This is the second column in a two-part series.

Last time, we discussed recessions, how quickly they can come upon us; and, how growing job losses impact the general economy. (Part 1, titled “So what is a recession, really?” is available online at : www.baldwincountynow.com/articles/2009/03/16/columnists/doc49b607073916c010210080.txt.)

Historically, any recession that lasts longer than two quarters can, technically, qualify to be called a depression. Of course, the depth and breath of the downturn will affect the descriptor economists use to discuss it and historians assign it in history books.

As downturns unfold, they are usually made worse by inappropriate government interventions undertaken by politicians, who, along with special-interest groups and the media, spin the data and arbitrarily select economists who support their respective philosophical agendas. The objective is to influence the public with the skewed interpretations offered during the downturn.

Despite that, it doesn’t take long for most citizens to figure out what’s really happening, because many of them are experiencing the direct effect of whatever the economists ultimately call the contraction (recession or depression).

Ronald Reagan understood this. And the people knew Reagan got it, back then, when he declared, “Recession is when your neighbor loses his job. A depression is when you lose yours.”

During the current contraction, unemployment, already above 8 percent, will continue to increase. That means the number of individuals and families who will experience the depressing effects of recession increases dramatically. Unemployment trends, along with the anemic financial system – banking, credit availability, debt obligations – bodes bad news for the rest of this year, at least. That bad news will likely continue into next year, despite political incumbents and the Fed forecasting the economy will begin to recover in 2010.

Realists doubt this hype, and their skepticism is wise.

After all, the value of all assets held by Americans has dropped an average of 18 percent. The housing market will continue to deteriorate as the number of foreclosures and bankruptcies increase, which means the largest investment made during the lifetime of the typical American citizen has already lost significant asset value. Depending on when they purchased their home, this investment may have a current market value peg that is below the amount of their actual total mortgage debt.

Meanwhile, the interveners within the government and Federal Reserve decided (rightly or wrongly) that Wall Street was their priority, and opted for a bailout approach, which has committed taxpayers to pay, over time, for the funds government has thrown into the proverbial money pit to bail out large banks, insurance companies and other financial institutions.

Regrettably, the senior managers at a number of these firms were paid bonuses at the end of 2008. This past weekend we learned AIG is ready to disburse $165 million to its top executives.

Interestingly, the public furor that will undoubtedly bubble up over this second round of bonus payouts plays into the hands of an administration that is demonstrating a lust for intervention everywhere, and wantonly stokes populist sentiment for still more government regulation and involvement in “free” markets (Irony intended).

While the government has no business telling a private entity how much to pay their employees, or what represents warranted bonuses – that is a responsibility for management, stockholders and their fiduciary representatives on the board of directors – those very individuals at AIG failed everyone except themselves, as did their counterparts at several large banks.

Instead of government doling out billions in bailouts, each of those distressed private firms, including the Big 3 Automakers, should have the opportunity to reorganize; and then pursue market viability with oversight by a bankruptcy judge.

And, instead of the government wasting still more billions creating artificial jobs in public works projects and social support programs, the focus should be to promote, indeed, inspire, private capital investment in “value jobs.”

Such jobs produce things people, in their role as consumers, actually value and are willing to buy with their own hard-earned money. This is something that can only be done in the free market, not by bureaucrats and politicians.

In retrospect, almost all economists now agree that the make-work programs during the Depression were ineffectual as economic stimulus; and that it took the entry of the United States into World War II to extricate the country from our economic woes.

At this point, perhaps, we can only hope the misguided actions taken by the Bush and Obama administrations do not have the same or similar deleterious effects as those undertaken during the 1920s and ’30s by the Hoover and Roosevelt administrations.

Unless, of course, Americans decide to take back their rightful role in our republic and begin to vigorously exercise both their God-given rights and their personal freedoms and responsibilities certified in the U.S. Constitution.

Richard Olivastro is a professional member of the National Speakers Association, president of Olivastro Communications and founder of Citizens For Change. He can be reached at Rich@Olivastro.NET or 877.RichSpeaks.