EconomicCrisis.US

Deficit spending and government debt are reaching a level that could culminate in another economic crisis as big as the one that hit the United States last year, Minnesota’s Republican Governor Tim Pawlenty told CNSNews.com.

“One of the main things I’m very worried about is this administration and the Democratically-controlled Congress running on a pathway to bankruptcy,” Pawlenty said. “I mean, we have a reckless amount of deficit and debt in this country. The Obama administration and this Congress are exponentially growing that.”

The $787 billion stimulus package pushed by the Obama administration and congressional Democrats was supposed to salvage the tanking economy, but that measure – along with the $700 billion bailout of the financial industry pushed by the
Bush administration and supported by Obama – will boost the nation’s debt by $9 trillion to a total of $14.5 trillion by 2019, according to the non-partisan Congressional Budget Office.
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Changes in accounting standards, rules and policies for financial institutions must be coordinated globally in the effort to help avoid a recurrence of the economic crisis, federal regulators said Monday.

“Now that some measure of confidence has been restored and financial strains are receding, it is time to turn our attention to the lessons learned in the crisis,” Federal Reserve Gov. Elizabeth Duke told an accounting industry audience on the first anniversary of the collapse of Lehman Brothers, the day before it filed for bankruptcy. “Accounting standard setters, regulators and policymakers around the world are discussing and proposing preventative measures. Now the challenge lies in integrating those changes smoothly and seamlessly.”
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The US recovery may be the slowest since World War II to regain all the ground lost during the recession, even if economists’ more optimistic forecasts for expansion turn out to be right.

The slump this time was so deep, said JPMorgan Chase & Co. chief economist Bruce Kasman, that the 3.5-percent average quarterly growth rate he sees in the next year won’t be enough to bring gross domestic product (GDP) back to its $13.42-trillion pre-crisis peak. That’s in contrast with the last 10 recoveries, when GDP returned to its previous levels within 12 months.
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Lehman Brothers

The fallout was fast and frightening, and will reach far into the future.

Almost 6 million lost jobs. A 5,000-point Dow plunge. The government bailing out cash-starved banks. General Motors and Chrysler declaring Chapter 11. The unemployment rate doubling to almost 10%. Consumers getting $4,500 handouts from Uncle Sam to buy a car. Talk of a 1930s-style depression.

To modern-day Wall Street historians, these bizarre events mimic the other-worldly feel of a Ripley’s Believe It or Not episode. But all those unthinkable occurrences made news in the past year. They all tie back to Sept. 15, 2008, the day Wall Street titan Lehman Bros. filed for bankruptcy. The collapse of the investment bank was so shocking it triggered a financial tsunami of such size and scope that it was compared to the Great Depression.
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