US in longest recession since World War II

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From Fazle Rashid
NEW YORK, Dec 02: The United States is in recession since December 2007. It was officially acknowledged only Monday, a year after it started. It is the longest recession since the World War II. National Bureau of Economic Research (NBER), most prestigious independent economic watchdog only confirmed what most Americans have been saying so long.
As if to greet the announcement by the NBER the Down Jones plunged by 9.0 per cent Monday. The fall in share prices do no longer create any tremor in the Wall Street. It has become used to it. The prices have plummeted below 500 point 12 times in past few months. Both the Chairman of the US Federal Reserve Ben Bernanke and Treasury Secretary Henry Paulson vowed to 'use all tools at their disposal to restore a measure of normalcy to the economy'. This they have been repeating for quite some time. NBER defines a recession as a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators".
Surveys of manufacturing orders in the US, Europe and China are much weaker than anticipated. In China the purchasing managers index fell 38.8 per cent from 44.6 per cent. The eurozone manufacturing figures also hit a record low. The equivalent data in US revealed manufacturing activity suffered slowdown to a 26-year low, a reputed paper in a report said. Over the next three months 5000 workers could lose their jobs in Dubai.
President Bush, increasingly the odd man out in the last weeks of his term said his administration would do whatever was necessary to safeguard the system, the New York Times (NYT) reported today. "I am sorry it is happening". Many economists say Congress could negate the benefits of any economic stimulus if it tried to hold down spending or reduce budget deficit.
The market watchers and analysts warned that the downturn is likely to set a new post war record for lngth and likely to be more painful than any previous recessions. Ms Elizabeth Warren who is heading a new Congressional panel set up to monitor the gigantic federal bailout says the government still does not seem to have a coherent strategy for easing the financial crisis despite billions it has already spent in the effort, the NYT quoted her as saying.
"You just cant say credit is not moving through the system, you have to ask why", she commented. "If the answer is that the banks do not have money to lend it would make sense to push capital into their hands. But if the answer is that their (banks) potential; borrowers are getting less creditworthy with each passing day, pouring money into banks is not going to fix the problem". Ms Warren is a Harvard law school professor and a consumer bankruptcy expert.
Anxiety is mounting that a quick recovery for economy no longer seems probable. Worries about the economy were the most pronounced in the debt market where yields on treasury securities fell to their record lows. Citigroup, Merrill Lynch and Morgan Stanley saw their share prices dropping by 20 per cent. Most Wall Street banks also witnessed double digit percentage decline. AIG has sold its Swiss-based private bank to an investor in Abu Dhabi marking insurance giant's first significant disposal after it was bailed out by the US government. The buyer Aabar Investment, a government backed institution paid $254 million for the acquisition. The biggest chicken producer in the US filed for bankruptcy protection dragged down by unmanageable debts, weak demand, oversupply and high feed cost. It was a clear indicator how the downturn is affecting the food producers.