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The Warp Speed Recession

Several months ago, when every Monday seemed to bring news of a new economic catastrophe, we started throwing around the idea of “recession speed.” It’s the accelerated pace at which things—usually bad—happen during the downturn. Sometimes it seems like we’re living out some economic offshoot of the theory of relativity.

One week there is “no liquidity crisis” at Bear Stearns; the next, the bank collapses. In the morning you accept a new job; in the afternoon, the company folds. One day your investments are doing great; the next the world learns that Bernie Madoff is a crook. In two weeks last October, the Dow dropped 17 percent, wiping out big chunks of retirement accounts. As Mark Cuban recently blogged, this is the year of WTF.

But recession speed isn’t necessarily a bad thing.  Yesterday Daniel Gross wrote on Newsweek.com about how similar the U.S. recession and response is to Japan’s bust in the 1990s—real estate crash, economic stimulus package, etc. The difference is, ours is taking place in dog years. According to the deputy governor of the Bank of Japan, Gross says, “in less than two and a half years, the U.S. has experienced as much trauma and recovery as Japan did in about 12 years.” In part that’s because the government has been speedy. But it’s also because things move around the globe faster today than in the 90s. So instead of taking 15 years to slog out of it, we could be out by 2010. Take that, Albert Einstein!

Tags: bailout, economy, opinion, recovery, Wall Street