German Economist Says Growth May Not Return Until 2010

Big Think recently approached five leading economists for their best predictions on when we will be out of the mess known as our national economy.

Watch for their commentary in the Big Think blog in the coming days. And after you listen to their ideas, you can let the countdown begin.

Today's prediction is from Michael C. Burda, Ph.D. of Humboldt-Universität in Berlin. Burda is Professor of Economics and Chair for Macroeconomics and Labor Economics. He has held previous teaching positions at INSEAD and the University of California at Berkeley. His research centers on macroeconomics and the economics of labor markets. He is co-author, with Charles Wyplosz of "Macroeconomics: A European Text"  which was published by Oxford Univerisity Press. He is a founding contributor to the gloabl economics policy portal Vox EU.

So, Professor Burda, when will the recession end?

"Historically, recessions in the US have been brief affairs. As far as I can see, in this case we have just started. We haven't seen anything yet. This is a contender for the mother of all recessions, not quite a depression, because Obama seems to have a grip on what needs to be done.

All the same, the US will recover more slowly than Germany and the rest of Europe because it is sitting on a ton of bad mortgage debt. This is an albatross around the neck of the economy. US house prices remain significantly above their average levels over the period 1890- 1990. Here's the picture for a the Case-Shiller index of real (inflation adjusted) house price in the US, compliments of Professor Barth of Auburn Universtiy and the Milken Institute:

The drop in real housing values has enormous implications for the equity positions of US households and for banks and investors who hold the debt issued to those homeowners now sitting on negative equity and having trouble making mortgage payments. If US banks were forced to accept these losses all at once, we'd have to start the banking sector from scratch again. The alternative is to stretch it out over time, which means the US could end up looking more like Japan did in the 1990s.

So in a nutshell I think the recovery will be drawn-out, if we're lucky growth will return in another year's time (beginning of 2010). Maybe a bad bank solution will help. Or maybe Obama will pull off a miracle."

LinkedIn meets Tinder in this mindful networking app

Swipe right to make the connections that could change your career.

Getty Images
Swipe right. Match. Meet over coffee or set up a call.

No, we aren't talking about Tinder. Introducing Shapr, a free app that helps people with synergistic professional goals and skill sets easily meet and collaborate.

Keep reading Show less

Think you’re bad at math? You may suffer from ‘math trauma’

Even some teachers suffer from anxiety about math.

Image credit: Getty Images
Mind & Brain

I teach people how to teach math, and I've been working in this field for 30 years. Across those decades, I've met many people who suffer from varying degrees of math trauma – a form of debilitating mental shutdown when it comes to doing mathematics.

Keep reading Show less

A world map of Virgin Mary apparitions

She met mere mortals with and without the Vatican's approval.

Strange Maps
  • For centuries, the Virgin Mary has appeared to the faithful, requesting devotion and promising comfort.
  • These maps show the geography of Marian apparitions – the handful approved by the Vatican, and many others.
  • Historically, Europe is where most apparitions have been reported, but the U.S. is pretty fertile ground too.
Keep reading Show less

How KGB founder Iron Felix justified terror and mass executions

The legacy of Felix Dzerzhinsky, who led Soviet secret police in the "Red Terror," still confounds Russia.

Getty Images
Politics & Current Affairs
  • Felix Dzerzhinsky led the Cheka, Soviet Union's first secret police.
  • The Cheka was infamous for executing thousands during the Red Terror of 1918.
  • The Cheka later became the KGB, the spy organization where Russia's President Putin served for years.
Keep reading Show less