Skip to comments.The Economy Is Bad, but 1982 Was Worse
Posted on 01/22/2009 3:09:01 AM PST by expat_panama
You often hear that we are now living through the worst recession since the early 1980s, and the comparison is not wrong. But its ultimately unsatisfying, because it is a little too vague to be useful.
Is the economy only a little worse than it was in the last couple recessions, as some have said, and still a long way from the dark days of 1982? Or are we instead on our way toward something that may even approach the severity of the Great Depression?
The ranks of unemployed and underemployed, controlling for the size of the population, were much larger in 1982 than today.
The recession of the early 1980s doesnt have a catchy name, and almost half of Americans are too young to have any real memory of it. But it was terrible qualitatively different from the mild recessions of 1990-91 and 2001. The first big blow to the economy was the 1979 revolution in, which sent oil prices skyrocketing. The bigger blow was a series of sharp interest-rate increases by the Federal Reserve, meant to snap inflation. Home sales plummeted. At their worst, they were 30 percent lower than they are even now (again, adjusted for population size). The industrial Midwest was hardest hit, and the term Rust Belt became ubiquitous. Many families fled south and west, helping to create the modern Sun Belt.
Nationwide, the unemployment rate rose above 10 percent in 1982, compared with 7.2 percent last month. But that rate has a couple of basic flaws, as Ive discussed in previous columns. It counts people who have been forced to work part time, even though they want to work full time, as fully employed.
(Excerpt) Read more at nytimes.com ...
Where's my coffee...
In 1982, there also wasn’t a socialist idiot in the White House.
I remember the job market of 1982 very well. I graduated from college in 1982 and there were no jobs. The jobs that were available were very low paying even in 1982 dollars. During college I worked part-time at a bank and remember helping people fill out applications for a 13% car loan. Things do need to be put into some perspective.
Don’t get me wrong, the job market right now is scary. But I think the NY Times painted a gloomier picture to get the One elected and slowly (maybe not so slowly) they’ll be reporting that things are suddenly better and The One is the reason.
--the idea being that we're still doomed? Not really; Mr. O may be bad but saying he'll destroy America is like saying SUV's will destroy the planet. Mrs. B.S. Roberts called right in post 5, by pointing out that "scary" isn't "doomed", and that when we leave the slump the O worship will stretch recovery talk all out of proportion.
I was real lucky. I was among the last persons to qualify for full Veterans Benefits under the old GI Bill. My company in Navy Basic Training was last in a group to get it. I used that to survive. I went back to school at a tuition free state Voc/Tech and worked on minimum wage contract for the VA at a National Cemetery mowing grass and digging graves with a pick and shovel.
But a jew hating socialist moron had just left...a big mess.
I was just sitting here thinking of posting something very, very different than what you just posted. I graduated high-school in ‘81 and got married and between us we worked 4 jobs to make ends meet. Within 5 years I was promoted through cashier, sales, assistant manager, manager, to district manager of 15 locations. Hubby ended up going to a technical school for drafting. We went from rent to a nice condo in a beautiful neighborhood. I recall hearing about a recession, but we never really felt it.
Wonder what shape the banks were in in 82, since they are only focusing on unemployment. As I understand it, in this situation, the unemployment is being caused by banks drying up.
The real difference will be the aftermath. With Reagan we worked our way out of it. With Obama’s policies we may never get out of it.
If a “big stimulus package” is the correct approach to a declining economy then logically it would iprove any economy and should be a permanent feature of government. The laws of economics are not a sometime thing. Either they are laws-true statements of how things work- or they are not. If the government can “fix” things by government action then there is no excuse for the government to permit any facet of the economy to function without careful planning and total control. If government direction is economically beneficial then we are bing foolish and immoral to permit any freedom in the market at all. But back in the real world, compare this economy with every command economy that has ever been.
I lived through the 80’s, it was not as bad, and no the banking system was not on the verge of collapse. Back then, there were regulations in place...the banks acted more responsibly.
Also, the banks were not leveraged 60 to 1.
“Wonder what shape the banks were in in 82, since they are only focusing on unemployment.”
They were in good shape, they didn’t loan to flakes.
My construction company had very good times in te early 80s.
Personally 81 was the highest income year I’ve ever had.
I remember this. I remember because “going for a drive” was a treat to be held in much esteem and memory. Also, EVERYONE rode the school bus. Parents didn’t want to use up their gas on driving the kids to school when the bus came right up the street.
Horseradish. After inflation, the S&L bailout of the '80's was bigger than the current one.
Bad memories are easy to forget.
You would think. In '92 Clinton/Gore ran against "The worst economy since the Great Depression" and evry siggestion by Bush that things weren't so bad was trumpted by the Main Stream Media as a sign that Bush was dangerously out of touch with reality.
Until after the election. By the first week of December, '92, the MSM was all over how the economy was rapidly improving, and had been for months. They tried to call it the "Clinton Recovery" -- even though he was six weeks from taking office, and the numbers pre-dated the election.
Frankly, I'm surprised we haven't seen more "Happy days are here again" stories from the MSM. I guess they got Rham Emmanuel's memo about not wanting to waste a crisis.
Like others here, I too remember the recession of the early 80s. Up here the money simply dried up but interest rates on business loans were 22%. Consumer loans were capped at 18%. We bartered for all sorts of things. Thursdays I would walk up and down the Main Street of our town seeing if clients could pay a little on their bills. I still thank God for the local banker and those 90 day notes he’d extend for me when I needed it. They were business loans, I suppose, but we’d secure them with an old Buick I owned so they could be called consumer loans and save on the interest. Unemployment was through the roof. My wife calls them our “water stew and chicken liver days”. But we never fell behind on bills, never missed a payment (thanks in great measure to that banker)and came out fine in the end. What I am seeing now looks a bit like back then, but thus far no where near as bad.
Hey, America will prevail, and Obama won't. OK, neither of us can say for sure what the future holds, but the fact is America is not nearly as helpless as everyone says it is and Obama is not nearly as powerful as he says he is.
I missed out on the 82 recession. I was floating around on CVN68. I was busy stuffing my bank account and contributing to the 2 for 1 GI bill. It paid for most of my college when I got out in 84...
People still blindly swallow this "Clinton Recovery" talk even though Clinton's unemployment peaked higher than our current level. Truly amazing. Clinton's 7.3 unemployment was a "recovery", while GW's 7.2 level is the worse economy since Genghis Khan.
I was still a kid when the ‘82 recession rolled around, but I do remember it well. My dad was out of work for the better part of a year, and my mom just barely held on to her job.
We were luckier than a lot of folks - both my parents had always been frugal, and mom knew how to feed a big family on a shoestring budget. Still, there were some very lean times until the Reagan recovery took hold.
“Sun is shinin’ in the sky
there ain’t a cloud in sight
It’s stopped rainin’
ev’rybody’s out there playin’
And don’t you know
it’s a beautiful new day
As predictable as more taxes, the NYT get behind O big time!
Leave it to the NYT to start talking the economy up as soon as a Dem gets in the WH.
It won’t work this time. This crisis is nothing like the recession of 81-82 (yes, I lived through it also).
We are just in the beginning of this crisis...it is going to get much worse before it gets better. In 82, there was money available, only at a high interest rate. Inflation was the foe.
We are facing deflation and no money to loan today...a far worse threat. Obama hasn’t figured out yet that there is not enough government money to get us out of this...a severe contraction of the economy is unstopppable.
And don’t forget how Clinton got out just ahead of the next recession. Turns out he had been cooking the books and releasing downright fraudulent numbers to make sure Bush got the shaft.
One of the biggest to fall happened in fall 1982. Southern Industrial Banking Corp a S&L uninsured. People lost entire life savings. The other was United American Bank of Tennessee FDIC insured. The first ran by CH Butcher Jr the second by brother Jake Butcher. They cooked the books between the two institutes and dummy corporations. this was also the scandal Harold Ford Sr was linked to.
I'm very thankful the old GI Bill was in place and don't think it should have ever been changed. The vets today especially are not getting a fair deal. It didn't last forever. IIRC you had up 10 years from time of EAOS to claim benefits as far as schooling went.
......two East Tennessee brothers.....
You are much to kind. The Union County brothers were the head of the current democratic leadership and it was only by the grace of God that one was not governor. He hyped the fair, created a bubble of exuberant expectations.
I was dealing with a Florida vendor at the time and he wanted to come to the fair. He couldn’t find a hotel in Knoxville and got one in Pigeon Forge. Ha called me to ask “Where in the hell is Pigeon Forge Tennessee” :)
The S&L meltdown came later...after regulations were relaxed-the late 80’s and early 90’s. I was there, but if you were not...google is your friend.
No we're not. The only deflation we got is asset deflation and energy deflation. Consumer prices as a whole are still rising. OK, so nobody knows the future and you're saying it's bleak. Fine, but was there ever a time you've said it wasn't bleak?
Welcome, one and all, to the "communist states of obammica"!
Savings and Loan Associations
For decades, savings and loan associations, also known as S&L’s or thrifts, had been staples of the American economic landscape — solid if unexciting institutions whose major business was making mortgage loans within their community. But in what became known as the S&L crisis of the late 1980’s, hundreds of thrifts made a torrent of bad loans, ending in a government takeover and bailout that ultimately cost taxpayers over $120 billion.
In the 1960’s, the government capped the interest rates that thrifts could offer on their federally guaranteed accounts. When interest rates soared in the early 1980’s, the thrifts faced such difficulty in attracting money that the caps were removed. At the same time, some states relaxed the limits on the kinds of investments thrifts could make.
A new breed of aggressive S&L’s emerged, that attracted large pools of deposits by offering higher returns, and then used this cash to move into new lines of business, including junk bonds and real estate development.
Welcome, one and all, to the "communist states of obammica!"
Now...get to work....we have lots and lots of lazy people that you have to support!
The banks were a rock of stability in 1982 compared to today. Financial markets were “stone age” compared to today; “innovations” like CDOs didn’t exist. So while there was some turbulence due to foreclosures, the damage was localized and manageable. You didn’t have trillions in assets just disappearing into thin air. You also has Chrysler asking for a (small) bailout—you didn’t have a sizable percentage of the Fortune 500 asking for one.
When it went all volunteer, the pay got a little better. I have no complaints about the deal I got. I wasn't eligible for a Pell grant, because I saved too much. Should of blown it on fast cars and fast women..
Somehow "responsibly" followed by "meltdown" just doesn't make sense. It doesn't fit with post 27 either:
"..fall 1982. Southern Industrial Banking Corp a S&L uninsured. People lost entire life savings. The other was United American Bank of Tennessee FDIC insured. The first ran by CH Butcher Jr the second by brother Jake Butcher. They cooked the books between the two institutes and dummy corporations. this was also the scandal Harold Ford Sr was linked to."
LOL I have no liking for either. I'm in a short walking distance of Union County. But you are right about Jake especially. Had he not got caught? I don't think Clinton would have been POTUS. Someone was grooming him for politics. I never bought the rags to riches stort either. Pappy had a store or to and they opened an oil company. C&C Banks IIRC was the bank they first ran.
The Fair failed due to two major factors the first being location. That was the most stupid place in East Tennessee to have it. Right in the middle of a railroad track down in thwe bottom of a hollow in downtown Knoxville, and in a flood zone as well. The flood zone was a story in itself as they put the power panels to several Pavillions right on the bank of the creek. Several times me and the Electrician were in waders and had rubber gloves throwing the mains and getting out of there.
The second was pre-fair greed which led to bad pre-fair publicity. People were being fools and I don't just mean rich folk. People were converting carports into apartments they thought were going to rent for hundreds per night. The opening day with Reagan here was the largest crowd. The fair just to break even IIRC need about 50,000 visitors per day or 30,000 was a low number. Some days didn't see 15,000. 25,000 I think was about the average.
Then there was construction issues like the air conditioning system in the European Pavilion. Oh man that thing was botched worse than any job I have ever seen. I was the fairs only HVAC man directly employed by KIEE. The rest of the maintenance crew was generally on loan from UT. My job was to keep the chillers going. If one needed repair it was under warranty and I called the contractor. Not a bad job :>}.
I knew Butcher was going down in the summer of 1982. A guy I worked with wife worked at the bank auditors. He said it was fixing to come down hard. Of course all you had to do was look around Knoxville at empty Airstream campgrounds and the apartments in the FT Sanders area where greedy landlords tossed people to the streets to see what was coming down.
By the second week of the fair many motel rates had dropped to more normal pre-fair rates. that was when reality began to set in.
Back in the early 80’s, I got stuck with a very high interest home loan. Of course the house I had bought was not at a hyperinflated cost. The interest, while high, was tax deductable. I also remember netting over 10% interest on some longterm zero coupon bonds I had bought. I was able to refi some years later to a much lower interest rate.
The big difference I see today, is the shear numbers of people who are unbelievably upside down on their homes. I see far too many homes that are probabaly not going to go back up value to equal their mortgages any time soon.
Agricultural equipment manufacturing (Deere, Case, International-Harvester) took a big hit. We lost thousands of jobs. The people that lost the jobs did not stay. There was a mass exodus out of the Midwest.
They are actually being kind to the first Bush, which is when most of that unemployment spike took place.
Right, and kids never talked back to their parents and we had to walk 3 miles in the snow to school uphill both ways .. ..
If you think 1982 was bad, wait until 2011.
CDOs did exist - they were even around in 1873.
And BTW, folks, read up on the depression of 1873 because that’s where we’re likely headed.
If you can explain why the banking situation was just as bad back then, I’d like to hear it. As I recall, the biggest banks in the country weren’t in jepoardy of being nationalized back then, with private equity holders being sqeezed out.
Memories aren’t perfect, but sometimes things WERE better in the past.
No, the party line is that Clinton presided over the longest recovery, and the way they made it the longest is they began dating it to before Clinton took office.
Yes, I know it's crazy, but this is exactly what they're saying!
Post #12. Bingo. See my Tagline.
Probably, we will work our way out of this, one way or another, as long as the money-printing stays within reasonable bounds -- that will be the big task for the GOP and the reasonable dems.
The DBM is addicted to gloom and doom. They can’t help themselves. But they’ll always find a way to blame the crisis on the GOP or the “rich”.
When Bush was President, the buck stopped with him - everything that went wrong was his fault. For a while, he will still be the scapegoat, but when that’s no longer believable, someone/something else will get the blame. It will never be Obama, however.