Sen. Richard Burr (R-N.C.) says when the financial crisis began he encouraged his wife to withdraw all the cash she possibly could from their local bank.
During a speech on the economy last night, Burr related his immediate reaction the week the crisis began. After hearing Treasury Secretary Hank Paulson relay a story about a major company having trouble transferring money between banks, Burr became worried about the solvency of his own bank.
“On Friday night, I called my wife and I said, ‘Brooke, I am not coming home this weekend. I will call you on Monday. Tonight, I want you to go to the ATM machine, and I want you to draw out everything it will let you take,” Burr said, according to the Hendersonville Times-News. “And I want you to tomorrow, and I want you to go Sunday.’ I was convinced on Friday night that if you put a plastic card in an ATM machine the last thing you were going to get was cash.”
Burr also gave a gloomy forecast for economic recovery.
“I would tell you it’s not a recession,” Burr said. “I would define this as a depression. A recession by definition is when you raise interest rates to slow growth. We are at a zero-interest-rate policy and have been. The world is at a zero-interest-rate policy, yet we continue to see the economy slide. We continue to see unemployment grow. We continue to see confidence wane not just here but around the world.”
The senator came up with a new image to explain the prospects for recovery. Economists often speak of “U-shaped” or “V-shaped” recoveries, where economic growth rebounds either quickly or after a period of stagnation. But Burr think neither shape fits.
“Those are the only things they talk about,” Burr said, according to the. “Either it’s a lack of imagination or some belief that you can make everything fit into those two. Let me suggest to you today, I think we are in a Nike swoosh.”
A slow, steady recovery in the shape of a swoosh is more likely, Burr said, because the causes of the crisis are deep and systemic. The crisis happened “primarily because the habits of the American consumer have changed permanently,” Burr explained. “This is not temporary.”