Wednesday, July 28, 2010

The Dot Com Collapse Versus the Great Recession

Which was more severe ? By unemployment, the 'Great Recession'. But Durable Goods Orders tell a slightly different story, as they reveal the true severity of the Dot Com collapse, which - as is commonly understood - was masked by the Greenspan 'put' of easy money and inflating a new bubble in the housing sector.

The overall story is that the US economy has been very weak since the last motor of productivity peaked, the internet or dot com revolution, which encouraged private capital to invest on a large scale. Without a motor of this type again, the US will be mired in stagnation indefinitely. Especially as long as the leadership remains fixated on the idea that only private capital can create jobs.


The Arthurian said...

We need a new fad?? A replacement for the dot-com bubble? Surely this is not the overall story. Surely we have not reached the end of what can be done on the internet. Granted, when the economy is healthy it will always have a "best" sector. But the problem is not to find a best sector. The problem is to find economic health.

I don't like to disagree with you, as you are unfailingly interesting. But I think this has to be said.

I think if we focus on the economic weakness of the last decade or so, we miss the trend of weakness visible over the last four decades. And I think the short focus leads to wrong conclusions.


Purple said...

Not a new fad, not at all. I would consider relentless housing speculation to be a fad.