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April 23, 2014

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J. Patrick Coolican:

Reflecting on recession’s unfolding a timely reminder of what Obama inherited

J. Patrick Coolican

J. Patrick Coolican

I’m the kind of politics junky who measures out his life in presidencies. I can’t tell you what I had for supper two nights ago, but I vividly remember Pat Buchanan’s 1992 Republican National Convention speech. (His real mistake wasn’t radical culture warmongering, it was pushing President Ronald Reagan out of East Coast prime time.)

So, as I watched President Barack Obama on Wednesday at Canyon Springs High School in North Las Vegas, I thought about four years ago. I sort of remember that my apartment off Boulder Highway, Coral Gardens, had just received a splash of brown and hunter green paint and a new name: Canyon Pointe. More vividly, I remember cocktail waitresses caucusing for Hillary Clinton.

And because I was so busy covering one of the most interesting campaigns in recent history, I wasn’t paying close enough attention to the fact that the world was collapsing, even though that collapse was intimately intertwined with the campaign.

By early 2008, Nevada’s foreclosure crisis had been pummeling the housing market for nearly a year, first with fraudulent and then subprime borrowers, stalling out growth and pushing down home prices. Nevada’s state government decided the best approach would be to mimic a deer in headlights, though to be fair, there was probably not much elected officials could have done.

From September 2007 to September 2008, the unemployment rate in Nevada had jumped from 4.9 percent to 6.9 percent, and it was rising more every month. It would become rapidly clear, though for most of us only in retrospect, that our economy was too dependent on growth and development, on construction workers building homes and stores and casinos for other construction workers.

The national economy had its own problems, though they were linked to ours. Some on Wall Street made big, reckless bets that home prices would never decline. The troubled Wall Street banks were so big and so intertwined that their collapse would have destroyed the economy.

Even though the government stepped in to stabilize the system, the economy still seized up. Only last year did we learn that the American economy saw an annualized decline of an astounding 8.9 percent in the fourth quarter of 2008, far worse than original estimates. By the time Obama took office, the private sector was losing 700,000 jobs per month, with state and local governments soon to follow with their own layoffs.

What should have been clear at the time was that there would be no quick recovery. The recession was the result of a financial crisis. Here are economists Carmen Reinhart and Kenneth Rogoff, experts on financial panics, writing in Newsweek in March 2009: “The recessions that follow in the wake of big financial crises tend to last far longer than normal downturns, and to cause considerably more damage.”

They were right. Homeowners were deep in debt and underwater on their homes and so were reluctant to spend. It was worse in Nevada, which was heavily dependent on construction, and on people and businesses spending disposable income on the Strip.

Once the job losses hit, more foreclosures would follow, and the cycle continued, only abating somewhat in the past year or so.

We can argue all day long about what caused all this, but you can’t deny that this is what was happening four years ago.

In amnesiac America, it seems to me that recalling this recent history — and reflecting on the mess that Obama inherited — is a valuable exercise.

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  1. This is not just a US recession, it is global as well, and our markets interact with that fact.

    Historically, we seem to have recessions of varying degrees fairly regularly.

    Authorities can proclaim the end of recessions, but that doesn't really seem to reflect the experience of the populous due to the effects of a recessions.

    I've read about the 1973-74 recession proclaimed by one source to have ended in 3 years, and another source saying it took 20 years to fully recover.

    The current recession stated to have ended in 2009 will hardly be cheered since the global facts point to problems that are still effecting us today, with some improvements, but not enough for people to dance with joy.

    I think reality should see our current recovery as a long term effort, not something that should end within a few years.

    Also, a dysfunctional Congress has impeded the recovery, so who knows what could have been if they were functional and looking to benefit all the people instead of digging our graves with intransigence.

  2. Obama's efforts with the ACA were a step toward bring the cost of healthcare into greater control.

    I would have been much happier about that if he had created, and Congress had passed, a single payer universal healthcare program. It is the only way to reduce the cost of healthcare in this country, while increasing and maintaining quality care.

    The problem with bringing that about was due to the national and multinational big money special interest lobbyists that dominate our government.

    With everything else, making an effort to get us out of the war business, gradually as needed for our economy, was a piece of good governance.

    At the same time, trying to get through Congress a jobs program that would also help to repair our decaying infrastructure was also a good effort.

    Dealing with the global economic issues is not a one man job. There are other leaders and circumstances to deal with, and the US helped mightily to add to the global problems, before Obama ever took office. The world knows that and it is time Americans accepted responsibility for our role in what is happening globally, and which continues to circle back around to us.

    There are so many global changes that were not as forceful as in the past decades. The fix is not nearly as simple as some people think.

    There maybe many things that Obama could have done if his hands weren't tied by a dysfunctional Congress of intransigents. We will never know until he has more cooperation and teamwork.

  3. The United States was "-" that close to having our financial structure gone as we know it. President Obama literally saved the US from financial collapse. Period!

  4. you're spitting out a bunch of number and claims Future and Milt, but you won't put your real name up with them. You're partisan rhetoric gets ZERO CREDIBILITY.

  5. you're spitting out a bunch of number and claims Future and Milt, but you won't put your real name up with them. You're partisan rhetoric gets ZERO CREDIBILITY.

  6. "By early 2008, Nevada's foreclosure crisis had been pummeling the housing market for nearly a year, first with fraudulent and then subprime borrowers, stalling out growth and pushing down home prices. Nevada's state government decided the best approach would be to mimic a deer in headlights, though to be fair, there was probably not much elected officials could have done."

    Coolican -- gotta disagree with you on this point. The "fraudulent and then subprime borrowers" are insignificant when compared to the massive fraud perpetrated by lenders and their many, many parasites. The best word to describe them is rapacious.

    Your characterization of Nevada government is right on. At least the legislature started giving us some good laws, especially last session's AB284. And our AG seems to be at least trying. Have a look @ http://www.lasvegassun.com/news/2012/aug...

    "I think reality should see our current recovery as a long term effort, not something that should end within a few years."

    peacelily -- the reality is this kind of recession is nothing new. The difference now is government over-regulation is a serious impediment to recovery. What used to be personal liberties, particularly in person-to-person commerce, are now beat down by government at every level. A friend in court yesterday told me about a poor guy prosecuted for having a sign on his trailer advertising he could help with remodeling, etc.

    "The paper bubble is then burst. This is what you and I, and every reasoning man, seduced by no obliquity of mind or interest, have long foreseen; yet its disastrous effects are not the less for having been foreseen. We were laboring under a dropsical fulness of circulating medium. Nearly all of it is now called in by the banks, who have the regulation of the safety-valves of our fortunes, and who condense and explode them at their will. Lands in this State cannot now be sold for a year's rent; and unless our Legislature have wisdom enough to effect a remedy by a gradual diminution only of the medium, there will be a general revolution of property in this state." -- Thomas Jefferson, letter to John Adams, 1819, from "The Works of Thomas Jefferson" Vol. 12

  7. The Sun needs to limit comments to 'tweet length" so we get more content and less ramble.

  8. Historically, the US economy runs in cycles. This does not consist of a regular pattern of equal dips and peaks, some are worse than others. We are in the worst decline since the Great Depression. I find myself highly skeptical that either party will proactively lead us out of the current recession, but blame or credit will be assigned to the party in office as some normalization eventually occurs. So much for partisanship and the state of the economy.

  9. And yet with all this going on, we elect the one person who could not get a job as dog catcher, president of the United States.

    Than blame it all on the fact that as a Senator, he had no clue to what was coming because all he did was vote "present"

    Now it sits in his lap and he has nobody to blame but himself for not being able to do anything but campaign constantly..

    To be fair, he did stop campaigning a few times/ Just long enough to reward top donors to his campaign, with government bailouts (wall street and bankers) than to write a few letters supporting some cause that would lead to more minority blocks of voters. (illegals and gay marriage)

    Now we go three years without a budget and all he can do is slam Mitt's budget because his doesn't exist... It can't exist because it would show he is still trying to keep America down...

    As loyal Obama supporters know, you can't grow the government if the economy is good and everyone is working...

  10. Bob_Realist:

    The legislation that ended Glass-Steagal was the Gramm-Leach-Bliley Act, authored by Phil Gramm who still defends his actions today.

    Phil Gramm was picked as John McCain's financial adviser for the 2008 run against Obama. As the G-L-B Act was in the midst of crashing the economy, John McCain still believed that Gramm was an authority on economics!

    Gramm was only bumped from the campaign after making the statement "We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness."

    A nation of whiners. The G-L-B act allowed Wall Street to sell mortgage insurance policies (credit default swaps) that had no liquidity, NO money to back up the mortgage if it failed. That is illegal.

    So after $billions of commissions were paid for illegal mortgages and insurance policies, the real estate market collapsed throwing millions out of work. However, the real problem is that we became a nation of whiners. We complained about being robbed.

    The warped irrationality of GOP authorities and dignitaries cannot be underestimated.

  11. And as today's headlines read: "Nearly 70 percent of Las Vegas homeowners remain underwater".

    All around is the damage from the real estate and stock market crash of 2008. Those facts and the reasons for them cannot be denied. Nevada property values will be lucky to recover dead even with 2002 within a decade.

  12. I honestly can't believe what I read in this column. Here we are, three and a half years after Obama took office, and people are still saying that everything bad that exists today is the fault of George W. Bush, even though President Obama is the one who has in many case embraced and continued the very policies that are being complained about.

    Talk about denial!

  13. Honestly, I think that most of the comments from both democrat and republican partisans here lack some degree of insight.

    Both Bush and Obama, and their financial advisors and government entities were and have been at work trying to deal with both a national and global economic crisis.

    It doesn't rest on one man's shoulders, or one party. To think so is very shortsighted and shows a lack of understanding of the complexity of the politics and problems and how governments and economies operate, plus how they are interrelated.

    Also, as far as the US goes, the Congress has a good deal of culpability in it's obstructionism and intransigence.

    This is a long term process, and many changes can take place globally before we begin to see the light of day.

    Even now, Europe is considering move to including growth in its formula, as the US recommended. Euro bonds are also under consideration, something the US did earlier.

    If any of those commenting think they have the solution for the world, please present your solution, and send it to the various governments in the world. You might get credit for saving the global economies.

    Here are a few links for those interested in timelines and other information for review, both nationally and globally, related to the events of the global crisis, and more. Sometimes memories are short, especially during an election year.

    National:

    http://timeline.stlouisfed.org/

    http://libraryguides.law.pace.edu/financ......

    Global:

    http://www.cfr.org/economics/timeline-gl......

    http://ww

  14. In order to head off some election year partisan politics about the US economy in the near future, I am adding a link to a Reuters article from last night.

    It explains the changes in the global economy that are going to effect the US, in spite of showing some improving in manufacturing.

    Knowledge of realities in a global economy helps us to keep an appropriate perspective.

    http://in.reuters.com/article/2012/08/23...

  15. peacelily,

    What that article fails to mention is that we are by far the largest single importer in the world. It should come as no surprise that if we slow down our purchases because our people simply don't have the money then it is going to ripple out to the others.

  16. Obama didn't inherit this mess, we the people did. Obama didn't create this mess and won't cure it, nor will any other politicians, as their marching orders come from those funding their political campaigns. The needs of special interests are varied and great and not conducive to that needed for economic stability. Consider the faction which holds great opportunity in times of uncertainty.
    What the world needs now is a resurgence of fair media, that peoples champion and conscience of nations holding history of inspiring citizens to gather overwhelming public opinion in order to force needed changes! Large opinion holds history of forcing significant political changes and media holds history of influencing opinion.

  17. Special interest lobbyists certainly can be credited for the economic mess that the USA and the countries around the World are in. And Commenter Don Steele is absolutely right about "We the People" actually inheriting "this mess"! There is lots of finger pointing and blame to go around over this current recession/depression.

    Our country has yet to fully recover, and few US Citizens have truly recovered from this economic disaster where the Wall Street financial wizards and Bankster had gotten the lion's share of "bailouts."

    Blessings and Peace,
    Star

  18. Coolican offers a pathetic plea for the voters to blame anyone but the president for his disastrous policies. It's the -- johnny made me do it -- defense. Of course the second act is the other Johnny defense - But Johnny did it first.

    Desperation at his stage of the game is like a football locker room at the end of the season, it just stinks.

  19. Staying out of the political part of the article and focusing on the economic outlook for LV as a whole.

    When an area maxes out on it's building potential for the population and the construction business goes away...is there enough business left to support the market construction has built?

    I think for LV we need to look at diversification of employers to rebuild job growth in the area and get the unemployment rate down. Zappos is a great example of a new employer in the region to help lower the umemployment rate. Now, how does LV attract more Zappos,aka new and diversified business to the area?

    To take it to the political side, should people in every town and city hope the president will stop individually to their town to find solutions? No, local government and citizens need to try to find solutions to bring answer about to help recover from the economic crisis. Las Vegas got too big on housing, and has always been big on gambling....housing is done growing, its balloon has burst, what can we replace it with? Maybe one or two big balloons, or 100 small ones. What do we have to do on a more local level to rebuild out of this recession on our own local level? Finger pointing isnt going to do it. Time to put our thinking caps on and make some movement for ourselves.

  20. Cooligan -- You are so liberal that you don't let facts get in the way. Four years is enough: As the lyrics of the song by The Who "Won't Get Fooled
    Again!", I won't either. If Romney is no better, OUT he goes also. He can't do any worse. At least Ryan has a quantifiable plan for Medicare. The best Obama has done is hot air and smoke and mirrors and run up more debt.

  21. It's getting old. I think Americans know the "Blame Bush" strategy is complete BS.

  22. The perfect storm converged during the Bush W tenure.No doubt he seeded some of the storm clouds,but he was not alone to blame. These seasons of economic shifts occur in cycles, they are attributable partly to man made events, and partly to forces of change. The perfect controller does not exist--there is no automatic steering mechanism in charge of all the variables in economic processes. It's a dynamic and unpredictable system. And we must view these things as occuring over long term periods. What is difficult is that we live in the here and now, and seek improvement in the short term--but that is not always to be. I would venture to guess that we are in a long term correction which will in several years settle at a new equilibrium. Afterall, we have a massive debt bubble working its way thru the process, as well a massive supply of currency outstanding that is yet unresolved. Some predict yet another major stock market implosion from the debt, and major inflation from an excessive money supply.This is not over yet, so hang on for awhile.