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.

[SUBMAN1]

Originally Posted by Overboard

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.

They should be ringing at least a little though. I think the Media has a lot to do with it however:

http://www.subsim.com/radioroom/showthread.php?t=148960

-S

[U-84]

from what i have been hearing and reading, if we are still in a recession by june or july, we are officially in a depression, but you know the government won't confirm this until several months into it.

[Aramike]

This is getting a quote-fest....

Yeah, that's kind of my trademark.

I love "quote-fests" though - takes the context argument right out of it.

I am enjoying this discussion, however. You are quite civil in your viewpoints.

Only true for people who are gifted enough to study. If you are not that smart you have hardly a way to really distinguish yourself from the other hard working people around you. And since you are easily replaceable (there are times were everyone is eager to have a job) you accept to work for less than the others who in return are accepting lower offers again to be not fired themselves and so on.

This is untrue. First off, I believe that everyone is "gifted" enough to study. Perhaps everyone is not disciplined enough, but again you run into personal responsibility.

That being said, "study" isn't the only recourse. There's also "practice" and "hard work". "Committment" also comes to mind.

If you're "unfortunate" enough to be able to display ANY of those marketable strengths (most people possess the ABILITY to show multiple traits), then Darwin seems to come into play. But, alas, we have social welfare to take care of those people.

The question is: how many are capable but unwilling?

In some countries they are always quite high so this generalization doesn't work, especially in times of globalization were lot's of jobs in labor intensive branches are transferred away.

You're right about this. In this case, you have to look at the reason that the idea of a cyclical econonmy isn't true. I bet you government policies have a lot to do with it.

In any case, keeping with our debate, please tell me which nation has a free-market capitalist (FMC) economy where the "generalization" doesn't work.

I think that you're falling in the trap of describing NON-FMC economies as an argument against PRO-FMC economies.

The premise just doesn't work. Apples and oranges...

It would be best for his success if you were working for free.

No it wouldn't ... because you wouldn't be working. That's FMC. Capitalism is not slavery.

Again, if you are highly specialized, good for you. If you are not (and not everyone is able to do that) you are at his mercy because you can be replaced easily.

Again, untrue. Being educated and specialized is only one trait of a workforce. Employers also look for other traits.

He is expected to pay a decent wage not more but also not less. What good is a job if you can't make a living of it?

SOMEONE is making a living off of it ... else they wouldn't be working.

The question is, what do you consider a "living"? Seems to be extremely subjective to me...

If no one could make a "living" off of the job, no one would be able to AFFORD to work it. Ergo, the employer would have to pay more to attract employees.

The problem comes in when one person doesn't find that the wages are what THEY CONSIDER to be a "living", while another person does. So, what defines a "living"? The government? Yeah, right. I prefer FMC's economics, as numbers can't be corrupted.

But isn't that part of this hated socialism? To me it always sounded like this was contrary to the American Idea of free capitalism (if I have gotten that wrong all the better).

I think you've gotten it wrong. Free Market Capitalism doesn't discount the need for a nation's welfare. It wouldn't do well for a capitalist society to have people dying in the streets, right?

We can be free, and capitalist all the while helping out our weakest. The problem arises when trying to separate the "weak" from the unwilling. What people like me wish to avoid is deciding that well, making the distinction is too hard so let's just give them all a means.

It is not just about working hard and being a dedicated worker. If you are replaceable, and I think most people who are doing manual labor are, then your only argument for you is a low wage. Lower than that what the others take because they are hard working dedicated workers too.
It seems you assume that everyone is able to be best of the class if he only tries hard enough.

I'm not making any assumptions ... you are.

If someone can take the job, and survive, than they are making a living. If they can't survive, then they are not working and therefore cannot take the job.

Sure, maybe a laborer is replaceable. But his replacement is either: (a) more skilled/dedicated/hard-working/efficient than he is; or, (b) makes less money than he does.

In the case if (b), that person who is making less money is obviously finding a way to make it into a "living", thereby invalidating the argument that one cannot make an argument at such a low wage.

Again, we run into "what is a living?".

China is communistic on paper only. They have the most brutal capitalism you can find on this planet.

I would research this a lot further, if I were you. The PRC economy is still heavily regulated, especially regarding international trade.

But, even more so, the poverty rate in the nation has declined 43% in 20 years due to their moving towards FMC economics. The Chinese are hardly an argument against FMC - rather, they are an example of what trending towards FMC can do for a nation. http://en.wikipedia.org/wiki/Economy...ublic_of_China

If he can't even pay the minimum wages then the job was not be worth to be called a job anyway. Again minimum wages aren't meant to allow everyone to buy a Mercedes S-Class. They only guarantee that you have the minimum to sustain your life and not less.

If he can't pay "livable" wage, he won't have an employee...

That's why FMC works.

I have the feeling I'm repeating myself but: The boss is not supposed to pay stellar incomes. It should only be enough to make a humble living with it and not less. So there is usually still a lot of profit to be made.
My main concern is about managers and bosses with pockets full of money who employ people who can't afford something proper to eat.

What are the numbers you're basing this off of, because this seems like leftist talking-point rhetoric...

This does only work if there are many more jobs than potential workers. I think the situation has never been like that for the last decades.

This is true, in a global sense. Certainly not in the USA, as there have been MANY periods of more jobs than workers. The problem has been there were more jobs than QUALIFIED workers. But, referring to the global situation, there isn't a global FMC economy so the global circumstances are not an argument against FMC.

Again, we fall back on what qualifies as a "living" (hint: color TV does not).

Yes, but you need the job now. So you take what you can get and since a few thousand of your former colleagues are looking for a job too you better have something unique to offer or you will be forced to accept very low income, lower than what your competitors can stomach.

So you take the job now, and look for something better, later.

Again, we come back to what is a "living"? Is it what you make in a week? Six months? Ten years?

Sure, sometimes some people need a job right the hell now. But what good does it do to regulate those jobs when doing so brings the rest of the economy down in order to pay for them? For the people who can't make it under those rules, we have social wefare programs.

I'm going to put the following in bold, underlined, and in Italics because it is an urgent point: social welfare is NOT for those people who don't want to flip burgers at McDonalds ... it IS for those people who CAN'T!

Yes, but they must also sustain the worker.

Again, what do you consider "sustain"?

This is in fact a problem. But give people proper wages and they will be more willing to take a job than if being unable to make a living even though working 8+ hours a day.

This is, again, very broad ... what is "proper"?

Moreso, how do you determine what proper is? FMC does that automatically...

That's what we are here for, aren't we.

Good night to you, I wanted to go to bed about an hour ago.

You too, bro...

[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.

[mookiemookie]

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.

Wrong, wrong, wrong...

A recession is NOT 2 quarters of negative GDP. The official arbiters of recessions, the NBER define it as

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

All of which we've seen. And when you look at the chart of GDP growth, I'd say there's plenty to doom and gloom about:



Fourth quarter GDP was at an annualized -6.2%. The worst showing in a quarter century. And that's not doom and gloom? :rotfl:

[Aramike]

Wrong, wrong, wrong...

A recession is NOT 2 quarters of negative GDP. The official arbiters of recessions, the NBER define it as

Actually, he's not wrong. http://en.wikipedia.org/wiki/Recession

While there is no "official" definition of a recession, 2 quarters of negative GDP is typically considered the main indicator.