Recession to Depression: how close are we?

[Overboard]

Times and money are tight..We all know this right, But How close are we to slipping From being in a Recession to a depression?. Do you think it can happen or are we all ready there and just don't know it yet?

I realise only time will tell but i can't help but feel helpless.

[SUBMAN1]

Recession is 2 consecutive quarters of negative GDP. Even though we are officially in a recession, 2008 still had growth of 1.25% GDP, so all the news doom and gloom was wrong.

So to answer your depression question - that takes a drop of 10% GDP. So you tell me? Are you listening to economists that tell you we are in a depression? If so, they need to go back to school. Maybe they have their money in bear market funds and they are trying to push the price of stock down to make money. That is my second guess.

By your statement above, I can see that alarmism sells easily with you.

-S

[Overboard]

Originally Posted by SUBMAN1

Recession is 2 consecutive quarters of negative GDP. Even though we are officially in a recession, 2008 still had growth of 1.25% GDP, so all the news doom and gloom was wrong.

So to answer your depression question - that takes a drop of 10% GDP. So you tell me? Are you listening to economists that tell you we are in a depression? If so, they need to go back to school. Maybe they have their money in bear market funds and they are trying to push the price of stock down to make money. That is my second guess.

By your statement above, I can see that alarmism sells easily with you.

-S

No alarm bells going off as of yet, But the thought did cross my mind today mainly because of co-workers talking about it-Hence the question.

[breadcatcher101]

President Truman was once asked what the difference was between a recession and a depression.

He said a recession was when your neighbor lost his job and a depression was when you lost yours.

Makes a lot of sense when you think about it.

I would say things would have to get twice as bad as now with unemployment around 20% and the Dow around 5000.

It is bad now but I remember worse times.

[Overboard]

Originally Posted by breadcatcher101

President Truman was once asked what the difference was between a recession and a depression.

He said a recession was when your neighbor lost his job and a depression was when you lost yours.

Makes a lot of sense when you think about it.

I would say things would have to get twice as bad as now with unemployment around 20% and the Dow around 5000.

It is bad now but I remember worse times.

What you said is very uplifting and thank you very much for your well thought out reply God bless.

[Zachstar]

Originally Posted by SUBMAN1

Recession is 2 consecutive quarters of negative GDP. Even though we are officially in a recession, 2008 still had growth of 1.25% GDP, so all the news doom and gloom was wrong.

So to answer your depression question - that takes a drop of 10% GDP. So you tell me? Are you listening to economists that tell you we are in a depression? If so, they need to go back to school. Maybe they have their money in bear market funds and they are trying to push the price of stock down to make money. That is my second guess.

By your statement above, I can see that alarmism sells easily with you.

-S

Subman you can tell your view without that crap at the end. Take a hike!

[Skybird]

Just to add some alarmism concerning that Truman quote:

http://money.cnn.com/2009/02/06/news.../jobs_january/

Employers slashed another 598,000 jobs off of U.S. payrolls in January, taking the unemployment rate up to 7.6%, according to the latest government reading on the nation's battered labor market.

The latest job loss is the worst since December 1974, and brings job losses to 1.8 million in just the last three months, or half of the 3.6 million jobs that have been lost since the beginning of 2008.

The loss since November is the biggest 3-month drop since immediately after the end of World War II, when the defense industry was shutting down for conversion to civilian production.

January's job loss was also worse than the forecast of a loss of 540,000 jobs from economists surveyed by Briefing.com
The rise in the unemployment rate also was worse than the 7.5% rate economists expected. The unemployment rate is now at its highest level since September, 1992.

As bad as the unemployment rate was, it only tells part of the story for people struggling to find jobs. Friday's report also showed that 2.6 million people have now been out of work for more than six months, the most long-term unemployed since 1983.

And that number only counts those still looking for work. The so-called underemployment rate, which includes those who have stopped looking for work and people working only part-time that want full-time positions, climbed to 13.9% from 13.5% in December. That is the highest rate for this measure since the Labor Department first started tracking it in 1994.

I think there is a reason why they already call it the worst economic crisis since the great fall in the 1920s. And quite some officials point out that it already is worse.

However, it will become worse this year. AIG just illustrated that end of good news is not in sight: with 100 billion lost, they just marked the highest loss of a single company in the history of economic recordings.

What is worrying is that more and more of the real system key nodes reveal how deep they are in trouble, like AIG in America or HRE in Germany. If any of these key players falls, they pull a whole rat tail of others down with them. HRE in Germany falling, for example, would mean the total collapse of Germany's national infrastructure construction and the breakdown of all national services associated with that.

Once we see such key players falling, the real fun begins. Compared to that, GM and Lehmann are just funny entertainment for the interruption in the main program.

If anything is to be learned form current times, then how deeply sick and unhealthy the economic structures are that have been risen in the past. There is little reason to be proud of them or sell them as a success story. More realistic assessment obviously would be to call them rightout dumb and stupid.

[Overboard]

Originally Posted by Skybird

Just to add some alarmism concerning that Truman quote:

http://money.cnn.com/2009/02/06/news.../jobs_january/

I think there is a reason why they already call it the worst economic crisis since the great fall in the 1920s. And quite some officials point out that it already is worse.

However, it will become worse this year. AIG just illustrated that end of good news is not in sight: with 100 billion lost, they just marked the highest loss of a single company in the history of economic recordings.

What is worrying is that more and more of the real system key nodes reveal how deep they are in trouble, like AIG in America or HRE in Germany. If any of these key players falls, they pull a whole rat tail of others down with them. HRE in Germany falling, for example, would mean the total collapse of Germany's national infrastructure construction and the breakdown of all national services associated with that.

Once we see such key players falling, the real fun begins. Compared to that, GM and Lehmann are just funny entertainment for the interruption in the main program.

If anything is to be learned form current times, then how deeply sick and unhealthy the economic structures are that have been risen in the past. There is little reason to be proud of them or sell them as a success story. More realistic assessment obviously would be to call them rightout dumb and stupid.

Iam Sorry but do you live in the U.S.?

[Skybird]

It doesn't matter that much. Events of this scale affect people inside the US - and outside as well. If AIG falls, it will be a major financial catastrophe for many German communties and towns who are locked in deals with AIG. The shape of the EU or American economy causes waves around all the globe. If HRE falls, you will feel it in the US as well. Not too mention the Münchner Rück.

If you think national strategies alone would provide solutions, you're in for some surprise. So do not make this a national dispute. It is not. We're all in this together.

[UnderseaLcpl]

Originally Posted by Skybird

I think there is a reason why they already call it the worst economic crisis since the great fall in the 1920s. And some officials point out that it already is worse.

However, it will become worse this year. AIG just illustrated that end of good news is not in sight: with 100 billion lost, they just marked the highest loss of a single company in the history of economic recordings.

What is worrying is that more and more of the real system key nodes reveal how deep they are in trouble, like AIG in America or HRE in Germany. If any of these key players falls, they pull a whole rat tail of others down with them. HRE in Germany falling, for example, would mean the total collapse of Germany's national infrastructure construction and the breakdown of all national services associated with that.

Once we see such key players falling, the real fun begins. Compared to that, GM and Lehmann are just funny entertainment for the interruption in the main program.

If anything is to be learned from current times, then how deeply sick and unhealthy the economic structures are that have been risen in the past. There is little reason to be proud of them or sell them as a success story. More realistic assessment obviously would be to call them rightout dumb and stupid.

Skybird is absolutely right. The economic structures of modern times have many flaws, and foremost amongst them is the omnipresent trend towards centralism.

Nations like the U.S. have always been a beacon to capital because of the economic freedoms allowed, but now that the state has decided to intervene and nationalize many key industries, it will suffer the same fate as every socialist nation. Worse yet, the world will be dragged down with it because so many weak socialist economies are dependant upon U.S. fiscal markets and the weakening fiat dollar.

Things are going to get bad, mark my words. Very bad. Maybe not this year, or the next, but very soon. The state's intervention and massive, unwise, expenditures are a perfect recipe for stagflation in today's economic environment. The excessive overhead incurred on businesses by over-regulation coupled with the inflation of currency brought on by borrowing and printing fiat currency can only lead to that end. Some economic schools disagree, but none have an empyrical example to point to.

At this point the best hope for the U.S. is that the rest of the world economy will buckle more quickly than ours, thereby placing us in a position to emerge once again as a world leader. Unfortunately the current administration is inadvertently hell-bent on expediting our economic demise.

All these lessons have been learned before. The state cannot be trusted with the wealth of the people. They always consume and destroy it and they always cause the economic and/or/and then military collapse of the nation. The modern crop of states is no exception, even if some of the withering plants have yet to die.
Economic freedom is paramount to the prosperity of any nation, period.

But don't take my word for it. Watch what the current administration does to the economy. Honestly, the economy may even "recover", somewhat, but the prices of goods and the labor required to obtain the capital to purchase them will increase, exponentially and contextually(in the fiscal sense).

America is rapidly becoming the newest experiment in centralist government. The results should be noted, for once.

[Overboard]

If the U.S. goes down then every body else will go down too, Kind of like the domino effect (so to speak)

[Overboard]

Dam What a ******up world we live in, Maby poeple around the world should help the U.S. instead of calling us names. (Help us help you)

[Skybird]

Originally Posted by Overboard

Dam What a ******up world we live in, Maby poeple around the world should help the U.S. instead of calling us names. (Help us help you)

It cannot be understood why you would deserve any help as long as you stick to a system that has produced the mess we all are in, and for which we already are paying. Just leaning back and saying: "let's close our eyes and then right through it", and afterwards business as before, that cannot be the solution. It is no name-calling per intention, but a necessary defining of the causes for the desaster, when one identifies the US ways of business to have been and still being the epicentre that both caused the turmoil and from where the shockwave spread around the globe.

The years of irresponsible national economic mismanagement, excessive focussing on short term profits only, deficits and mounting debts, living on tick, and creation of super-complex finance "products" by the US banks that nobody can see through anymore and that shuttled risks and losses around the globe just so that nobody would be responsible for them anymore, as well as the stubborn resistance to any measurements that would add back some transparency, respomnsibility and supervision to this wanted chaos, have presented all of us - not just the US citizens but but people of all the globe - the bill for these excesses. Further boosting of the crisis was done by growing excesses of a totally disconnected system of manager boni that motivated them to take risks that simply were hilarious, just so that they would maximise their own already unjustifiable stellar incomes. That way the greed of the few have spelled desaster for all the others. If there is any lesson to be learned, than this: the market does not regulate itself for the benefit of all, a system basing on egoism and declaring selfishness a virtue does not produce sufficient positive effects in quality and quantity that compensates the majority for the greed of the few. In other words: this very ideology - has failed.

So, if "helping the US" translates into: just giving money to the US efforts, directly and indirectly, so that it could return to the status of 2007 and before, then the answer is No - No, we do not want to help in that, and it seems neither China nor Europe is willing to assist in that plan anymore. If help for the US means to cooperate with the US to implement a reasonable minimum of superivison and transparency on financial markets, and implementing new rules for financial trading and transaction that are effective in achieving these goals, then the answer will be yes. Just totally liberal market philosphy that wants to rule out any monitoring and supervision in general - that is no longer negotiable. It is a failed system, it is the cause of the breakdown, and there is no reason to see it as the cure to the disease it has caused itself.




Lance,

it is strange that you point out that "Skybird is totally right" - when we totally disagree concerning what you wrote! Judging by what you said, we could not assess the situation and it's causes any more different, it seems.

[Aramike]

All these lessons have been learned before. The state cannot be trusted with the wealth of the people. They always consume and destroy it and they always cause the economic and/or/and then military collapse of the nation. The modern crop of states is no exception, even if some of the withering plants have yet to die.
Economic freedom is paramount to the prosperity of any nation, period.

But don't take my word for it. Watch what the current administration does to the economy. Honestly, the economy may even "recover", somewhat, but the prices of goods and the labor required to obtain the capital to purchase them will increase, exponentially and contextually(in the fiscal sense).

You're absolutely correct. What I don't understand is the logic that people use to justify the government involvement. You hear them cite the scandal and corruption on Wall Street, but then their answer is to turn over the reigns to an equally scandalous and corrupt group - politicians. Except, politicians have a LOT more power to screw things up.

This is not to say that all politicians are corrupt, but neither are all Wall Street insiders. And Wall Street insiders can do far less harm than Capital Hill...

[UnderseaLcpl]

Originally Posted by Skybird

Lance,

it is strange that you point out that "Skybird is totally right" - when we totally disagree concerning what you wrote! Judging by what you said, we could not assess the situation and it's causes any more different, it seems.

I know. I just thought it would be fun to hijack your argument and run the other way with it.

I know we have trod this ground before but I wholeheartedly disagree with your assessment that the market does not regulate itself.
The vast majority of the past century has been a period of effective self-regulation of the market. Free trade has generated wealth and prosperity consistently even as the strain of supporting the bloated state increases.
In the instances where the economy enters recession, it is working the way it is supposed to. That's part of the cycle. However, it never really gets a chance to work through recession like it should because the state always steps in and bungles the natural recovery process.

What you blame on the market is in fact the fault of the state. But I'm curious as to how you would prefer to see the problem addressed, and how you would effectively implement such a system.