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 ...
I just never heard of any war leading to the end of the depression. It not that I did not believe it, but never in any class or anywhere. That is why I was questioning.
On what are you basing your conclusion?
Bad news: it’s neverending
Good news: no sequel!
History basically. We are a strong country even in rough times. I just know we will get through this. I just can’t for the life of me seeing us still in the same recession/depression in 2012. It just does not happen. The 70’s were worse than this and we were out of it in the 1980’s.
Watching CNBC and Bloomberg, I have see a very noticeable downward trend in the commentary of the guests.
I read this article from 1933 and found it both prescient and ominous. After reading this, and seeing two well-known equity analysts on Bloomberg use terms such as “continued wholesale wealth destruction,” I become much more open to the possibility that this could be the big one.
Widespread over-indebtedness + malign deflation + failure of reflation efforts = Depression.
Hmmm.
The 1933 article is here and is well worth reading:
http://www.freerepublic.com/focus/f-chat/2135558/posts
It’s beside the point, but I feel compelled to mention that FDR was also one of the greatest of Iosif Stalin’s American admirers.
Any attempt to spend, tax, create government sponsored jobs, businesses incentives will only make it worse. The one thing that will work is something leftist retards are incapable of doing.
Cut government spending, cut taxes, shrink government and reduce the national debt.
There's only one area where government needs to spend, and that is upgrading the military, replacing old equipment, prepare for war. that will provide just enough seed for growth in the steel and manufacturing sector that will restore confidence and get the economy moving again.
That's because the a-hole backed Barack Obama and now knows he screwed up royally.
Well, my understanding is that excessive money supply growth during “booms” such as the dot-com boom and the housing boom is what has destabilized the economy under Greenspan. Pre-Greenspan, it’s a different story.
I also disagree that the credit market has frozen. A person with good credit can still get a loan for a car, house, or credit card. These companies *do* want to make money after all.
But I do agree that the economy isn’t “functioning normally,” but then I believe that ever since the founding of the Federal Reserve the economy hasn’t really been functioning like a textbook model. FDR’s massive, un-Constitutional expansion of Federal government powers did far more to socialize this country than Obama is likely to do, and most of those idiotic programs are still in place.
When 13 of the 30 DJIA companies are trading at historic lows, I can see why you think that, too.
Keynes seems to be quite good at diagnosis and atrocious at therapy. I must read his book someday.
I don’t think its cyclical either—it marks a turning point in our civilization. We have reached the point where most people are hopelessly overloaded with debt. Another stimulus package (or two or three) will not change this—it will just be like expecting the heroin adict to straight out by giving him another fix. The powers that be have been pushing homes, cars, gadgets, and debt for the last 48 years—the last 25 of these we’ve had to borrow as a country to maintain our lifestyle.
The simple fact is we are bankrupt now and are liable for many times more than what we currently owe. We can guarantee all we want—the only way we can pay it is by printing money and triggering hyperinflation. Our leaders don’t want to come to grips with this, as it would require real sacrific & lowered expectations from the entitlement class. So they will continue the guarantees, bailouts, and stimulus packages until our economic system (and nation) literally disintegrates.
I see straight down until at least the end of next year and then at least 10 years before any world wide recovery.
“Even the depression had an ending. This will be over in two to three years.”
The depression lasted 12 years!
The current one I predict will last at least 10 yeats.
“You are trying to put WW II with the depression?”
Absolutely, FDR negotiated the attack on Pearl to get us into the war and end the depression.
It depends on the culture; we will need to change big time to pull out of this one. For instance, in the Depression there was no mass stupefaction via TV, and the Christian churches were still community bulwarks in addition to houses of worship. Nowadays it’s very different.
When adjusted for inflation, almost ALL ARE.....
Well not really. It was the liberation of Europe and the pacific rim Asian countries from under the Nazi's and Japanese imperial empire that brought the world, and America out of the depression. It was post war economy that really began to improve.
All the rebuilding and expansionism, liberated trade not only in Europe but Pacific rim countries is what drove recovery. During the war, we just racked up debt, and although there was work manufacturing for the war effort, the times were really tight. No rubber, steel shortages, no fuel. Things were really tuff during the war.
what is flawed?
Are you serious?
First,
obama has to do nothing of the sort and
second,
mentioning o with Thomas Jefferson is a stretch of monumental proportions indeed.
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