Is This The Coming Of The Next Great Depression?

[No DUplicitous DUpe]

Is This The Coming Of The Next Great Depression?
(posted with permission from: http://sane-ramblings.blogspot.com/2011/11/is-this-coming-of-next-great-depression.html)

Yes it is, for we never even escaped the 2008 collapse. What is happening? To make bigger profits, U.S. multi-national firms aggressively shipped U.S. factories overseas along with their middle class jobs. Those jobs were replaced with lower wage retail jobs selling foreign made goods. In fact, U.S. wages adjusted for inflation are exactly what they were 33 years ago. Yet the cost of housing, cars, education, medical care and other middle class necessities kept rising.* So how did U.S. wage earners keep paying for them? They went deeply into debt like never before in U.S. history.

For awhile, everything appeared to work out well. Borrowing money was easy and the middle class thought it was not only doing well but had hit the jackpot, first in the dot com boom and when that collapsed, it seemed to be rich in housing values, riches it quickly borrowed. Then the housing market collapsed. Meanwhile, Wall Street made wild and greedy speculations and in 2008, that collapsed as well but unlike the middle class, Wall Street got bailed out, ironically at the expense of the middle class.

Meanwhile, the U.S. government keeps spending huges sums it doesn't have and puts it all on the U.S. taxpayer credit card. So no surprise, since 2008 the U.S. economy is floundering and sinking, taking the jobs market with it. Even as its deficits and debts soar, Washington answers with no new taxes, as it expands its military spending and wars, in part because that military spending employs millions of Americans, ironically also at taxpayer expense.

Americans are frustrated and angry. Public surveys show a 9% approval rating for Congress for example. Yet the huge campaign contributions still pour in because the elite are well served by the current system and they refuse to share in any significant sacrifices. While at the same time, the Euro Zone is crumbling and will take numerous European and U.S. banks with it, as they will again line up for bailouts this time from governments that won't be able to provide them. As they crumble, so will the export dependent Asian economies.

So what can you do to protect yourself from the coming Depression? Lighten your load by paying down your credit cards and selling off anything you no longer need, such as an extra car, boat or motorcycle. If you have a house to sell, sell it now before prices drop further. At work, cross train and offer ideas that generate revenue or save money, for these things make you more valuable to your employer. And as happened during the last Great Depression in the 1930's, we must unite to help one another through the difficult times to come. When those times end, we will hopefully rebuild with a U.S. economy no longer based upon bringing military Hell to the world but one based upon medical, educational, social and environmental advancement that can make this world a far better place.

---

*According to the U.S. Department of Labor, the urban Consumer Price Index is 3.5 times what it was in 1978. http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt. But as bad as this is the prices for some essentials such as housing, cars, education and medical care have spiked much more.

[RKP5637]

1. Recommend!!! n/t

[rhett o rick]

2. k&r

[truedelphi]

3. My simple one word solution - Occupy!

Despite the nature of severe economic crisis in Fall 2008, that was continually screamed about on the M$M, and that required the tax payers to fork over a 700 Billion dollar TARP (in addition to 155 billion that had gone quietly to the banks under Bush in 2007-08) and then the revelation that the Federal Reserve offered up the Biggest Financial Firms another nine to fourteen trillions of dollars, with "repayment" being the books and books of worthless "investments" - no one in Congress has been able to bring about any meaningful reforms of the broken system.

Just the other night, "Sixty Minutes Business" offered up the same weary tale -- that the "gambles" on exotic investments continues unhindered. Well, when a President who ran on Hope and Change chooses to ignore the will of the people and instead goes ahead and appoints as his top economic people one Tim Geithner, GoldSphincter, who insists that there is no need to reinstate the Glass Steagall act, we are all headed for trouble.

The nation realized back in 1905-1907 that having gambling casinos as investment houses in not a good idea, except for those who own the joints.

The above is just one set of reasons why we need to Occupy! And the biggst change in my life is to be working on getting an amendment to the COnstitution here in California, that Big Money must get out of politics and elections.

[RKP5637]

6. Well said!!! And demonstrates what money in politics does, to destroy the nation/t

[Enthusiast]

28. To correct this mess Glass Steagal was absolutely necessary.

Of course the banks don't want it. This is what happens when you coddle white collar criminals.

[truedelphi]

30. And by April of 2009, Obama gave a speech explaining how he didn't

Necessarily understand economic matters, and would have to leave such up to his "good buddy," Tim Geithner.

We are so screwn.

[Enthusiast]

31. And obviously Obama only listens to 'his' experts for advice. nt

[truedelphi]

32. Someone had just emailed me the link to his YoutTube statements about marijuana:

From spring of 2008- Paraphrasing his remarks - "Well, I am not sure of all the details regarding this matter, but I will be asking the experts who understand the implications of this."

As we see now, the "experts" were both the big banks who need the source of billions of dollars to be laundered each year, and also the Big Pharma concerns who adamantly do not want any pf their profits from patenting the cannibinoids to be bypassed as the various liberal, voter-approved Medical Marijuana state amendments allow for.

[Enthusiast]

35. Exactly.

What a disappointment.

[grasswire]

4. More effort should go to changing policy than to helping others.

Sorry, but I am getting tired of the idea that victims of the economy should take up the slack and let the predatory 1% off the hook. They are USING that human charity to avoid their own responsibility to the 99%. I'm sure they cheer every time someone puts $ into a kettle or buys someone a sandwich.

It's a wonderful human instinct to try to cover for their lack of human compassion.

But I urge each one of us to put the majority of our energy into changing policy and regulations. Don't make charity your first priority.

[Jackpine Radical]

7. I have had a similar thought under various circumstances.

Like, should I buy a DAV poppy or should I make a contribution to a Progressive politician who will vote for adequate veterans benefits?

[cutlassmama]

5. K&R

[mdmc]

8. r

[Mnemosyne]

9. Occupy. n/t

[bhikkhu]

10. Sounds like RW rhetoric to me

Sorry if I'm suspicious...

If you want to look at positive numbers on the jobs and GDP side which indicate steady recovery since 2008, the numbers are easy to find. If you want to hear about the next Great Depression, you have to be much more selective about what you read and listen to. Not that preparing for the worst is a bad idea, but a mindset fixated upon economic collapse does little good for most people. Its part of what got our asses kicked in the last election, which is part of what has us still stuck aways down in the hole.

[No DUplicitous DUpe]

16. RE: "...indicate steady recovery since 2008..."

Yeah, but it's like we fell down 3 flights of stairs in 2008, and we have steadly climbed up, 4 steps since then. I guess you could call that a "steady recovery" cause we are heading in the right direction, but we still have a long way to go, and that assumes things will continue in their current direction, which they might not.

[jwirr]

25. Often the stats indicate an upturn but it turns out that it is looking at

the stock market etc. that measures the progress of the rich. They seldom reflect what is actually happening to the 99%.

Last night was very indicative of the times. I baby sat my great grandchildren while mom and dad went to Black Friday to try to get several items they have wanted for the kids. The local Walmart packing lot was over flowing into three other parking lots and the lines for items were long. Likewise the two stores they went to in Duluth.

I do not know if people were buying when the item they wanted was gone but they were there. To me this indicates that people are very broke to be up at midnight.

[steelmania75]

11. Well with Europe's banks in a huge mess that will send shockwaves over here, yes

Europe's "PIIGS(Portugal, Italy, Ireland, Greece, and Spain) will all fall, thus dragging Germany and France into the chaos, and when all of Europe's under, the UK will go under, and it'll spread over here to the US.

A second economic collapse is eminent, nothing has changed in the rules since 2008, the same game is being played by the same players, this time it may have an even worse impact.

[Electric Monk]

12. German bond scheme fails to restore confidence

http://www.walesonline.co.uk/news/wales-news/2011/11/25/german-bond-scheme-fails-to-restore-confidence-91466-29838973/


Alarm bells rang across Europe this week after a German bond auction was widely described as “botched” and a “disaster”.

The yield on UK Government 10-year bonds fell to 2.16%, while the equivalent German costs rose to 2.21%, in a sign that investors have more faith in Britain’s ability to cope with its debts.

The rising borrowing costs in Germany followed the country’s worst-received bond auction since the euro’s launch as global investors appear to be turning their backs on Europe’s biggest economy amid fears of a possible break-up of the eurozone.

Read More http://www.walesonline.co.uk/news/wales-news/2011/11/25/german-bond-scheme-fails-to-restore-confidence-91466-29838973/#ixzz1ehNvHSgQ

[mick063]

13. Depression is inevitable

When the EU absolves 50% of owed debt from the failing European governments, a large, dynamic inflationary pressure will sweep the world.

Inflation is difficult to control under the best of times, but we all know that times are not good. Rising costs will squeeze already tightened budgets of consumers and governments alike. With many homes worth less than the value of the debt owed on them, huge swaths of citizens will be unable to refinance their primary asset, their homes, to consolidate debt. Citizens will be forced to use their only remaining collateral, their retirement, to keep above water. Hence leaving a ticking financial "time bomb" for the future. Sacred, lifetime financial goals will be devoured. Your kid's college fund, your home, your retirement will vanish into thin air.

There will be no personal "safety net" There will be no government "safety net". Historical "buffers" will not be there to absorb the impact. The remaining viable home mortgages teetering on collapse will fall into the abyss.

Yes, we are headed into a depression at ironically the same snapshot in time that banks have realized record profit.

My suggestion: Items are worth more than money. Money will devalue at such a large rate that I highly recommend replacing it with required, non perishable items now. Repair the furnace, buy new tires, get your teeth fixed now. It is the best value you will see for at least a decade.

There is a reason that Gov. Perry declared in a debate, "Gold is good" in an effort to diminish Obama's economic vision. No he wasn't smart enough to figure it out himself. He was simply repeating the advice his personal financial consultants had given him. He spilled the beans publicly and probably got his pee pee slapped privately. Can't start the run on gold before the elitists have gobbled up their share first.

[russspeakeasy]

19. Well thought out and expressed.

Thanks and I look forward to your next post.

[MaineDeadHead]

20. Explain This, Please

"When the EU absolves 50% of owed debt from the failing European governments, a large, dynamic inflationary pressure will sweep the world."

I'm no economist so i could very well be off, but my understanding is that investors in the EU are taking a 50% haircut on Greek debt. By forcing losses onto investors the ECU is decreasing the monetary supply which should put deflationary pressure on prices? At least that's the logic the Fed uses to combat inflation via controlling the monetary supply.

[mick063]

23. How I understand it.

Cause and effect. You are initially correct, but the reaction to it is the problem.

What typically happens when monetary supply is decreased?

More money is printed as a "cure".

What happens when more money is printed?

Inflation.

We are talking about a severe over reaction to the point you made. A "quick fix" fueled by politics as opposed to fiscal responsibility. Social pressure will demand higher money supply to revitalize the economy. Even the best economists will have varying, diverse proposals for "correction". The problem will be too complex to quickly solve. "Trial and Error" methods will likely be used.

Interest rates are at an all time low. In normal times, these conditions are inherently inflationary. The skids are already "greased". I think of the relationship like this. If interest rates are zero, you are basically "giving" money away. When you "give" money away, it rapidly loses it's value.

[Name removed]

14. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Laelth]

15. k&r for exposure. n/t

-Laelth

[oldlib]

17. Comparison to the Great Depression

The current depression is different from the Great depression, in that, in the Great depression wall street had also collapsed. Today wall street is doing quite well and it is only the middle class and poor that is suffering.

[bertman]

18. Judging by what's happening to businesses around me in a so-called "recession-proof" area

of the country, I'm agreeing with the OP. On the other hand, my brother's employer is now hiring engineers and line workers to keep up with demand. Of course, they make fuel assemblies for fighter jets. Maybe that's why the PTB want to invade Iran. WWIII might pull us out of this depression just like WWII did the last one.

))-:

[mckara]

21. It's a Pity that Most People Don't Know This...

Even though it has been a problem for 30 years.

[Tierra_y_Libertad]

22. A consumer economy without consumers does not bode well for "recovery".

Unemployed, under employed, people don't buy stuff they can't afford. And, when they're forced to buy necessities, they buy the cheapest stuff available...made in China, Guatemala, Indonesia.

A recipe for depression.

[jwirr]

24. I recommend this but I am not sure I recommend the solution. Selling

your only home when you have equity in it sounds like a recipe for homelessness. Yes you are losing that value in the house but what are you going to replace it with? My family is also going to keep our boat and canoe because we have a fishing lake within walking distance.

I noticed that this is a report from a government agency - the description of the problem is what they are good at - they are not so good a the survival aspects of the problem. Usually that comes from the grassroots.

[dddem]

34. I agree if you have a low mortgage balance,

but many have little or no equity. We refinanced a couple of times to keep afloat while my husband was laid off. Once he started working again, before you know it my daughter was ready for college. we had nothing extra, everything we earned went into paying the mortgage and utilities (oil heat in New England-yuck). We sold a year and a half ago, and I'm not one bit sorry. We walked away with a little bit, and paid off some debt, but if we had stayed, at this point, I probably wouldn't have any equity and still be up to my eyeballs in debt. Now, although we don't have much, we can breathe a little. I don't recommend this for everyone, but it has reduced our stress, which has made for a better life for my family. Now if we could do something about the cost of college and health insurance!

[patrice]

26. Sorry, but good ideas at work get you shown the door, leaving "ownership" open to others. nt

[lonestarnot]

27. K & R

[No DUplicitous DUpe]

29. As an update as to how fast the European Crisis is gaining momentum...

...on Wednesday even pristine credit Germany couldn’t sell 40% ($8 billion) of its bonds and no one knows what to do next. European bond interest rates are soaring, which means France, Italy and Spain, the 2nd, 3rd and 4th largest European economies will be hard stressed to pay the interest costs as their current debts are rolled over, let alone raising large sums of new money. The European Central Bank is scrambling to prevent a collapse of the European banking system. http://online.wsj.com/article/SB10001424052970204452104577058370049616582.html.



Why does this matter to Americans? Because the European and U.S. banking systems are interrelated and if giant European banks get hit with losses on their Euro debt, so will giant U.S. banks, as they have trouble settling outstanding transactions between them. The global banking systems will begin to freeze. The U.S. banking system provides credit for Americans to buy homes, cars, etc. and for American businesses to fund their operations. And unlike the 2008 Lehman Bros bankruptcy, which triggered the last collapse, now the numbers are far bigger with Euro bonds and governments don’t have the resources to bail all these huge banks out. Germany is a great example and their finances are stronger than the U.S.’s by far.

[chrisa]

33. Inevitable - It's only a matter of time, since no regulations have been passed since 2008.

They're doing the same things currently that got us into this mess - they're still packaging junk mortgages for investors that they know are junk, and they're still doing the same practices (making a ton of money for the executives, but tanking the company) that caused many businesses to fail.

They just figure the government will bail them out again, and again, and again. When the bailouts stop coming (no more money, or the world economic system collapses), they'll call it a day and move away from the chaos. Those in charge of corporations just don't care, and they never will. That's why they need to be regulated. Unfortunately, the US is committed to not doing so, and this will ultimately be our downfall.