Discussion in 'Economy' started by Gunny, Jan 22, 2009.
Is this another Great Depression? - Eye on the Economy- msnbc.com
We in the UK get to find out later this morning whether or not we are in a recession
However big it is, it is just a correction. We were acting irresponsibly before, and these are the results. There is not failure of economy or capitalism in this downturn. There is a revealing of personal failures of discipline and manipulation of supply which lead to overdemand.
Riddle me this... fucking idiot.
During the Depression of the 1930s, the government made several mistakes. One was raising tariffs and trade barriers which slowed down international trade. Secondly, Roosevelt did a huge government spending program beginning in probably 1933 which didn't lead to any improvement in the economy. Unfortunately, Obama wants to do a huge government spending program and probably raise tariffs or at least have tax breaks for things like American cars. If Obama gets what he wants, we will probably go into a global depression. If he has SIGNIFICANT tax cuts, not just token tax cuts, and hikes in government maybe we can avoid a depression. I fear for the worst. To bad Reagan's not starting in office now. He probably would do something like have a tax holiday for six months. That would work...
I understood every word but disagree with them.
sorry my friend tax holiday wouldn't work. and no obama is not going to raise tariffs that would be stupid.
We are currently in what is the financial definition of a Depression. Plus, the same causes of the Great Depression have occurred/are occurring now.
And what causes are those?
1.) Massive Bank Failures
2.) Stock Market Crash
3.) Imbalance of Wealth between Rich and Poor (CEOs make over 300-400 times the average worker now.)
4.) Contraction/Restriction of the credit supply in the economy. Companies like GM and Ford have the funds to continue to pay any debts for a short/good period of time. However, most of it is in credit and unable to be transferred to Cash. Especially in bad times like this.
5.) A reduction in output, in trade, and unemployment on the rise. (Rhode Island just hit 10% offically while unoffically it's more around 12%+ AT LEAST).
6.) Pessimism and Loss of Confidence (Obama seems to have changed this for the majority of the country. However, things do not bode well if he cannot keep the mood good.) FDR was talking about the economy when he said The only thing we have to fear is fear itself.
7.) Hoarding of Money (More so then usual).
8.) Numerous Bankruptcies (Circuit City anyone?)
9.) Highly volatile relative currency value fluctuations (Look at how much the Stock Market moved 5 if not 10 years ago compared to today)
10.) Price Deflation (Barrel of Oil I believe was in the $30 range today. If not for the hoarding of money for profit by oil companies and others the price of gas should be at about $1.00 a gallon. However, we have now entered the era by many which is considered the "Last Hurrah" for Oil Companies with the future looking bright in alternative energy. Solar, Wind, Compressed Air Cars, etc are the future. Oil Companies are now trying to make their last buck because once one alternative energy becomes fully relevant, their stock prices and quarterly profits will drop faster then a brick off the empire state building.
And of course, when talking about Price Deflation we cannot forget our "wonderful" housing market. Nuff said there.
And finally I'll add one more we currently have/will have:
11.) The population being forced to rid itself of tangible assets to fund every day living. (Medical bills anyone? Among many other things increasing in price).
I personally fail to see why a Depression can only be a Depression if it's more then 3 years in time. The affects of what happen in the time period are more important then how long in certain aspects.
And speaking of the UK:
UK in Recession after Fastest GDP Fall Since 1980 - Britain * Europe * News * Story - CNBC.com
Japan in recession | Reuters
Current Unemployment Rate & Statistics 2009 - Job Layoffs, Loss | Mint.com Blog
As the link states, real unemployment rate is currently 13.5%.
If calculated as 80 years ago: 17.5%.
The unemployment rate did not reach 25% until four years after the market crashed. In 1930, year after the crisis, the unemployment rate was 8.9%. That's about half of what it is today.
In other words, what does this all mean?
We all need to start doing this more heavily:
Keynes saved the world's economy during the Great Depression. Our collective knowledge of how to get out of depression has been informed by analysis of Keynes General Theory and its application back in the 1930s and in periods of recession since.
I was reading where Ben Bernanke enhanced his academic career with a scholarly analysis of the causes of the Great Depression. I hope he studied the solutions as well.
Despite FDR's errors - which apparently extended the effects of the Depression - Keynes was proven right in his theory. He had a big hand in Bretton Woods. We can't ignore him. Here's hoping everyone keeps their nerve and gets us out of this mess.
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