It would be helpful to know how the recent decline looks in the context of all downturns, not just 1929.

It may be that every decline starts equally steeply, while ending differently.
This analysis tells us little.

And your prescription is nothing more than a slogan.
What is a “Green New Deal”?
And how is reform of financial regulation especially “green”?

A Labour MP I quizzed last weekend suggested it was rather hard for Britain to take the lead on financial regulation ‘because we live in a globalised world and might lose out to other countries’. Funny how this doesn’t work the other way around – Britain has always been very happy to be the first to de-regulate.

Well, obviously. De-regulating gives a competitive advantage, increasing regulation imposes a competitive disadvantage. Where’s the supposed contradiction?

I rather like the concept of re-mutualisation, although I’d need to read more about the practicalities. Personally, I’ve found saving and mortgaging with a large mutual to be rewarding both emotionally (my money’s not helping fat cats boost leverage potential and with it their undeserved bonuses) and financially (my member reward means the effective interest rate on my savings is much higher than I’d be able to get at a bank). Better the customers and workers own it than the state, eh? Bring on the era of John Lewisism!

But to echo cjcjc – charts tell us next to nothing about this recession. And I’ve heard it argued that more precipitous falls in trade and employment levels than in past recessions is a Good Thing – shows we’re taking the pain up front and can get back to more sensible inventory and cost levels more quickly, with fewer businesses running into trouble and a more reliable recovery.

That said, I chaired a conference a couple of weeks ago where senior execs in business (ie not economists, chartists, politicians or think-tank wonks) were putting an 18-month time frame on any kind of recovery. We may have a degree of stability thanks to those early cuts (and to reasonably robust corporate balance sheets – thank-you, dot-com bust…). But it ain’t going to get going again until 2011. Worryingly, if we start getting over-excited about a recovery, the dreaded W-shaped recession looms. That could be even worse than the bath-shaped ones being discussed by my finance directors…

[4] Re your penultimate paragraph. It’s called the “race to the bottom” – about the only thing NuLab have been any good at.

The “Green New Deal” pushed by the nef is the most amazing great steaming pile of horseshit that the world of policy wonkery has ever seen.

Don’t forget, the nef are the people who gave us that report stating that Vanuatu provides the most efficient use of resources to reach an optimally happy society. Yup, penis sheaths and worshipping the Duke of Edinburgh as a Living God is what we all need.

Just to give you an example of the GND. We need lots of money, great gobs of capital, to invest in greening the economy and environment. OK, I might not agree but still….then look at their proposed method of providing this.

1) Lower interest rates.

2) Impose capital controls.

Now there’s a number of problems with both of these ideas. Lower interest rates mean, of course, other things being equal, lower rates of saving. You’ve lowered the price people get for saving so they’ll of course do less of it. It’s also true that we in the UK have been importing capital for decades. We must have been, for we’ve been running a trade deficit for decades and a trade deficit inevitably means a capital account surplus.

So, we lower interest rates and foreigners are going to send us more of their capital or less? Yes, congratulations, we lower the price they get for it and they’ll send less.

So, in order to increase the amount of capital available to invest in greenery they suggest that we should reduce domestic capital formation and reduce the addition of foreign capital to that domestic stock.

This is what is known in policy wonk circles as “not too bright”.

Then of course there’s the capital controls. Leave aside the disgusting illiberality for a moment (it’s not the country’s money, it’s not society’s, it belongs to an individual or company. What gives you the moral right to tell people which country they must keep it in?) and look just at the effect.

For we do not export capital on nett. We import it. And if Johnny Foreigner can not take his money away again after he’s put it in then he’s not going to put it in, is he? So we’ll further reduce the stock of available capital.

This is all so damn stupid that it could only have been suggested by someone who was entirely unaware that we run a capital account surplus. In fact, it’s so mind bogglingly crazed that I had initially thought that this part of the GND had been written by Caroline Lucas.

But on reflection I realised that not even the nef were so absurdly stupid as to take anything Dr. Lucas has to say on matters economic seriously.

What gives you the moral right to tell people which country they must keep it in?

Oh I dunno Tim, ask a Russian or something, they might know. As indeed might you.

Well, indeed. Also, it’s fair to say that, regardless of the merit or lack thereof of these proposals, the people suggesting them have not fucked the dog so badly that they have crashed the entire planet’s economy, accidentally kicked millions out of their homes and jobs and left every citizen of the UK and the USA with a stark choice between

1) Handing gargantuan sums of free money to the geniuses who caused the crisis in the first place or

2) Spending the rest of their lives guarding their vegetable gardens with shotguns.

Not that this means that this Green New Deal is automatically a good idea, of course. It’s just that, if you have a well-earned reputation for screwing every pooch you come into contact with, you shouldn’t be surprised if people prefer to leave their household pets with the nice hippies next door.

It is far from settled that the original new deal was the thing that ended the great depression in the first place: http://www.cato-at-liberty.org/2009/01/14/did-the-new-deal-help/

It’s also far from settled that “protectionism” turned recession into depression. There is no comparable situation to compare against (i.e a recession to which the response was protectionism and which was not followed by a depression) and no credible economic theory which links the two. In fact, under many economic theories, protectionism actually creates more wealth than trade. Before cheap travel, most country’s practiced a de facto protectionism and many did rather well out of it.

Academic arguments aside, it does amuse me when politicians tells us we mustn’t slide into protectionism, when we have nothing left to protect anyway

“In fact, under many REFUTED economic theories, protectionism actually creates more wealth than trade.”

Fixed it for you.

“It is far from settled that the original new deal was the thing that ended the great depression in the first place: http://www.cato-at-liberty.org/2009/01/14/did-the-new-deal-help/”

What the Libertarian Cato Institute aren’t telling you, is that no Keynesian claims the New Deal ended the GD. For in fact, around 1936/37, there were “signs” of “green shoots”, and so FDR listened to the conservatives, and started to balance the budget, which extended the GD. What Keynesians do claim, is that WW2 ended the GD, but since this was an expansion of the public sector similar to what a government stimulus like Josh’s “Green New Deal”, the point stands that expansionary fiscal policy by governments during a recession/depression is what is needed, particularly when conventional monetary policy has been exhausted e.g. interest rates are near zero.

Alex is certainly correct that my blog post didn’t “tell[] you … that no Keynesian claims the New Deal ended the GD.” Of course, my post didn’t say otherwise, either. My post examined a simpler question (that should be more charitable to stimulus advocates): Did the New Deal provide any help in fighting the Depression? Further, my post relied heavily on data and analysis from a source that should support stimulus advocates: Christy Romer, chair of Obama’s CEA.

My reading of Romer’s (very prominent) empirical work and the broader literature on the Great Depression seem to be clear: the fiscal stimulus provided by the Great Depression was so tiny (even prior to the short-lived 1937 budget cut, and in contrast to the massive change in spending unleashed in Herbert Hoover’s last year) that it did practically nothing to combat the Depression. Instead, it was monetary stimulus that ended the Depression (and returned GDP to the 1923-1927 trend PRIOR to the ramp-up in WWII spending). Other work, including a prominent paper by Romer and husband David, empirically demonstrates that monetary stimulus, not fiscal, brought the U.S. out of subsequent recessions — a thesis that I read as now broadly accepted by economic historians.

With that said, Alex could argue that a liquidity trap now exists that leaves policymakers with no alternative but to use fiscal policy. However, that overlooks a number of important points: (1) the Fed has become very inventive in finding ways to pump money into the economy beyond the traditional jiggling of interest rates, (2) the history of U.S. fiscal stimulus efforts offers little encouragement that such stimulus provides sufficient lift, and (3) even if it does provide some lift, its questionable whether the benefits outweigh the cost.

One further note: It appears that Alex did not read my post, though he launched into a criticism of it. If he had, he would have realized that his criticisms were baseless. This is very, very bad form.