Recession to be longer than usual: UMich (It's now official - and it's bad)

[UpInArms]

Source: Reuters

NEW YORK (Reuters) - The U.S. economy has entered a recession that will be more painful and drawn out than the usual downturn, the director of the Reuters/University of Michigan consumer sentiment survey said on Friday.

Inflation pressures will linger despite the retrenchment in consumer spending, complicating the task of policy-makers, the University's Richard Curtin said in a report, citing data from industry group The Conference Board.

"This is no ordinary recession," he said. "The aftereffects will last much longer than the typical downturn."

He said the Conference Board's expectations index is a strong predictor of economic contractions, and that it is currently flashing red.

<snip>

The new report adds that a rising wealth gap will, even more than usual, lead to disproportionate pain for middle- and lower-income Americans.

Read more: http://www.reuters.com/article/bondsNews/idUSN0826726720080208?sp=true

[onehandle]

1. Four More Years! Four More Years! Four More Years! nt

[WillParkinson]

3. Oh, no...you forget

It's not the Bush administration fault. It's the previous president. Always. Unless it's a Republican. Then it skips a cycle.

[no_hypocrisy]

4. And it's going to be the next (democratic) president's headache how to

navigate out of the recession created during a prior republican administration.

[superconnected]

64. you for got to add - "again".

[dmallind]

5. Or unless it's Clinton according to DU

Since many of them are blaming Bill for this.

[fenriswolf]

9. oh thats right

nafta isn't the clintons fault. The program that laid the foundation for massive outsourcing. stripping away tariffs so that the government doesnt get due ammount for goods imported in. Couse the clintons don't have a share of the blame.

[dmallind]

12. Well "The Clintons" now have even less to do with it

But don't you think it's kind of funny that for years and years after NAFTA but with Clinton (sing, not pl) the new jobs kept piling up and up - 23 million of them. And the median pay went up in real terms (not nominal!) 25% in his tenure - the vast majority of it under NAFTA? And that all that started going pear shaped only after he left office?

I mean what with all the massive outsourcing (NAFTA of course does not and did not include the usual boogeymen so loathed by economic isolationsists - China and India) you'd think we'd have lost jobs. With all the new jobs being horribly low paying service sector drones instead of good solid factory jobs you'd have thought the median income would have gone down. And of course that would have led to more people in poverty and higher unemployment - all the things that - hey wait a minute - didn't happen under "the Clintons" at all.

[ozone_man]

23. Clinton saw the NAS crash from 5,000 to 1,100.

That wasn't Bush. The economy was collapsing already while Clinton was in office and NAFTA had a lot to do with it. When the wealth is concentrated in the hands of the few, the consumer has no more to spend. The GNP collapses as a result. The good old Clinton days were an illusion, just like the internet bubble.

[dmallind]

31. So a focused group of stocks is the only thing you could come up with

Note by the way that Clinton also saw the NASDAQ skyrocket first. GNP most certainly did NOT collapse - we had solid growth in all but one quarter in his tenure, and the very minor and transitory exception WAS the infamous "bubble" that is now used as the "excuse" for all the good data that came out of that time. The bubble was a fairly minor thing of interest to IT professionals and NASDAQ speculators and not much else - its impact caused about a 0.2% GDP drop in one quarter which was already reversed under Clinton budgest and policies before Bush screwed it up again.

The "illusion" managed to lift 7 million real people above the poverty line, generate 23 million real new jobs (incidentally that's ten TIMES the maximum level of total IT employment so the predictable "it was the tech bubble" excuse falls a bit short), generate a very real budget surplus, and see median incomes go from $20000 to $25000 in real normalized inflation adjusted dollars, and see confidenec in the US economy both here and abroad soar to record levels.

Revisionist spin all you like but Clinton's era is by far the best economy in the lifetime of anyone still in the workforce, and saw real standard of living increase beyond ANY other era.

[papau]

40. 22 million jobs- poor and middle class incomes (incl black) after tax incomes rising - nah- we need

Obama

[ozone_man]

41. It was irrational exhuberance.

The stock market bubble was fueled by margin buying. When it collapsed, the bubble moved to real estate. The real estate bubble led back to the stock market reaching an all time high in 2007. Now real estate and the stock market, and the economy are collapsing. It all started under Clinton though. Bubble economics. Bush just took the deflating bubble he was stuck with and reinflated it, making it far worse. You may remember when he was about to take office saying that the economy was in bad shape and Clinton saying that it was fine. Bush was right of course. The economy wasn't fine at all. It was sick, heading into recession.

So Bush extended the Clinton illusion by creating a war economy, which is collapsing finally. We're in debt up to our eyeballs, personally and nationally, but Clinton started the job outsourcing that led to our present situation. He renewed Alan Greenspan's tenure at the FED which created the equity bubble.

The recession that Clinton left office with never really left, it's just that with all the infusion of cheap credit, it appeared to have lifted, but it was just an illusion. The illusion is ending now.

[ryanmuegge]

82. Very solid factual analysis. Thank you.

[cosmicdot]

70. he should have vetoed repeal of the Banking Act of 1933

OKA the Glass-Steagall Act, a New Deal reform ... if it was over-ridden, so be it ... at least go on record of trying to save needed reform that the Democratic Party helped to enact ... not sign the repeal ...

repealing Glass-Steagall is a likely contributor to the subprime meltdown
http://en.wikipedia.org/wiki/2007_subprime_mortgage_financial_crisis


~snip~


Hedge funds, private equity companies, and the sub-prime mortgage industry have two big things in common. First, each represents financial middlemen unproductively extracting wealth from the real economy. Second, each exploits loopholes in what remains of financial regulation.

The Roosevelt scheme of financial regulation was built around two principles -- disclosure and outright prohibition of inherent conflicts of interest. All publicly listed and traded companies were required to disclose to the Securities and Exchange Commission and to the public all financial information deemed "material" to investor decisions. The New Deal also prohibited stock trading based on insider information, and it created structural barriers against the kinds of temptations that ruined the economy in the 1920s. The most notable of these was the 1933 Glass-Steagall Act, which prohibited the same financial company from being both a commercial bank and an investment bank.

The Glass-Steagall wall was devised to prevent a repeat of the 1920s' scams, in which banks made speculative investments, turned the debts into securities, and sold them off to unsuspecting investors with the blessing of the bank. With Glass-Steagall, commercial banks were tightly supervised and given access to federal deposit insurance, to keep savings secure and prevent runs on banks. Investment banks, meanwhile, were not government-guaranteed and were free to do more speculative transactions for consenting adult customers. But Roosevelt's newly created SEC subjected securities markets to much tighter structures against self-dealing and insider conflicts of interest.

~snip~

If you fast forward to 2000, much of this protective apparatus has been repealed. Regulators who didn't believe in regulation and a compliant Congress have allowed financial engineers to evade what remains. In the 1980s, regulators began allowing exceptions to Glass-Steagall. In 1999, Congress finally repealed it outright, permitting financial supermarkets like Citigroup to operate any kind of financial business they desired, and profit from multiple conflicts of interest. The scandals that pumped up the dot-com bubble of the late 1990s, as well as the most flagrant cases like Enron, and the crash that followed, were the result of the SEC and the bank regulators ceasing to police conflicts of interest. In the scandals of the 1990s, corporate CEOs, their accountants, and stock analysts working for their bankers, all conspired to puff up corporate balance sheets and pump up stock prices on which executive bonuses depended.

~snip~

http://www.prospect.org/cs/articles?article=the_bubble_economy

[Just-plain-Kathy]

58. Yeah, and if get the Guest Worker Program, it will be like our service jobs were out sourced.

[AdHocSolver]

74. The economic boom of the 1990's was coincidental with Clinton's presidency. He did not cause it.

The large number of jobs was due to the computer boom of the 1990's. Everything was becoming computerized, so a lot of engineering and programming jobs were generated. I know because I was part of it. The jobs of the computer "boom" also generated the tax surpluses of the late 1990's. More people working meant more income tax revenue. Clinton didn't have anything to do with it.

The computer job market reached a peak in 1999 because of the "year 2000" scare, in which it was believed that the change over would cause a lot of programs to fail. There was a lot of hype about computer systems collapsing that many software companies cashed in on. However, when the "worst scenario" didn't happen, many businesses became skeptical about the computer industry and started downsizing on IT staff, and looking for cheap foreign computer people, such as in India.

At the same time, businesses took advantage of low interest rates promoted by the Fed to expand, so more jobs were created here in the states, at least, initially. However, the expansion here was only a prelude to building factories in China and sending production and jobs over there. For example, I was modifying software for a manufacturing company that expanded locally, but they had brought engineers from China who were being trained to operate a factory in China that they were going to build there.

Clinton's pushing NAFTA and open trade with China, among other policies, paved the way for the massive increase in overseas outsourcing that began in the late 1990's.

Clinton's policies did not cause the economic "boom" of the late 1990's. In fact, they laid the groundwork for the massive offshoring of jobs. The tax revenue surpluses were, in turn, caused by the temporary upswing in jobs. They were both coincidental to Clinton's tenure, not caused by it.

[Buns_of_Fire]

77. A word on "worst scenarios" in regards to Y2K (an aside)...

<rant>

You mentioned that when the "worst scenario" didn't happen, many businesses became skeptical about the computer industry and started downsizing and looking for cheap labor elsewhere. You know, it's almost like the Worst Scenario almost HAD to happen in their little minds to justify the money they spent to PREVENT it from happening. Strange days.

It has intrigued me that the fact that the worst scenario didn't happen is because there were lots of people (yes, I was one of them) working their butts off to make sure it didn't. Mainframe (mainframe? what's that?) financial software was in pretty pitiful shape, and considering that that "the business of America is business," there would have been some hurtin' turkeys in the mahogany-paneled offices when monetary amounts started being calculated incorrectly. (And, believe me, I saw plenty of programs that would have gone off the deep end when things switched over!)

Be it because some designers had the foresight to allow for those extra two digits, or because of those who burnt lots of midnight oil figuring out ways to trick the computers into believing that 2000 wasn't really 1900 after all, it all worked out and things slid relatively smoothly into the 21st century.

Anyway, it would seem to most normal people that we were relatively successful in our efforts. Yeah, big whoop. As no good deed goes unpunished, we who worked almost exclusively on remediation in those last few years were rewarded by having our jobs dry up and blow away and our feeble, burnt-out asses becoming unemployable.

</rant>

Actually, I still maintain that the real "Y2K Disaster" was when Bunnypants was awarded the Oval Office.

[TankLV]

87. Just because you repeat the repuke spew, does not make it true...

Peace Hope Prosperity as far as the eyes could see - that's Clinton's legacy that BUSH* trashed ALL BY HIMSELF!

bush* had the ONLY presidency that LOST MORE JOBS THAN IT CREATED - we still have yet to get back to SQUARE ONE when Clinton left office...

[eib1]

44. They may have laid the foundation,

but they didn't actually disinvest from America wholesale.
The people they listened to, the ones that are funding HRC's campaign, are the ones who betrayed this country.
I have one solution that can be stated in one word: tariff.
A tariff on all goods regardless of whether they're made under American names or subsidiaries of American corporations.

[asthmaticeog]

39. Um, NAFTA and MFT status for China DID play a role in this. nt

[Mountainman]

21. This will get blamed on the next pres. like Carter got blamed.

[kirby]

29. Sure will! n/t

[Prophet 451]

22. Or the next president

If this thing drags into next year (which it probably will), they'll blame the incoming (presumably Dem) president.

[Chisox08]

36. Everybody Knows its Bill Clinton's Fault.

You know starting a war while cutting taxes.
Giving tax cuts to the rich.
Allowing more of our jobs to go over seas.
Destroying the middle class.
All of those things are Clinton's fault.



Oh wait that was Bush's fault. My Bad

[Just-plain-Kathy]

59. What's sad is that it was Bush's fault, yet NONE of our '08 candidates hold him accountable.

...Sure they say "bad Bush", I just wish they'd all say JAIL BUSH!

[louis-t]

43. And February, which has 28.

x(

[Winterblues]

8. We Don't Care....We Don't Care....We Don't Care..

USA....USA....USA

[winter999]

2. These guys are like weathermen. More wrong than right.

The one (and only) thing I got out of college was that you can't predict chaotic systems... weather, economics, hunter/prey population systems.

[Mithreal]

17. When it's raining and the weatherman says it is, you gonna disagree?

But I suppose that wouldn't be a prediction.

[Mountainman]

25. Well don't forget to come back in a few months and tell us that again.

[Oak2004]

52. You *can* predict the weather (or other chaotic systems)

You need to do it in terms of probabilities, rather than certainties. Weather prediction is, in fact, quite good these days. In fact the most accurate scientific theory to date deals in the statistical probabilities of subatomic particles (which it turns out are not all that well behaved, being neither here nor there, popping in and out of existence, tunneling through barriers, etc.). Yet particles are predictable enough to allow us to communicate by sending a bunch of subatomic particles at each other.

Economic predictions are not so good because they're not always using the right assumptions and data. Unlike meteorology, economics is entangled with power and there's a great deal of pressure to produce the results desired by powerful people. But economics is good enough to spot near-obvious things, even when they are undesirable, like our current slow-motion economic collapse.

[Alexander]

6. What is it about peace and prosperity that Republicans don't like?

Oh yeah, I forgot about the endless greed there for a second. Never mind. :eyes:

[DavidDvorkin]

7. Uppity workers

[NewYorkerfromMass]

10. Good thing Bush concentrated the wealth!

It only took him 6 years too! (tax cuts effective 2002)
Now, they just have to figure out how to send out all those checks and rebates to all the sheep they fleeced!

[Gman]

11. So how will they blame the Clenis?

Actually, they'll probably try to blame Pelosi and Reid but people aren't that stupid.

[debbierlus]

14. They haven't been in long enough to blame.

Not that people wouldn't be stupid enough to fall for such lies, it is just they would need a little more time. The repukes will get the blame this time.

[Gman]

20. They can't avoid blame this time.

[Cary]

16. They don't need a how.

They just do it.

[xxqqqzme]

19. They are already out there w/ the emails

Got one from my RW mother just yesterday saying Pelosi is going to tax everyone so SHE can help the poor illegal immigrants.

I swear she is on limpballs & o'liely's blast email list.

[debbierlus]

13. Then it is a DEPRESSION - which is basically a long term really bad recession

Well everyone, we can all tell our grandchildren, (if the earth is still here from global warming)...

[Up2Late]

37. You are exactly right, except that "they" have "Re-Branded" "Depressions" as "Recessions"

As I heard it said, It's the same thing, but "recession" sounds less negative than does depression.

Or if I was a "Vally Girl" I'd say, "Depression just sound SO Depressing.":crazy: :silly:

[TalkingDog]

78. The terms are only meant to differeniate severity and length.

But I will agree that the psychological effect of the word was probably taken into account. People tend to panic easily when threatened with similar traumas, real or imagined.

As a government, you wouldn't want people panicking every time there was a brief contraction in the business cycle.



My Favorite Master Artist: Karen Parker GhostWoman Studios

[AnneD]

15. Are these the same Numbnuts...

that have been giving us those bogus Consumer Sentiment numbers, the ones that say the consumers are so happy.:eyes:

[Blaze Diem]

18. Which sector's food will Bush take away next in his stupid efforts to help hte economy?

Doesn't think the elderly need to eat, unless their wealthy of course, lets see, has he cut the WIC Program yet?
Can't think of anything left for him to take from the poor.

I fucking hate what he has done to the American people.
He needs to be imprisoned for his crimes and made to survive off the same thing all prisoners eat.
Bush caused this disparaty of wealth, and he dares deny food to the hungry.
What's his plan for the increasing # of poor, homeless and hungry in our country,now that he's destroyed our economy?
This is about to reach critical mass, and no word from Bush on how to care for our citizens in the aftermath of his greed-driven psycotic episode of the last 7 years.

Maybe when the hungry of this country begin to die of starvation, Bush will enlist Blackwater to gather the bodies and haul them off to crematories, or just gas them enmasse before they starve to death and possibility taint the health and well-being of Bush's wealthy "base".
Fuck him.

[paparush]

24. Fearless Leader Says "Foundation is Strong"

Moose and Squirrel say - "Sure its strong..you top .01% are standing on the backs of millions of poor people."

[Angela Shelley]

27. Well stated, paparush!

[FirstLight]

26. First, let's just admit it isn't surprising...

If we already see that things are going to hell in a handbasket in no uncertain terms, then the economists are probably a bit slow ...

Second- as an Edwardian, I am amused by the use of the subheading "Two Americas" at least the term has caught on!
BUT

What good is saving, and how well off will the "rich" really be in a few years, when there IS NO MONEY SYSTEM, (because it collapsed as world economies are hit by climate disaster and port floods) and yes, I said a FEW years, the economists are sugarcoating this even, and so are the climatologists...to avoid PANIC. Wake up folks, the ride on our little planet is about to get really bumpy. And I wonder how much we would have to slide towards "depression" before GW declares martial law and cancels elections...(sound fatalistic? I'm just saying, it may be better to see that there are bigger forces at work here, like mother nature and the effects of this on our world economy, as well as years at war depleting our surplus and our resources..not an easy time for us to grab the bull (no pun intended!lol) by the horns and turn things around!):scared:


BTW - this is my first rec!

[greyghost]

32. Damn straight...

the ride is going to be bumpy indeed.

It's definitely headed toward a depression. However, Bush Co is already trying to cover his tracks as he exits.

Welcome to DU.

[UpInArms]

65. Welcome to DU, Journalgrrl!

and thanks for the recommend -

you made me stop and focus on what was niggling around in my head all afternoon about this article - it was that line about saving and not spending -

well, I just don't think that folks are saving - I just think that their spending is no so fully done that there is nothing else - gas, food, keeping the heat on at home, the utilities are soaring!

There is no savings and there is no more discretionary money to be spent.

(edited 'cuz I kant spull)

[Nickster]

28. Only one cure for that! More Tax Cuts for Big Business!!! /sarcasm

[katty]

30. no surprise - and now bush gets to duck out and 'retire'

[GOPBasher]

33. I think this is it, the peak oil depression. What do you all think?

I don't think we're coming out of this one ... ever.

[IronLionZion]

34. See what happens as soon as the Dems took Congress?

That's what Repubs will say. They'll blame it on us like it's instant cause and effect or something, completely ignoring the sub-prime lending crisis and Americans' tendency to drown in enormous debt.

At some point we have to admit that we are a fiscally irresponsible nation. Fucking Iraq war. We give so many billions of our tax dollars to these contractors and then Halliburton takes it to Dubai. assholes

[Broadslidin]

35. Being curious, I recently purchased the 1930 Jack Hylton Orchestra melody, Happy Days are Here Again

Ah,
those pats upon my head by a Woman
prove how advanced our specie has become....!!

[whistle]

38. For our democratic candidate whoever that will be, it now must be "it's the economy stupid"

...no republican president and for that matter republicans in congress know how to fix the mess they and their asinine economic big business policies have created. We need an FDR style recovery not just for America but for the entire world.

[Ghost Dog]

75. I'd expect Barack Obama's team

to soon be in a position to work on that.

[Lydia Leftcoast]

42. To me it feels as if we're headed toward at least an early 1980s-type downturn

At that time, the official unemployment rate was higher, but we had fewer people in prison then, too.

Also, you're counted as employed if you work one hour per week. How many people have had their hours cut back?

[Donnachaidh]

62. this is worse

My evil half's company just let go 80 (yes, that figure is right) PER CENT of their workforce. Went from 30 stores to 6 in a matter of weeks. And everyone is still holding there breath for more cuts or possible closing of this 50+ year old company.

We've already PASSED the *80's style downturn* point.

[Lydia Leftcoast]

63. Perhaps it is worse--I know it's at least as bad

and that the unemployment figures don't include a lot of people who used to be included.

[Ghost Dog]

76. Clinton cooked the unemployment figures

cf. http://www.shadowstats.com/

[Lydia Leftcoast]

79. Fascinating stuff: it deserves its own thread

Where the household survey includes farm workers, the self-employed and workers in private homes, the payroll survey does not. The payroll survey counts jobs, making no adjustment for multiple jobholders. Yet, adjusting for all differences, the BLS never has been able to reconcile the two series within one million jobs...

Suggesting that the household survey is more accurate than the payroll survey, however, does not mean household survey accurately depicts unemployment. While its measures have definable statistical accuracy, the accuracy is related only to the underlying questions surveyed and to the universe of people surveyed.

The popularly followed unemployment rate was 5.5% in July 2004, seasonally adjusted. That is known as U-3, one of six unemployment rates published by the BLS. The broadest U-6 measure was 9.5%, including discouraged and marginally attached workers.

Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.

It explains why I knew so many middle-aged people who lost well-paying jobs and were scraping by with temping and part-time work during the supposed "prosperity" of the Clinton administration. When people talked about "the prosperity of the Clinton years," I always wondered, "Where?"

By the way, an added factor was the Reagan administration redefining "full employment" as 5% unemployment up from the previous 2%, which is what the economics textbook I studied out of in the 1970s said, and which Japan was able to maintain until the U.S. pressured it into adopting "international" (i.e. conservative American) business practices.

The Bush administration is far worse, but the Clinton administration looks like a golden age only if one doesn't remember the days of REAL full employment with only 2% unemployment and lots of living wage jobs.

[ooglymoogly]

45. Who could have seen this comming....Who would have guessed

Borrowing vast amounts of money from the Chinese to pay for an illegal war and pad the pockets of the military industrial while handing over vast sums of money from the treasury to the super connected, would have brought us to this? Who would have guessed that printing vast amounts of paper and flooding the market for banks to lend out at usurious interest rates would have brought us to this? Who would have guessed that sweeping all the loose change from the middle class and the poor who would have to spend it and giving it to the super rich and well connected to spend in Paris couture, gold diamonds and such could have brought us to this? Who indeed? A group of nefarious bankers and well connected corporations who see themselves as aristocrats and want a subservient poor population to slave for them and with a complicit * and co. that is who.

[Miss Chybil]

46. "...consumer sentiment survey..." nt

[KansDem]

47. This is why you don't put the loser in the White House!

The Supreme Court should have known better...

[jackster]

48. it just amazes me that anyone with half a brain has seen this coming

yet all the "experts" can't figure out what's REALLY going on!

[lovuian]

49. economics 101 You can't have 90% of a countrys assets owned

by a few

depression

for capitalism to work you need WAGES to buy

but this is Shock and Awe

I see anger building and building

[PassingFair]

88. I think you have confused CAPITALISM with COMMUNISM!

Comrade!

:sarcasm:

Sorry, but that is what I imagine hearing from
the JERKS around here if I floated that line
at a dinner party!

They have spent the last 8 years telling me that
unions ruined the manufacturing base of my state,
and that "Islamofascists" are gathering on our
borders....

:)

[On the Road]

50. It is True That the Stock Market Bubble of the 1920s

caused a depression when it crashed.

There have been many other bubbles of various kinds -- railroads, telegraphs, previous real estate spikes. None of the others have caused anything as serious as the Great Depression. The stock market crash of 2000, as serious as it was (the NASDAQ losing almost 80%) caused an unusualy mild depression.

It's entirely possible that a recession is starting. But even that has not been established yet. I have been around for over 50 years, and there has never been a year when somebody has not been predicting the economic end times.

[Viva_La_Revolution]

54. The depression started earlier than the crash...

In some countries the downturn started in 1928...
http://en.wikipedia.org/wiki/Great_Depression


Another explanation comes from the Austrian School of economics. Austrian theorists who wrote about the Depression include Hayek and Murray Rothbard, who wrote "America's Great Depression" in 1963. In their view, the key cause of the Depression was the expansion of the money supply in the 1920s that lead to an unsustainable credit driven boom. In their view, the Federal Reserve, which was created in 1913, shoulders much of the blame.

In fact, Hayek, writing for the Austrian Institute of Economic Research Report in February 1929 <11> predicted the economic downturn, stating that "the boom will collapse within the next few months."

Ludwig von Mises also expected this financial catastrophe, and is quoted as stating "A great crash is coming, and I don't want my name in any way connected with it." <12> when he turned down an important job at the Kreditanstalt Bank in early 1929.

One reason for the monetary inflation was to help Great Britain, which, in the 1920s, was struggling with its plans to return to the gold standard at pre-war (World War I) parity. Returning to the gold standard at this rate meant that the British economy was facing deflationary pressure.<13> According to Rothbard, the lack of price flexibility in Britain meant that unemployment shot up, and the American government was asked to help. The United States was receiving a net inflow of gold and inflated further in order to help Britain return to the gold standard. Montagu Norman, head of the Bank of England, had an especially good relationship with Benjamin Strong, the de facto head of the Federal Reserve. Norman pressured the heads of the central banks of France and Germany to inflate as well, but unlike Strong, they refused.<14> Rothbard says American inflation was meant to allow Britain to inflate as well, because under the gold standard, Britain could not inflate on its own.

In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and in capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a depression was inevitable.

[On the Road]

55. I Did Not Know About Britain and the Gold Standard

But is sounds reasonable that a period of stimulative economics followed by a major move to restrict would trigger a crash.

That is one way in which the current situation is not like the 1920s. Rightly or wrongly, the mood now is accomodative -- in interest rates, taxes, fiscal policy, and monetary policy. It is likely to cause inflation, but makes a depression much less likely.

[nightrain]

51. Thanks George for the f-up!

Dems can fix it though...

[sarcasmo]

53. Folks, it's called a Depression.

The word Depression won't be said until a Democratic candidate is in office for six years and then watch the Republican pounce.

[greyghost]

72. What's why it's wise to start saying it now because it's definitely...

headed that way.

We aren't anywhere near the end of the housing downturn, never mind the credit crisis. Fortunately they can't spin it anymore.

[BadgerKid]

56. Recessicans 1, Citizens 0. n/t

[louis-t]

57. Oh, thank God Mitt's not around anymore to say

Michigan is in a "one state recession".

[bluestdogest]

60. Thanks to the sub-intelligent, sub-prime borrowers and lenders,

we may indeed be in the midst of, or headed for a recession. However, we ain't "officially" there yet.

An "official" recession is defined by two quarters of negative growth. The US economy grew in the last quarter of '07 and the results for the first quarter of '08 are not in yet.

[Donnachaidh]

61. Now let's watch as the MSM spins this to make it the Democrats fault

GMA had Newt Gingrich on this morning. My gag reflex kicked in and I had to turn it off. But if he's doing the talkshow circuit you KNOW he and the other M-F*ckers are going to blame the Democratic Congress.

[blue4evah]

66. This really scares me

I hope this is just a two or three month mild recession.

[greyghost]

67. Sorry, but it's going to be YEARS. eom

[area51]

73. Years.

The trouble is, it's already been years; the depression started in '01.

[LynnTheDem]

68. DAMN the clenis!!!

He just doesn't quit! First he have us that huge surplus and expanding economy...then under gorge bush's very nose, he squandered it all and then some!

[roamer65]

69. Seriously, I would consider buying gold.

Helicopter Ben is going to flood the economy with billions, if not trillions of dollars worth of new money. He has no choice but to inflate.

http://www.shadowstats.com

Look over to the right hand side of ShadowStats and view the "Non-borrowed Bank Reserves" chart. We're in DEEP TROUBLE, folks.

[CountAllVotes]

84. at close to $1,000 an oz. I do not believe it is practical for most folks

unfortunately. :(

:dem:

[SlowDownFast]

86. Silver rides on gold's coat-tails.

$1000+ will be the psychological benchmark, and when J6P cannot afford gold @ those prices, he will turn to silver.

Many predict silver will outperform gold's ascent percentage-wise, when the smoke clears.

[AlienGirl]

89. That puts it around $95.00 for a tenth-ounce coin: the "bit at a time" plan

Every time you are up a hundred dollars, buy a tenth-ounce. Every time you are up twenty dollars, buy an ounce of silver. Many people will be able to do this at least once a month, sometimes more often. If you had started doing this when silver was $7.50 an ounce and gold was $550, back in 2003 or so, you'd have a nice little chunk by now. If you do this, and view that pile of metals as your absolute-disasterfund (for getting out of the country if things go terrible, or saving your home if you lose your job) you should have a little extra safety net.

Tucker

[workinclasszero]

71. It will take a dem president

eight years to clean up the mess that king george and his corrupt party have inflicted on America.

[Lydia Leftcoast]

80. A necessary but not a sufficient condition

It would take a Dem president who is bolder than either of the two front runners in outright repealing most of the Reagan, Bush, and YES, Bill Clinton economic measures.

I fear that both frontrunners are so beholden to corporate interests that they will be more like Tony Blair, who undid almost nothing that Margaret Thatcher instituted, than like FDR, who transformed this country.

[Owl]

81. I agree.

[sakabatou]

83. Joy

Thanks a lot, *. :eyes:

[libodem]

85. That's too bad

but not unexpected, we have a bonehead, for a President. Cheneybush, appears to believe a pyramid can stand on it's pointy end and be stable. What has taken the sting out of this for me is, I don't have much to lose. What, rather, delights me is that the unctuous, arrogant, Republican, neocon, Saturday program, radio investment aficionado, seems to be eating a little crow. God, bless his smarmy, inflated ego. It seems to have deflated a bit with the downturn. Oh, shove those tax cuts for the rich up yours, Mister, "there are more billionaires than ever" Radio Guy.