Posted on 11/22/2008 4:01:21 PM PST by dano1
I AM endlessly charmed by chatter about when this slowdown/recession will end. (snip)
But this does not look like a typical recession. A typical recession is brought on by Federal Reserve tightening in the face of excessive demand and rising prices. The economy still functions normally, but purposeful credit tightening slows activity. When the Fed loosens up and money starts flowing, demand increases and growth returns. This, at least, is the pattern of the large recessions we have had since the Great Depression, which was a special case, as we shall see.
Smaller recessions have been brought on simply by the inventory-business cycle, but they, too, were amenable to Fed stimulus.
That was because normal credit mechanisms were working.
This time it’s different. Or, because that is a dangerous phrase, let me say that maybe this time it’s different.
The problem now, as in 1929 to 1940, is that the economy is not functioning normally. It is shot through and through with fear, even terror. Worse yet, and unlike the situation in the Depression, government miscues have been only a part of the problem. This fear is so pervasive that it has brought the credit sector to a virtual shutdown, even to borrowers with good credit. At this point, the lending sector is so panicked —largely from the government’s inconsistent behavior and failure to rescue Lehman Brothers — that it is frozen. Not totally, but way too much for ease of lending and maybe even for the survival of a robust economy. And if a colossal worldwide deleveraging spreads to Treasury debt owned by foreigners, the situation will be deadly serious.
The unemployment rate is rising. Housing is in collapse. Manufacturing is weak. The unionized auto sector is dying before our eyes. Commodities are falling hard and fast.
(Excerpt) Read more at nytimes.com ...
Obama either needs to privatize every public asset he can, or do nothing. More government intervention and funding will only make matters worse.
Great link thanks....
I have Peter Schiff’s book but haven’t time to read it. Plus I think I already know what he will say and agree with him
Overall Unemployment Rate in the U.S. Civilian Labor Force, 1920–2007 Here's a look at the U.S. unemployment rate for selected years from 1920 to 2007.
Year Rate 1920 5.2 % 1928 4.2 1930 8.7 1932 23.6 1934 21.7 1936 16.9 1938 19.0 1940 14.6 1942 4.7% 1944 1.2 1946 3.9 1948 3.8 1950 5.3 1952 3.0 1954 5.5 1956 4.1 1958 6.8% 1960 5.5 1962 5.5 1964 5.2 1966 3.8 1968 3.6 1970 4.9 1972 5.6 1974 5.6% 1976 7.7 19781 6.1 1980 7.1
1984 7.5 19861 7.0 1987 6.2 1988 5.5 1989 5.3 19901 5.6% 1991 6.8 1992 7.5 1993 6.9 19941 6.1 1995 5.6 1996 5.4 19971 4.9 19981 4.5 19991 4.2 20001 4.0 2001 4.7 2002 5.8 20031 6.0% 20041 5.5 20051 5.1 2006 4.6 2007 4.6
The Roman Empire fell in 476 when the military overthrew the last emporer. The bureaucracy stumbled on for a while as though nothing had happened, but eventually taxes stopped geting collected.
The legions that had kept peace in the empire didn't get paid, so they went home or married into the barbarian families resident in that portion of the empire where they were serving. Let me give you an anecdotal lesson into what happened.
When the empire still stood, a Roman judge issued a decree in a civil case that injured a barbarian family. One of the barbarian menfolk killed the Roman judge. A day later the local Roman legion swept in, crucified the menfolk and sold the women and children into slavery. Roman law prevailed.
After the fall of the empire, the same thing happened, but there was no retribution. The day after the judge was murdered, the local barbarian clan chief and his men swaggered around town. There was a new boss, and everybody paid protection (taxes) to him.
Multiply this on a grand scale, and you see the highways taken over by bandits, towns walling themselves up for protection and trade coming to a halt. Add to the mix the takeover of the Mediterranean by Islamic navies a few centuries later, and you have the Dark Ages.
For protection, towns and landowners hired former legionnaires to protect them. These people were essentially thugs on horseback and didn't become knights until the Church got its hands on them and promulgated a code of conduct that was later known as "chivalry". (Comes from cheval, the French word for "horse".)
People without the means of self-protection sold themselves to the large landowner of the region, and thus serfdom was invented.
In the dying days of the empire, the gold and silver coinage had been adulterated by base metals or clipped to the point where their worth was questionable and not easily able to support commerce. Barter replaced money.
With barbarian tribes moving into formerly Roman areas and the Islamic threat from the east, the Papacy attempted to recreate the Roman Empire under Charlemagne. That helped by preventing the Muslims from crossing the Pyrenees from Spain. It also Romanized the barbarians by converting them to Christianity.
I'm drastically condensing what happened so that it fits into a reply rather than a historical tome, but you get the picture. Monetary collapse led to societal collapse which in turn led to the dissolution of Europe. It wasn't pretty.
Check Post #124.
Interesting numbers
At Ford's Willow Run plant near Detroit, by 1944, American workers were rolling one B-24, 4-engine bomber off the assembly line every 56 minutes.
Such feats of industrial production were repeated from one end of this country to the other and all of that happened DURING WORLD WAR II.
Americans were building tanks, ships, aircraft, small arms and munitions at speeds and in quantities virtually unimaginable before that time.
The "hard times" of World War II were voluntarily endured in a massive cooperative effort to support our fighting men and end the war, with victory, as soon as possible.
The war effort proved to Americans they could overcome enormous obstacles and bring victory and secure freedom from tyranny while demonstrating unprecedented industrial output.
You are making the mistake of equating the cooperative sacrifices of Americans during World War II with the malaise of the 1930's. The two things are not the same.
World War II produced an economic output miracle in the United States which carried this country to victory.
“I can’t recall this fool...”
Alot of things, perhaps, can be said about Ben Stein, but “fool” is not one of those things;
Ben Stein (Benjamin J. Stein) was born November 25, 1944 in Washington, D.C., (He is the son of the economist and writer Herbert Stein) grew up in Silver Spring, Maryland, and attended Montgomery Blair High School.
He graduated from Columbia University in 1966 with honors in economics.
He graduated from Yale Law School in 1970 as valedictorian of his class by election of his classmates.
He also studied in the graduate school of economics at Yale. He has worked as an economist at The Department of Commerce, a poverty lawyer in New Haven and Washington, D.C., a trial lawyer in the field of trade regulation at the Federal Trade Commission in Washington, D.C., a university adjunct at American University in Washington, D.C., at the University of California at Santa Cruz, and at Pepperdine University in Malibu, CA.
At American U. He taught about the political and social content of mass culture. He taught the same subject at UCSC, as well as about political and civil rights under the Constitution. At Pepperdine, he has taught about libel law and about securities law and ethical issues since 1986.
“These are some examples of ways the government could “spend” money and give it to the people who can, by their good choices, keep this country afloat.”
Well said. Thank you...
I am aware of Ben Stein’s background. Unfortunately, as I said, he appears to have forgotten anything he once knew many years ago and filled his head with the usual Hollywood junk which now puts him IMO in the same category as Lindsay Lohan, Paris Hilton, etc. Perhaps that is what happens when one lives and works in close proximity for a lengthy period of time surrounded by other liberal airheads. That’s the best excuse I can offer for his sounding like a complete fool. In the event that you don’t think he has reached fool status, let me suggest that you listen to his recent appearances on the Sat. a.m. $ programs on Fox instead of citing his credentials from 30+ yrs. ago.
Hi Mr. Reed!
By then (in 10 years) we'll have multitudes of boomers retiring, sucking billions per day out of the (un)productive class, then shortly after that, a 55 trillion nut in medicare alone. This is leaving aside all of the trillions we'll have to come up with to pay for Roosevelt's, Johnson's and GWB's big government giveaways, plus all of those Obama is sure to manufacture.
Sure we'll see spurts and upticks causing some to think it's all gone away, but few have come to grips with the simple fact that America is officially bankrupt - some of us just don't know it yet. That's not rocket science, it's just simple 3rd grade math.
There is simply no way that we'll even begin to pay for it all. We can't even pay the interest on what we owe now, much less all the $*** that is gathering and will be rolling down hill in the near future.
Thats funny. Stein happens to have a degree in economics and is the son of a famous economist so he grew up on the subject. Whats your credentials?
Wrong. What was the unemployment rate during the war? Rubber and gas were unavailable because they were rationed for the war effort. A MAJOR complaint at the time was that people had money, they just couldn’t buy things because of the rationing and priority war production. But the economy was booming during the war.
I just got laid off from a job that, a month ago, looked to be secure. The credit shutdown has stopped manufacturing in my field (general aviation) in its tracks, because nobody can afford to buy anything. Prospects for a new job look pretty grim for now. I’m relying on God to take care of me, but I would feel better if I had some prospects of income. This has sort of changed my perspective - a stimulus plan looks way more attractive than it did when I had a job.
Keynes is an apologist for statism,government interventionism, government budget deficits, pro-union legislation,and inflation and ultimately socialism and anti-free market in labor.But prior to the publication of Keynes's book The General Theory of Employment,Interest, and Money in 1936, economists who accepted the quantity theory of money had accepted the proposition that unemployment can be eliminated by a fall in wage rates and prices.If, as the quantity theory of money in fact implies,the volume of spending tends to remain unchanged in the face of a given quantity of money,then, reduction in wage rates and prices must put an end to unemployment in short order.
Not that it’s any of your business, but I also have a degree in Economics and was a year ahead of him in Law School. Does that make me more of an expert? Hardly, but at least I am a conservative which is a great deal more than can be said for Stein.
These experts never talk about the source of fear: the huge pyramid of leveraged financial transactions which created so many unknowns and potential black holes. Everybody fear with justification that they are one misstep away from being sucked into a black hole.
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