Skip to comments.Let’s Be Honest: We’re in a Depression, Not a Recession, And There’s No End In Sight
Posted on 08/23/2011 6:44:28 AM PDT by SeekAndFind
If the notion that we are merely living through the aftereffects of a mere recession that ended in 2009 sounds somewhat ridiculous, thats because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions.
The American economy currently has both a short-term problem and a long-term problem. The short-term problem is that the economy is depressed; it is growing more slowly than the population, with the result that per capita income is declining. The high rate of un- and underemployment is a factor, but is itself the product of other factors, having mainly to do with the reluctance of over-indebted consumers (over-indebted in major part because of loss of equity in their houses, the major source of household wealth) to spend, the reluctance of the impaired banking industry to make risky loans, and the reluctance of businesses to invest and to hire, which is due in part to weak consumer spending and in part to profound uncertainty about the nations economic future.
The roots of this catastrophic situations lie primarily, I think, in the incompetent economic management of the Bush administration and the Federal Reserve. The persistence of the depression, however, is due in part at least to surprising failures of the Obama administrationpoor leadership, poor management, the sponsorship of incomprehensibly complex health care and financial regulation laws that have created widespread uncertainty that has discouraged consumption and investment, and the inability to explain the nature of the economys problems to the general public. These failures caused the stimulus enacted in 2009 to be botched in both in its design and its administration, resulting in discrediting of deficit spending as a response to depression.
(Excerpt) Read more at tnr.com ...
He asks, So what can be done now? Probably nothing.
I beg to differ.
Would declining per capita incomes, high personal indebtedness, a depressed economy, high uneployment, underutilized production capacity not lead to deflation and lower prices rather than the inflationary cycle that almost all the talking heads have been predicting?
This must be what liberals means when they say the recession is over.
The white president’s Great Depression is the black president’s minor economic downturn.
Mustn’t do anything to affect O’Bozo’s self esteem.
Go read the abjectly idiotic follow-up posts to that article and weep.
I, for one, would like to see today’s unemployment rate calculated AND REPORTED in the same manner it was during the Great Depression!
With all due respect, it's not their job to solve this problem. It's their job to stay the hell out of our way so we can solve our own problems. I apologize for the snarfiness.
I get your general meaning, though. As White House Ironing Secretary, Che Carny, said the other day, The White House doesn't create jobs.
If this is a depression, I can handle it. I don’t want it getting worse as I know some who need jobs.
We will remain in this depression until Perry takes office in 2013
Depression versus Recession
Recession is the falling down part. Depression is staying down. Normally, the recuperative powers of a market-oriented economy are sufficient that the falling-down part is immediately followed by a rising-back-up part. But, that’s not happening now and that didn’t happen during the 1930s.
According to the Great Obama, it’s because of earthquakes, “speed bumps,” and other bad luck events.
It’s like Global Warming. We continue to see CO2 building-up in the atmosphere, but global temperature has flattened out. At some point, you’d think, the scientists will look for another cause of global temperature. But, those who believe in AGW desperately cling to their Hockey Stick theory.
Similarly, Keynesian economics did not rescue the economy from an under-employment equilibrium during the ‘30s, and it’s not rescuing the economy now.
So, what constitutes the normal recuperative power of a market-oriented economy? At some point, investors perceive a profit-opportunity in hiring labor and other factors of production, because of their low cost and because of the low rate of interest, in anticipation of selling their production in the future at a profit.
Why isn’t this happening? Why is money staying on the sidelines? Why is cash building up in corporate treasuries, staying or moving off-shore, or being exchanged for gold and other such hedges against inflation and political risk?
Well, duh, could it have something to do with the socialists we have in Washington who attack profits every opportunity they get? Could it have something to do with the enormous fiscal mess of the government in Washington, that puts every dollar of private income and wealth at risk?
Do they really think people in the private sector to be so stupid as to not notice that their government is insolvent and could not ever make good on all the promises it has made to its bondholders, current and retired civil servants, the aged, the poor, the sick, green industries, farmers, etc., etc., not to mention those who own government-guaranteed mortgages, defined benefits plans and bank deposits?
Do they think we are as stupid as the people who vote Democrat?
The garment industry in NYC is dead and buried. The Automobile Industry in Detroit done.
Guess who is responsible? Me?
I do not think so.
It is just government cover-up to remove people from the U3 unemployment numbers because they have been out of work too long!"
Actually it is an unwillingness on the part of Obama and the Congress based on self-preservation. If they were to honestly explain to the American public why we are in the mess we are in and the decisions that have led us to this point, there would be an instantatneous revolt adn the lives of politicians wouldn't be worth diddly-squat.
In my mind, the path to recovery is clear: Cut personal and corporate income taxes across the board and cut gov't spending. Indeed, I'd love to see a flat tax of 17%, as suggested by Friedman years ago. (BTW, Poser and Friedman worked together at Chicago years ago.) In a nutshell, we can get along quite nicely with less gov't spending. The idea that the gov't knows how to spend my money better than I do is simply a position I don't agree with.
They will be amazed at our society's intent on ignoring all the signs of what was coming. And then they will realize why they are the first generation that will not live better and at a higher standard of living than the previous. Then they will be mad at what we did to their future.
What a piece of blame and propaganda...
Of course letting the Democrats off the hook who wouldn’t do a thing to prevent all this, and in fact voted against it’s prevention...
Extend that to all the manufacturing that has moved overseas, not to sell to the locals, who have no money, but just to get rid of their expensive employees - who happen to be their main customers - Oops!
It doesn't matter if Palin or Perry get in - things will get better to a degree, but until the factories come back, no amount of Green or Service jobs will bring us back up.
I've seen factories go from bustling to empty to razed to the ground to save property taxes.
Try rebuilding in this regulatory environment. I don't see any chance of that being rolled back. The Democrats implement Socialism, the Republicans only say that they can make it run more efficiently, and the downward spiral continues.
I concur. A weekly report on the total number of unemploymeny checks cut by state would tell the tale.
My advice when discussing it with liberals, go ahead and call it the "Obama depression," and chuckle when they try to tell you otherwise.
Wait a minute. I thought we were in a recovery.
Ah, well. If The Ministry Of Truth says we're in a Great Depression, then we're in a Great Depression.
Oh, by the way, what's the latest on The War In Eastasia? Or are we at War with Eastasia? Wait. I hear footsteps out in the hall. I'll check back later.
My father's inflation is gone forever!
Back in the 1970s Honda had one car in the US, it was the Honda 1000 [today's civic], Datsun has the 240z and all other cars were made here. Most people had a Zenith TV, made here. Most people had ATT phone, made here. Most consumer goods were made in America. And when prices started to rise, my dad could go in to his boss and demand more pay to offset his cost of living increase. As Archie Bunker sang ... "Those Were The Days!"
Today, higher priced goods because of a fed that recklessly prints money, but no wage pressures to accompany the higher priced goods. Why? Because there are 1.2 Billion Chinese and 1.1 Billion Indians who will produce anything you want for a nickle and a bowl of rice per day. That is massive deflation. Cars, TVs, phones all made someplace else.
Americans demanded higher paying jobs and low priced goods ... can't have both.
Low priced goods come from low wages. Our demand for low priced goods caused manufacturing to seek low wages. That is where are jobs went! That is why you can have deflation in some aspects of our life and inflation in other aspects of our life.
well said econjack, amazing that a guy who worked next to Friedman can be so far away.
How true is it that if we calculated the unemployment rate the way they did in the 1930’s, we’d have similar unemployment figures like they did back then?
Normally, when demand drops (say, because people are not spending), but supply stays high, the prices should drop. So, I can see why you might expect deflation, but you also have to take into account the variable of the money supply. As long as the Fed keeps printing money and increasing the money supply, they can offset the lack of demand and stave off deflation. Basically, they are devaluing the currency, so that it takes more dollars to have the same purchasing power, meaning prices are pushed back up.
This is why, although the economists talk about inflationary and deflationary cycles, we never see any drop in prices in the long term, but only a steady, constant inflation. The Fed has been printing money since it was created, so they are artificially maintaining long-term inflation and effectively taxing the wealth of the country away under the radar.
You’re right that children will someday study our economic situation in school. However, unless leftists stop infesting the school system before then, the only thing they will take away from their study is: “Bush caused it, Obama tried to fix it, but the Tea Party held the economy hostage because they were terrorists”.
Measuring unemployment by the checks going out is probably worse than the current method. A lot of people get denied and never get unemployment, and then you have it expiring anyways for people who are still unemployed. Also, it would totally exclude college and high school graduates who are just coming on to the job market and unable to find employment.
Hey, how about this being an “Electronic Depression” imagine if all the people who are not working had to stand in line for their unemployment checks and food stamps. By going electronic the government has rid itself of the visual. Out of sight, out of mind!
& where did all the homeless go now that a dem is president?
For all the inquiring minds since I don’t post very often .. I’m a beekeeper not a stoner
I don't know about how unemployment was calculated back in the 30's, but if you calculate it back the way it was in the early 90's you're getting pretty darn close to 30's unemployment rates. See the blue line below.
Alternate Unemployment Charts The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers. The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
According to Bear and Stearns ours was supposed to have surpassed our legit economy by 2010. Never read a follow up.
I’m not sure. I’d be surprised to find that the underground employment surpassed legitimate employment, though, even factoring in the level of illegal alien employment, but that’s JMO, nothing factual to base it on.
Youre going to have a serious problem with that contention.
No true Christian could possibly vote for Perry or anyone else who cozies up with Muslims. Heres just one quote from Perry that will illustrate.
It is a great honor to be in the presence of the Imam of 16 million Muslims around the world, a global humanitarian leader, a man of peace with a pluralistic vision for people around the world, His Highness, the Aga Khan, the 49th Hereditary Imam of the Shia Imami Ismaili Muslims. Your Highness, on behalf of 23 million Texans, and over 600,000 thousand Muslims living in Texas, I extend our heartfelt appreciation for your 50 years of great international leadership. We are delighted to welcome you to the Lone Star State and participate in the celebration of your Golden Jubilee. I am also grateful to the many federal, state and local leaders in attendance tonight. By their presence, these special guests convey the profound respect that exists in the Western World for His Highness work and leadership.
Now here is what scripture says about someone who gives credence to someone who preaches another gospel.
But though we, or an angel from heaven, preach any other gospel unto you than that which we have preached unto you, let him be accursed. As we said before, so say I now again, If any man preach any other gospel unto you than that ye have received, let him be accursed. Galatians 1:8-9
2 John 1:9 Whosoever transgresseth, and abideth not in the doctrine of Christ, hath not God. He that abideth in the doctrine of Christ, he hath both the Father and the Son. 10 If there come any unto you, and bring not this doctrine, receive him not into your house, neither bid him God speed: 11 For he that biddeth him God speed is partaker of his evil deeds.
Notice the partaker of his evil deeds? Perry has put himself in a very dangerous position. If he is partaker then I would propose that anyone who gives him the same deference is also a partaker. I will not support Perry for that and other reasons. I would suggest that anyone who professes Jesus as savior be very careful about supporting anyone who gives Muslims the type of support that Perry does.
The unemployment number should be calculated from those that: have applied for UIC, have fallen off UIC because of limits, are on food stamps, section 8, EBT, AFDC, WICs, SCHIP, EITC, AEITC, etc.... These people do not work historically, are unemployed, or underemployed. Regardless of the definition, they are drain on society’s resources with no value added. We’d see that this new calculation comes to over 50% of us.
That's a nice bumper sticker for the dumbed down masses, but we need someone like a Reagan as POTUS to make that happen - and I repeat: none of our lightweights are up to the task.
Add a third way: inflation. Which decreasing consumer spending ability the same as increased taxes.
Zer0 needs to be sent to a re-education camp.