Are we heading for an depression...

[butterfly77]

or are we already in one and it hasn't been realized yet. When all of these budget cuts go into effect won't this effect all business and the buying power of all.

[MADem]

Sorry, dupe, I really need a new mouse!

[MADem]

1. Feels like it to me, either that, or a very severe recession...OR

that old bugaboo from decades past...STAGFLATION! Where's Jerry Ford, with his WIN (Whip Inflation NOW!) buttons?????

[TallahasseeGrannie]

2. I haven't noticed it in my pocketbook yet

but with all the rebuilding going on in the Gulf states and FL, I just don't know how that will affect things.

Right now this real estate bubble is still huge in my area and I personally got the best raise of my life this fall.

But the economy can nosedive in a matter of weeks. It remains to be seen.

[5X]

3. We are either there or flying headlong into one. eom

[sendero]

15. Is that a triband yagi?

Or just a 20m :)

[liberal N proud]

4. I have been asking this question for a year or more

The only reason you haven't seen large scale foreclosures on property is because the interest rate is artificial. I would suspect though with the new bankruptcy laws, that should change.

I say we are either headed for a collapse or it has happened already. Just no one has the guts to tell the chimperor that he doesn't have any clothes.

[applegrove]

5. Either that or your Rove WH will sell off tons more american

assets to "fluff" up the market for another year.

A mild depression is not bad. Really - it does not have to be as bad as a recession. The 1930s were bad because the depression rate was above 5%. If your rate of depression is 2% or less - it is okay. And with oil going up in price - there is no way that the USA could get into a huge depression. Too many people are making too much money.

Now - how you spread around that sacrifice and wealth - that matters.

[mzteris]

6. I've been depressed

since November of 2000.

:(

[butterfly77]

7. the numbers are phony ,,

and whatever happens after thanksgiving they will try to lie.

[Hypatia82]

8. Well seeing as the GNP hasn't shrunk...

there's historically low level unemployment and so on, we're nowhere near a depression. Part of what makes for a depression isn't slow or rather negative economic growth alone. You need a lot of other factors to come in. The great depression saw entire segments of the economy collapse, record deflation of currency and so on. A lot of what happened then, either as cause or effect, can't happen now. The loan pyramiding that was responsible for a lot of bank foreclosures is now illegal. Also since currency is both off the gold standard and exchange rates are now free floating, the currency pressures are gone. As for helping the economy, only one thing does it, people spending more money.

[progressive_realist]

13. Well, now that you mention it. . .

Real GDP (GNP is not used much by economists anymore) is nominal GDP adjusted by the purported rate of inflation. It is in the best interests of the federal government to have high GDP and low inflation. And the federal government compiles most of the commonly used indices of inflation.

According to Progressive Realist's First Law of Corruption: "The likelihood for a dishonest or unethical act to be performed is positively correlated to the level of potential benefit for the performing party." Meaning, of course, that it is a sure bet that the government is understating inflation and overstating real GDP.

Unemployment is running at 5.0%, considerably higher than the postwar low of 2.9% achieved in 1953, but much lower than the postwar high of 9.7% reached in 1982. More importantly, however, real wages have declined by about 12% since 1970. Debt is the only thing allowing spending to continue in this country.

Our manufacturing sector has, in fact, collapsed, and our financial sector is much closer to collapse than anyone wants to acknowledge. If one compares total bank reserves with total deposits, the banking system in the US is currently holding reserves equal to 0.77% of what it owes customers, a far cry from the 10% usually quoted in textbooks. The difference between the liquid assets banks have on hand and what they owe depositors is about $5.5 trillion. FDIC currently has about $50 billion accumulated in its insurance fund, less than one percent of the potential shortfall. So, yeah, a run on the banks could still happen, and could wipe out up to $5 trillion in personal wealth overnight.

As far as the value of the dollar, it is currently worth about 5% of what it was worth in 1913 and 20% of what it was worth in 1970, based on purchasing power. So now we have the opposite problem from the first depression -- our money is rapidly inflating to worthlessness. If any or all of the OPEC countries ever switch their petroleum sales from dollars to euros or some other currency, the US dollar will lose almost all of its foreign exchange value. That would send us spirally into another depression immediately.

Not to be too much of a pessimist, but I think Americans in general have Titanic syndrome -- thinking the US economy is too big and powerful to sink. It isn't. We're not there yet, but it's not as distant as people assume.

By the way, all of my stats are from the BLS, FDIC, and other government websites.

[sendero]

17. Gold hit $507 today..

.... lots of people think the dollar is about to bloat like a balloon :)

[sendero]

19. Make that $511..

... :)

[sendero]

23. Make that $522

... :)

[Quequeg]

9. Some people think our debt bubble will lead to a depression

This chart is updated as of the year 2002.



http://www.howestreet.com/story.php?ArticleId=1328 - June, 2005
"The Fed and the Bush Administration have been “successful” in delaying the next Great Depression by inducing Americans to continue borrowing to buy houses and cars and whatever junk they can convince us we need. They want us to keep spending even though it is leading America into national poverty. As such, our ability to service debt is far inferior to that of Americans during the early days of the 1930s’ depression. In fact, the chart above is quite out of date, because total debt is now $40 trillion (up 23.8%), while income (GDP) has grown by $388 billion, or only 3.6%! As such, the current ratio of debt to GDP is now more than 360%, compared to 265% in the early 1930's."

Quequeg: Also, we had a trade surplus in the Great Depression, whereas today we have a large trade deficit.

[screembloodymurder]

11. The currency devaluation may be just around the corner.

Is it just coincidence that our government plans to stop publishing the M3 figure in March?

[MazeRat7]

10. Technically speaking...no.

First we need at least two consecutive quarters of declining growth to qualify for a "recession". While growth has "slowed" in Q3... it is not negative. Q1 and Q2 were definitely positive. Bottom line, we are not currently in a "technical" recession. That being said...

Second, a depression is defined as an extended period of severe recession.

So, my answer is no, we are not headed for a depression based on current indicators.

MZr7

[area51]

12. I think we're already in a Depression.

There's so little job creation it's not funny. And if you're unlucky enough to lose your job, it can take 2 years or more to get another job. I think that's a pretty good indicator of a Depression.

[raccoon]

24. Sounds like one to me. One thing for sure,

the corporate media (Presstitutes) will NEVER use the "D" word.

[Conker]

14. It sounds like if we were to have a depression...

it would be far worse than the one we had before.

[Quequeg]

16. It takes $4 of debt to crank out $1 of GDP

Or something like that.

I don't totally understand it, but some critics think that when the housing bubble bursts and cheap credit disappears, then that's when things will get really interesting.

Already, we have no new job creation in tradeable goods/services for the last 5 years. Wages are falling at rate of 2% annually (after adjusting for inflation.) And the economy is booming according to GDP figures and corporate profits. What will the economy feel like when we have a serious recession?

www.StopGlobalism.com

[butterfly77]

26. Yes . because this generation are not used to not having...

[fasttense]

18. It is hard to tell

Here are the facts:

Before the great depression hit, "there was a large disparity in wealth distribution. According to a study done by the Brookings Institute, in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%."

Today, the top 1% controls anywhere between 60 to 30% of the nations wealth.

There was a large debt owed to the US by European countries following WWI.

Today we are no longer the lender nation but the borrower nation.

"From 1923-1929 the average output per worker increased 32% in manufacturing. During that same time average wages for manufacturing jobs increased only 8%. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62%."

Sound familiar? Corporate profits are way up yet the average income in the US has stayed the same for the past five years.

"Calvin Coolidge's administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income for the rich and inheritance taxes dramatically." (In the 1923 case Adkins v. Children's Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional)

Again, sound familiar? What can I say? Repukes believe in the trickle down theory. Of course if the trickle down theory ever really worked, than all those economies in the 1400s who had huge wealthy royals and lords would have just been booming.

Before the great depression, "three quarters of the U.S. population would spend essentially all of their yearly incomes to purchase consumer goods such as food, clothes, radios, and cars. These were the poor and middle class: families with incomes around, or usually less than, $2,500 a year. One obvious solution to the problem of the vast majority of the population not having enough money to satisfy all their needs was to let those who wanted goods buy products on credit. The concept of buying now and paying later caught on quickly. By the end of the 1920's 60% of cars and 80% of radios were bought on installment credit. Between 1925 and 1929 the total amount of outstanding installment credit more than doubled from $1.38 billion to around $3 billion. This strategy created artificial demand for products which people could not ordinarily afford."

Oh, oh so, familiar, the average American's saving rate is as low as it was during the depression. Does anyone really have any savings today? Yet consumers carry huge debts and bankruptcy laws have tightened like a noose around a convicts neck.

"In the 1920's the United States was trying "to be the world's banker, food producer, and manufacturer, but to buy as little as possible from the world in return." This attempt to have a constantly favorable trade balance could not succeed for long."

There was no trade balance in the 1920s. The United states sold but did not buy. Today we buy but do not sell. Can an imbalance continue even if it is a positive trend?

Then there was the heavy reliance on confidence to keep the market booming. "Prices had been drifting downward since September 3, 1929 but generally people where optimistic. Speculators continued to flock to the market, until Monday October 21st."

This is why the brush administration massages the economic numbers and perhaps fixes the market by buying futures. They have to keep confidence up in order to keep the economy going. The current economy is based on nothing, no savings, no manufacturing, no creation of better paying jobs. We don't produce, we consume. If people lose confidence they stop consuming.

But how long this will last is anyone's guess. It looks like the roaring twenties lasted about nine years.

http://www.gusmorino.com/pag3/greatdepression/
http://www.inequality.org/facts.html

[ArmHayseed]

20. I think

I overheard a similar question the other day while on the Eastbound Bullet train from New York to Le Havre.

“Big Daddy, are we about to have a depression?” Little Orphan Annie asked.

Big Daddy Warbucks thought for a moment and replied “Child, you know we can influence the business cycle though the control of monetary policy and our goal is to increase the wealth gap and to keep the working class under control, not to create depressions. Depressions are not good. The last time we had a depression we lost control of the White House and the Socialist took over and created jobs for the poor thereby freeing millions of indentured serfs and sharecroppers. The bastards set our agenda back decades. For this reason a depression must be avoided at all cost.

A mild recession is preferable every time. Maybe you noticed that when we raise the interest rates beyond a certain point a recession follows. Belonging to a higher class we naturally have much more money than the commoners and will scarcely notice the conditions the rabble are whining about. In a short time they will be strapped for grocery money we will be able to buy their assets for pennies on the dollar.

Now here’s the fun part. If we can get a recession soon enough our PR folks will initiate a campaign to convince the working ignorant that the best course of action is to make the tax cuts for the wealthy permanent because we might use that money to go into business and hire someone. We use slogans like ‘You were never hired by a poor person’ and ‘The rich should get more because they paid more’ and we keep repeating it until even the homeless are parroting it.

No, really Annie, quit laughing, it really works.

We will then lower the interest rates, which is the real reason the economy improves but we won’t tell anyone that, and claim that the reason the recession ended was my tax cuts.

Once the economy improves we will have to raise interest rates again in order to head off inflation which we will claim is caused by workers demanding wage increases they need to keep up with inflation. We get our radio whores to constantly repeat the message until soon even some of the workers are talking against the unions. We tell them how intelligent they sound and that they have an amazing perception of the way the economy works. Then we’ll take away their overtime.

No, really Annie, don’t laugh it works. We’ve already done a test run.

In the meantime we have to keep telling everyone that the economy is much too big, much to global, too many forces at play, for monetary policy to have any real direct effect.

Annie, please control yourself. It really works, even on some of the financial reporters. “

By this time Annie was laughing so hard she could hardly catch her breath, tears were rolling down her cheeks and there was a puddle beneath her seat.

I think I’m pretty sure that’s what really happened. Or maybe it was an epiphany.

[fasttense]

21. Oh ArmHayseed, the way you say it is so much more

interesting than just listing the facts. I quite enjoyed it. Thanks for posting.

[AX10]

22. bookmarked

[Quequeg]

25. Does this say anything?

Just for the heck of it, I've irregularly done some google searches, just to see how many websites come up for certain search terms. I'm not sure what this might say, but I was thinking it might indicate what's on people's minds. On the right-hand column is the price of gold, which is a rough estimate that I got from eye-balling the charts.

I suppose it may be that as the web grows, the # of results returned by google will grow as well. So, this table may simply reflect the growth of the web.

Still, in some months, the # results declined. Also, from feb 04 till feb 05, the results for "great depression" didn't rise much. But in the last year, it's gone up 16 times.

google  "great depression" "1987 crash" "inflation"    "gold"  "e-gold.com" "goldmoney.com" $gold/oz
03-jan-04                        9,000                              23,600           2,030     410
10-feb-04         992,000        9,000                              24,400           1,850     400
18-apr-04         969,000        8,970   4,840,000   64,300,000     28,700           2,410     390
30-may-04       1,010,000        8,930   5,110,000   61,400,000     32,300           1,660     390
20-nov-04       1,860,000       17,800  11,200,000  118,000,000     87,400           5,100     450
14-jan-05       2,040,000       19,600  12,600,000  134,000,000     99,000           7,250     425
13-feb-05       1,040,000       18,600   7,710,000   84,400,000    110,000           8,590     413
09-dec-05      16,500,000       90,700  98,900,000  338,000,000    285,000          20,100     526

www.StopGlobalism.com       www.VOIDnow.com

[fasttense]

27. Wow Quequeg, interesting. More and more people

are starting to see the similarities between the economy of the roaring twenties and the last five years, and they are concerned about the sudden stop at the bottom.

[filthyrichkleptocrat]

28. When Brookings and Heritage agree on something!!!!!!!!!!!!!!!!

We should all pay attention. They don't often agree on anything!


Brookings, Heritage, National Press Foundation Seminar Describes "The Future America Can't Afford"
"Budget Deficits an Unsustainable Danger, Scholars, Officials Conclude

http://www.brookings.org/comm/news/20051031budget.htm

[sendero]

29. Terms like 'recession' and 'depression'..

... have limited use for describing the state of a complex economy.

They are both technical terms, referring to certain performances in the GDP for certain time perionds.

The problems with this is that GDP in and of itself is not a particularly good measure of an economy's health.

Personally, I'd describe our current situation as "stagflation", even though official inflation numbers are low we have price inflation right now, without similar wage inflation. Not a pretty situation.