Some Reccession history

Discussion in 'Economy' started by Trajan, Sep 21, 2010.

  1. Trajan
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    Trajan conscientia mille testes

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    Some history and imho a cautionary tale.

    They have a very good point at the end, that no one can argue with as it isn't political- what happens when the fed has got ( which I personally think has come) to the point where they have to start raising rates...?

    By the looks of past downturns IF the economy isn't cruising along at at least +5 growth, I am not sure it will be able to sustain the rate hikes that will have to take place without sputtering.......




    A Tale of Two Recoveries
    The state of the economy after a year of 'rebound.'

    It's official: The Great Recession ended 15 months ago, in June 2009. That was the word Monday from the economists at the National Bureau of Economic Research, the outfit that tracks the U.S. business cycle based on a variety of economic variables.

    By their calculations, the downturn that began in December 2007 lasted 18 months, or the longest on record since the 43-month plunge of the Great Depression. On the other hand, the recession was only two months longer than the 16-month downturns of 1973-1975 and 1981-82, the two other most serious post-World War II periods of falling economic growth. The 2007-2009 downturn was painful but not extraordinary in historical context.

    What is different about this period is the relative weakness of the economic recovery. As the nearby chart shows, in 1983 the recovery surpassed its previous peak in gross domestic product very rapidly from the recession's trough. Growth rose by 4.5% in 1983, 7.2% in 1984 and 4.1% in 1985, and it kept climbing through the rest of the 1980s. This is the kind of recovery you would expect coming out of a severe recession, since the deeper the trough the steeper the rebound.

    This time, even after a year of recovery through June 2010, real GDP remained 1.3% below its previous peak in the fourth quarter of 2007, according to the NBER sages. The current recovery peaked with 5% growth in the last quarter of 2009 but has decelerated in 2010—to 1.6% in the second quarter. This tepid growth, in turn, has contributed to the sorry state of job creation, slow business investment and the overall sense of malaise.

    Our readers know the competing explanations for this undeniably disappointing performance. White House economists and liberals say the financial roots of this recession have made the recovery unusually difficult, the fiscal stimulus saved the day, and thus we need more of it. Our view is that hyperkinetic government policies have done more harm than good, leading to uncertainty and higher costs that have undermined business and consumer confidence and slowed the economy's otherwise natural recuperative powers.

    Consider this contrast: In 1983, the Reagan cuts in marginal tax rates were finally kicking in, regulatory burdens were falling across the economy, and the Federal Reserve was cutting interest rates. In 2010, taxes are heading up, new regulations are piling up thanks to ObamaCare, et al., and the Fed can't keep interest rates near-zero forever. We think these different policy circumstances are very much related to the different pace of the two recoveries.

    Review & Outlook: A Tale of Two Recoveries - WSJ.com
     

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  2. william the wie
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    william the wie Gold Member

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    This is huge but too soon to tell how huge.
     
  3. loosecannon
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    loosecannon Senior Member

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    Wow. I thought it was totally misguided.

    It seems pretty obvious to me the reason why recessions are becoming more frequent and recoveries less robust is a two fold effect that everybody is aware of: Globalization is outsourcing our jobs and industries thru the windows of recessions, and there haven't been any corrections since Greenspan took the helm. Just deferments of correction until the next recession, or the next. Meanwhile the bubbles boom in between fueled by higher debt, more leveraging and increased reliance on non asset based stores of wealth.

    Of course had this article measured and abstracted upon the world wide trends it would have drawn vastly different conclusions, because in world wide terms this recession was abrupt at first, short and featured an extremely robust period of recovery. Perhaps unrivaled period of recovery.
     
  4. william the wie
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    william the wie Gold Member

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    In the developing world like say Brazil yes, Africa is also turning around but other than China and its de facto colonies I don't see what you are seeing.
     
  5. loosecannon
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    loosecannon Senior Member

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    within months of the end of the recession annualized GDP was 5.1%, and over 11% in the two largest economies, while being above 2.5% in Europe. Japan bounced around between 0 and 2% GDP in that same period.

    Granted that was a short recovery but I am pretty certain world GDP was only negative for a few Qs, maybe a year tops.

    In contrast the recovery after Great Depression took years to generate steam and wasn't shared by much of the world until years after the war ended.

    I dunno how many other global recessions have occurred.
     
  6. uscitizen
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    uscitizen Senior Member

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    Areas of the USA did not pull out of the great depression till WW2.
     
  7. Trajan
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    Trajan conscientia mille testes

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    I think the 'global recession' been masked by the usual flypaper. The EU and IMF have sighed in relief and put on a happy face, I don't really think they think thay have anywhere near solved the Greece Fire....they act like it, b ut then again they have to, and then again the IMF loves this kind of thing, fire fighting we are the savior thing, its adds to their worldwide worth as in remaining viable.

    I would liken it to a hurricane, it is my belief that we are in the eye, and have yet to come out of the storm, theres lots of heavy 'stuff' caught in the air and it will hit us as we try and depart the eye to calmer weather....

    We as in the US have disadvantages built up over decades other nations don't have or even care to address; obama-care, baby boomer retirement, a dumbed down work force just when we need a smarter one, states whose collective debt. is trillions, a Fed. who has not the slightest idea how they are going to as I said above, unwind the cheapest money we've ever seen that is clearly un-sustainable just as we are monetizing debt concomitantly and saddled with an admin. who sees the only engine/engineers or machines that can drive us out of this as the enemy.

    The business of America is still business, thank you Calvin...how else did we ever get the the point where in we had so much to lose and the burden become so great?
     
    Last edited: Sep 23, 2010
  8. loosecannon
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    loosecannon Senior Member

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    by legislating the federal reserve?
     
  9. william the wie
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    william the wie Gold Member

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    And senseless imperialism.
     
  10. Pepe
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    Pepe Senior Member

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    The Old Confederacy, The South, did not fully recover from the War of Northern Aggression until the 1990s.
     

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