"...how fast would the economy recover in the absence of a stimulus plan?"

[Kurt_and_Hunter]

Use, delay, and obsolescence

One question that seems worth asking right now is, how fast would the economy recover in the absence of a stimulus plan and a financial rescue? Would it, as Rush Limbaugh says, be over in a few months? Or are we talking about a sustained slump — and how sustained?

Well, my general view is that this isn’t your father’s recession; it’s your grandfather’s recession. And the experience with pre-WWII recessions may be a useful guide. I’m not just talking about the Great Depression; some earlier experiences may in some ways be equally or more relevant.

So let’s look at the NBER business cycle data. What we see is that some of those prewar slumps were really, really long: the Panic of 1873 was followed by a recession that lasted 5 1/2 years.

And Keynes explained why: in the absence of an effective monetary or fiscal policy, a recession would have to go on until:

"the shortage of capital through use, decay and obsolescence causes a sufficiently obvious scarcity to increase the marginal efficiency"

So this could go on for a long, long, long, long time.

http://krugman.blogs.nytimes.com/2009/02/13/use-delay-and-obsolescence/

[leftstreet]

1. "increase the marginal efficiency"

hmm...

[tularetom]

2. It's almost sort of a moot point now ain't it?

The plan will soon be adopted by both houses and signed by the President so anybody who wants to speculate like limpballs is basically talking out of their ass.

We'll never know. So if there is a recovery now, Obama will get the credit whether or not the stimulus caused the recovery.

Post hoc ergo propter hoc as they say. It may be a logical fallacy but it is an apt description of public attitudes.