too big for salvation by export anyway). The only entity that has the ability to deliberately increase spending and accelerate economic activity is government, but it is stuck in gridlock as one party is determined to get the black man out of the white house by sinking the economy and blaming him for it.

  18. MikeDonnelly says:

    Barry would love to see some stories explaining why the “New Normal” is 150k jobs per month that we’ve seen from basically 2001-2012 in the good years.

  19. techy says:

    Can some one explain to me why tax free repatriation is bad? Is that money doing good to USA at the moment? if it comes in to shareholders, wont it help the economy over here a little?

  20. techy says:

    Another thought: the sooner we realize that it is a global economy…the better we are off. corporate tax will have to be what it is worldwide, as low as possible…developed countries need to work together and punish tax havens, else we will be doing begger thy neighbor. Otherwise Individual taxes and consumption taxes will have to generate all revenues.

  21. willid3 says:

    not sure that a long term depression is a solution either Brent_in_Aurora , which is exactly what happened the last time we used your solution. all one has to do is look at the 1873 depression., than ran for about 20 years. but here’s the deal. we dont have an agricultural based economy any more, so that the majority of people live on farms so they can survive when their incomes play out. today 97% of folks would die off since they dont grow their own food. so your prescription would likely end up with a revolt against any thing that remotely looked like capitalism? think not? consider in the great depression there was real concern about just that. and people back then were more patient. and much more conservative. and they were just about willing to change to any thing else since they saw 0 benefit from it

  22. DeDude says:


    We just need some hefty import taxes such that corporations that chose to produce products sold in our country somewhere else, will be paying a tax on that decision rather than be given a subsidy.

  23. GeorgeBurnsWasRight says:

    Kind of like the way I personally would prefer to see at least U3 and u6 charts being presented together, I’d like to see a second payroll chart which takes out the reduction in government jobs. The decision to reduce the number of government workers is in part driven by political decisions, so presenting both figures together is helpful. (I find it remarkable that many of the people who are complaining about unemployment also want to make large cuts in the number of government workers, as if doing so wouldn’t affect the jobless numbers.)

    More importantly, IMO our current economic situation is only really comparable to the Great Depression, at least for the post WWI era, as both were cases where the banking system and mortgage markets collapsed. Also, IMO, it’s far to early to determine whether the government’s response is better or worse than it was during the Depression, and even whether the government’s response in either crisis has all that much impact; could well be like dropping an atomic bomb into a hurricane. And even there the impact of the Boomers lends unique circumstances to today’s economy. In both cases, the causes of the crisis built up over many years and were jointly impacted by the actions of both political parties.

  24. microcap says:

    Count me as surprised by your repatriation comment BR. It seems at odds with your constant [and well deserved] bashing of corporate welfare.

    So I am curious as to your rationale…

    thanks as always

  25. willid3 says:

    if we allow them to repatriate we might should require they spend it. in the US. and create jobs. or face a tax penalty . of maybe 10% in 2 years? or maybe we change the rules all together to match what we citizens face they can pay taxes on their over seas income, or they can pay less if they bring it home and invest in jobs in the US

  26. Pantmaker says:

    @DeDude- The depth of this recession (IMO currently in the 4th inning) is directly related to the extent to which the bubble had been blown over the past 20 years. Standing in the way of the natural process of deflating that bubble now is nothing more than a game of kick the can and unfortunately it is politically savvy for both parties to kick that can as far as they are able.

  27. techy says:

    Sorry I have to repeat myself, I lean liberal but do not see a rationale why overseas profits should stay overseas, because it aint coming back, its too easy to invest abroad or acquire companies abroad than pay 35% tax.

    Can some one explain to me why tax free repatriation of overseas profits is bad?
    Is that money doing any good to USA at the moment?
    if it comes in to shareholders, wont it help the economy over here a little?

    Why should corporation be not given benefit? I would rather tax millionaires 45% than keep a higher tax on corporations, how much effort will it be to simply become a true multinational?

  28. willid3 says:

    well based on the results the last time we did it, it accomplished nothing at all. it didn’t help us all. while it does np good to us overseas. bringing it home like last time didn’t help either

  29. Greg0658 says:

    repatriation seems to be contentious and in debate .. next step ratios in allowed useage:
    (I)nvest in USA structures 40%
    (T)axed 20%
    (D)ividends 30%
    (B)onuses for top 10%

  30. Robespierre says:

    @techy Says:

    “its too easy to invest abroad or acquire companies abroad than pay 35% tax.”

    What makes you think that money pays 35% if brought back to the USA? The reason it is overseas is that is paying no tax. Free tax repatriation benefits only the mega corporations and does nothing domestic companies that actually do the bulk of hiring. In my opinion is corporate welfare and very bad policy. The reason that money is still overseas is that there has been other tax-free repatriation holidays so they have gotten use to get them so they wait. Kind of like TBTF banks assume they will be rescue if they fail. BTW you want a quick way to repatriate that money? Impose a onetime (1 year) %50 surtax to all corporations doing business overseas…. They either borrow to pay the tax or bring the money back to pay it… Bad solution but to be honest I’m very tired of all these corporate queens by-passing US laws and buying our government officials…

    BTW still waiting for BR explanation as to why he is proposing something so out of character…

  31. philipat says:

    I am really surprised by your tax free repatriation comment since there is no evidence that previous “One time” tax free repatriations have created jobs, despite the supposed justification for doing so. Another “One time” tax free repatriation amounts to further Corporate welfare. Not surprising given that The United Corporatocracy is run by the Corporations and their part-time employees in Congress, but VERY surprising that you should support it.

    Let’s remember WHY all the money is sitting overseas. US Corporations “Transfer price” as much of their profits from both overseas AND domestic operations as possible through tax haven countries via artificial material prices, royalties, license fees etc. etc. They get instant tax credits for taxes paid on overseas profits but onlt pay the commensurate US taxes on those profits when they repatriate the profits, which is never at present. Instead, those profits get re-invested in overseas expansion. Net result; more US jobs sent overseas and little if any tax paid in the US.

    I agree that US Corporate taxes are too high and should be lowered, say, to 25% and ultimately to 20%. In the meantime, I would propose as follows:

    2.. Stop Corporations getting oversaes tax credits for taxes paid overseas until they repatriate those same profits and pay US taxes as a direct offset.
    2. If the tax rate is lowered to 25%, allow Corporations the benefit of this lower tax rate to repatriate profits but NOT ANOTHER “One time” tax free repatriation.
    3. Revise and enforce International Treaties regarding the transfer of profits to other jurisdictions via the use of non arms-length inter-company pricing and via intellectual property transfers and fees.

  32. VennData says:

    I’ll bet the proposed ‘tax free repatriation’ has zero correlation with average incomes as the last one did under Bush.

  33. Jim67545 says:

    OK so we repatriate overseas retained earnings. What then? Is there insufficient liquidity now? Are those with overseas profits unable to obtain debt financing or issue more stock? Do those domestic firms which are unable to obtain debt financing have overseas profits?

    So, more dollars slosh in. Do they dividend that to stockholders, do a stock buy back, reduce liabilities or invest the money in the US? If they look to invest in the US what kind of demand will they see for their products here or produced here and sold elsewhere? Is expanding production of goods and services in this country a better choice for them than expanding elsewhere? What demand picture would they see here and around the world?

    Some have observed that the last time we repatriated it “didn’t work.” It is unclear to me that it would work this time either. Perhaps added immediate federal tax revenue justifies it but as a stimulas to the economy longer term?

  34. scottsabol says:


    Over the last several years, I have been a frequent reader of your blog. While some of the posts are over my head, much of your macroeconomic posts that focus on the reasons why the economy is where it is post credit crisis are both insightful and challenging.

    As a television meteorologist with a background in math and physics, I try to find ways to challenge my mind with topics that are not science related. Your site allows me the escape that I welcome after analyzing computer models along with the other preparations for a morning news show. Macroeconomics might not seem like an escape in the traditional sense for me, but its another way to stimulate my mind. I’m a “big picture” thinker much to the frustration of my wife :)

    Its refreshing to hear that there are professionals like yourself who try not to fall victim to preconceived notions. A newsroom nowadays is not the newsroom of old where objective analysis ruled. Far from it. Stubborn hard core conservative and liberals who are stuck thinking a certain way believing that their views are absolute. This mentality contaminates the work environment. Your posts are a refreshing break from a highly opinionated newsroom.

    For me, what sets your website apart are the posts on cognitive biases. Over the years, I now have a better understanding of these biases. I see the psychology at work in other people as they make decisions and formulate opinions especially in this election year. Most of all, I now recognize my own biases and have reshaped the way I think about science, economics, politics and other aspects of everyday life. Call it an awakening of sorts.

    Thank you for your hard work on the many fronts (no pun intended) you cover each day.


    Scott Sabol

  35. Jim67545 says:

    My prior post was a request for an explanation of the benefits BR envisioned by the repatriation, not a position statement. Seeking knowledge.

  36. DeDude says:


    What bubble are you talking about? The housing bubble has been deflated by any metrics that I am aware of, and now we have such good numbers for “purchasing to rent it out” that investors are pushing prices up again. I would not argue against bubbles in stocks and gold, but those have always bubbled up and down without much of any effects on the real economy (GDP and employment).

    Working off the debt after a financial crisis is always a long slow process. But it is government’s job to make sure that this process does not lead to an economic downturn, because it is much harder to pay down debt in a contracting economy than it is in a growing economy. Indeed if the austerity is harsh enough your payments on debt doesn’t even improve the burden of the debt (debt/GDP ratio’s stay the same), so you get all the pain and no gain. In that case it would be absolutely moronic for government to not kick the can down the road.

  37. ZedLoch says:

    There is a lot of debate over the repatriation aspect. Maybe it is just meant as a compromise? Congressional Republicans would never sign off on another stimulus unless they got something (big) in return. A bribe of a few billion tax free dollars might do the trick.

  38. Raleighwood says:

    Does this “typical credit crash recovery” mean the repatriation of the manufacturing/industrial jobs off-shored and a greater appreciation of Labor and their ability to create demand through wages earned?

  39. Greg0658 says:

    ‘ greater appreciation of Labor ‘ .. humm – doubt it – common labor is always (seemingly) best aquired at leastest $cost possible .. thats in developing economies (2x gain too – ie: future customers grow)
    Raleigh that entire statement reminded me of NIMBY green grass of USA country club atmosphere .. ie: let someone else do the dirty work – we are above it here – besides its just cheaper that way .. tho said before – its not gonna work out in the long run (imo)

  40. Raleighwood says:


    I‘m not sure I understand your position statement – but I will say that I admire Germany for their appreciation of the significance of Labor – not everyone needs a desk job and a diverse economy has less chance of crashing. But then again – a two tiered society does not need Labor, it requires serfs.