Depression Fears Begin to Take Hold

[Liberal_in_LA]

Posted July 06, 2010

Depression Fears Begin to Take Hold

By Seth Fiegerman

Since the recession first started in December, 2007, it has often been referred to by economists and politicians as the greatest economic crisis this country has faced since the Great Depression. Yet, as menacing as this description may be, few ever dared to use D-word to describe the current economic crisis, at least until now.

Last month, Paul Krugman, a Nobel-prize winning economist and regular columnist at the New York Times, declared in an article that we are now in the midst of a depression. “We are now, I fear, in the early stages of a third depression,” he wrote. “It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.”

To support this astounding claim, Krugman cited as evidence our continued period of high unemployment and concerns that we may soon suffer from deflation. These fears are not new. In fact, we ran down a list of these and other concerns in a recent piece about signs that we may soon face a double dip recession. However, Krugman’s bold statements paired with more dismal job numbers may soon create a new narrative centered around the fear of another depression.

CNBC reported yesterday that stock markets around the world are showing signs of a “rapid collapse” that is very similar to the one that led up to the Great Depression.
http://www.mainstreet.com/article/moneyinvesting/news/depression-fears-begin-take-hold?cm_ven=msnetzero

[hfojvt]

1. take heart

the only thing we have to fear, is fear itself.

I heard that somewhere.

[msongs]

6. yeah from the right man for the times - who said he welcomed the hatred from repubs instead of

desiring bipartisanship

Msongs

[KonaKane]

2. I thought Krugman was better at this stuff. Maybe not.

Jobs are the last thing to come around at the end of a recession's recovery. That's economics 101. In a recession as bad as this one, it doesn't surprise me at all that it might take years. And that's optimistic.

I wouldn't be jumping from the high rise offices just yet.

[Warpy]

5. Krugman is better at this

because what he's warning us about is what will happen if the deficit hawks get their way and strangle what little recovery we've seen. If they get their way and stop current spending as well as the desperately needed additional spending, we will see another Great Depression. Nothing will be able to stop it.

[KonaKane]

12. So in other words, a scary bunch of "ifs".

I'd prefer to go with "are"s as the economic situation unfolds, thanks.

[nashville_brook]

15. just say no to the deficit hawks -- there's no reason to stand in solidarity against fellow citizens

suffering in this economy. "reduce the deficit" is another way of drowning the government in the bathtub. enough.

[KonaKane]

18. I'm no fan of the hawks, but all the flimsey alarmism doesnt help either.

I usually like Krugman alot...but I think he's a bit off kilter on this one.

[nashville_brook]

23. if it doesn't "feel" like a depression, that's b/c we have a minimal safety net that didn't exist

in the 30s. In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than a recession, which is seen by economists as part of a normal business cycle.

This is not a normal business cycle correction.

[KonaKane]

28. "Feeling" has nothing to do with it. I'm trying to follow the experts

who know more about this stuff than I do. And so far, none of them are saying we are in a depression. Not anyone of them with any credibility, anyway.

That doesnt mean I'm not caring about this. It's definitely the worst recession I've seen in my 50 years, but I think we should deal with realities and not hysterics.

[eridani]

41. The experts are mostly far too insulated from real life to understand it n/t

[nashville_brook]

45. actually, *feeling* has everything to do with it. we build the safety net precisely to not FEEL the

effects of economic depression. but, if you look at the numbers, we're there and have been there for a while. it just doesn't look/feel like the 30s, so many people think there's no problem.

[robinlynne]

24. in other words, you still have a job and a home so everything is fine?

[KonaKane]

29. Care to shove any more words in my mouth?

Or would you like to stick with reality?

[sendero]

16. Lots of folks.

... like you, have been downplaying this for 3 years. When do you get a clue? We are in a DEPRESSION already. The only thing propping up this economy right now is government stimulus spending.

The minute it stops, all hell is going to break loose.

But tell yourself this is another 12-18 months (already way past that) recession. Lots of dummies are.

[KonaKane]

19. No, Sir/Madame, we are not in a depression.

And hopefully won't be. And calling me a "dummie" doesn't particularly advance your case.

[Name removed]

21. Deleted message

Sub-thread removed by moderator. Click here to review the message board rules.

[PSPS]

11. Our current reality isn't suitable for academic boilerplate

I've seen others make this claim about "jobs are the last thing to return at the end of a recession." While this may be true in an academic sense, it implies that, indeed, jobs will return. I don't think that will be the case this time.

Probably the most significant predictor of this is that, unlike the previous GOP depressions, there is no significant manufacturing industry left in this country to create the living-wage-paying jobs this time around. Where are the living-wage jobs "returning at the end of a recession" going to come from?

Another bad harbinger is that, unlike before, the current Obama regime is loathe to fill the gap with immense government spending on infrastructure and other things that provide both jobs and material benefit to the country (like the WPA in the 30's -- we still drive on roads, through tunnels, over bridges, use lodges and parks, get electricity from dams all created at that time.) There's plenty of work to do, just no willingness to commit revenue to it. Instead, it's all being used to backstop the wall street casino and "housing credits" to merely prop up a Potemkin economy (and insure billions in bonuses for criminals.)

[KonaKane]

13. It's pretty much well known that millions of these jobs are not coming back.

But what is not talked about is that THOSE jobs are not the only ones there are, or are to be. Job markets are always shifting, based largely on technology. No doubt many of the traditional jobs won't come back, but I have confidence that changing technology will create not only new jobs but whole job markets in and of themselves. That doesn't help my generation much (I'm a Boomer) who stands the least willingness to retrain, but it is hopeful for the next generations.

[eridani]

42. Nonsense. Technology eliminates jobs by increasing productivity

The only way around that is to for the government to dictate reduced work hours at the same pay.

[sendero]

27. Thanks..

... for "getting" it. So many, despite ALL the evidence, don't seem to. Or maybe they are all whistling past the graveyard, I don't know.

This is not your father's recession and it is not going away in a few months. Citing the "factoid" that jobs are a lagging indicator is useless. Without some reason, the economy is never going to hum again just because people want it to. The bankster class has our government by the balls and they are squeezing, and Obama is clearly not the man who is going to stop them.

[Zenlitened]

33. "There's plenty of work to do, just no willingness to commit revenue to it."

Well said! :applause:

[girl gone mad]

14. maybe econ. 201..

is where you get to learn about consumer-led recessions in consumption-based economies, and unemployment functioning as a coincident indicator under this model.

:shrug:

[KonaKane]

17. At any academic level, jobs are the last thing to recover.

That's just a fact. It stands to reason that a particularly horrid recession is going to require a lot longer time to heal employment.

[girl gone mad]

32. Just because it gets repeated often, doesn't make it any more true.

There are several things wrong with this platitude, but let's just start with the basics.

Technically, average duration of unemployment and the unemployment rate are lagging indicators in an ordinary business cycle recession (let's leave aside the fact that we are not in an ordinary recession), but nonfarm payrolls is a coincident indicator and initial claims for unemployment insurance and average manufacturing workweek are both leading indicators.

Economics 101.

[nadinbrzezinski]

20. Problem is he is right on target

Been following them pesky economic indicators, and they don't look as good as they should. Partly it is the stimulus, which he warned about, was not large enough.

[BootinUp]

31. do you even read his stuff?

just curious, because there is no one doing a better job of presenting the liberal case for economic policy.

[ShamelessHussy]

39. lol

[eridani]

40. So what? That is irrelevant

What is relevant is that the "coming around" will leave us with 15 STRAIGHT YEARS of no job growth whatsoever. We had 2 recessions and 2 "recoveries" under Bush, an entire decade with NO NET JOB GROWTH. And you don't see any problems with that?

[Rosa Luxemburg]

3. we are not alone

The US is in a much better position than some other countries in the world.

[JuniperLea]

4. I think the recession started much earlier than that...

And we've been in the birth pangs of a depression since late 2008. No one wants to call it like it is. We've already had a couple of "rapid collapses" and if the talk of the stock market going to 1000 is even close, we're in trouble.

What am I saying, we ARE in trouble already... once fear sets in, it's trouble.

[Subdivisions]

7. Yep. You and I have shown up many times in discussions going back

years now on this. And all along we've been roundly chastised for our pessimism. Yet, things continue to get worse and worse.

And you and I know why.

[JuniperLea]

9. Frustrating, isn't it?

It has been years, hasn't it? Amazing. Amazing we have the intestinal fortitude to continue sounding the alarm when all we get is grief!

Wow... I'm glad you're here, Sub... and I'm glad your memory serves you well:)

[Subdivisions]

30. Yes, it's very frustrating. So far all I'm getting from the effort is

confirmation that I listened to all the right people. Passing along their warnings, though, has proven very unwelcome at times. And now we're living out those warnings, with all the jobs lost, the deficit, the shattered economy, the misery. It makes me sad. And frustrated.

Thanks for your kind words. :) I'm glad you're here too. There are very few here whom I sense are on the same wavelength as I am (not necessarily a bad thing) and you're one of them. I'm grateful that when it seems no one else will listen and no one cares, you always end up popping in to make my day. :hug:

[zazen]

35. extrapolating from the accuracy of past warnings. . . the current ones freak me out

I really am in walking denial. There's an entire mainstream plus at least half of the progressives I know who deride these concerns as "doomerism," all too happy to tell me I'm "alarmist." Yes, I get there's an apocalyptic strain in human history and that there are psychological reasons people might want to romanticize these scenarios as offering renewal. There's also a cultural myth of progress that's as deeply held as was the Aristotelean view of the cosmos.

It's really weird. Calling this a "Depression" in a work or other social setting, and God forbid, suggesting there will be no "recovery" in the traditional sense, causes as many demeaning, aghast glances as saying one believes in ghosts. Nice to come here (and not just post-carbon institute) and find kindred spirits.

[Subdivisions]

37. It's nearly as bad talking about it around here, much less to people

out in life at the grocery or at work or family functions. I think people's aversion to our message lies in their complete inablility to comprehend a person that actually follows current events; cares about what's happening beyond their little world; thinks about what it all means.

Most everyone I know is so into their own little world that very, VERY, little gets in from outside. I have exactly one person in my immediate life-zone who watches things as closely as I do. Unfortunately, he interprets all of it exactly opposite of the way I do. A republican't teabaggin' racist.

Finally, more people should follow PCI. But they won't, so I won't even post the link.

[Juneboarder]

44. Please do post that link...

I am young and have a lot to learn, but do agree with your thoughts on the matter.

:rant:

I was just speaking with my cousin this morning and trying to inform him on this. He is 25; married with one 2 year old and a baby on the way; recently rented out his upside down home so that he could buy another home in Las Vegas that will depreciate; and now is trying to tell me the best thing for him is to rent out his 2nd home and buy a house in Denver. Why, you ask??? Because things are BETTER in Denver. Really? I guess we should all be looking at Denver right now, because they're untouched by our horrific economy. His answer, "don't live in fear, just keep spending".

:wtf:

I wonder when people will understand what is happening to our country, economy, way of life. I guess it won't hit home for most until they actually lose their job, sit unemployed for 18+ months and then wonder why things are so bad... must be Obama's fault...

:sarcasm:

Okay, off my rant now...

[lukasahero]

49. Please post the link...

My husband's catch-phrase right now is "Wait, it'll be cheaper in two years." There are a few of us out here listening...

[Subdivisions]

50. Here's the link to Post-Carbon Institute:

http://www.postcarbon.org/

[Juneboarder]

51. Thank you :) nt

[L0oniX]

8. but but ...let's keep spending over a trillion $ each year on the military.

[JuniperLea]

10. And blame the deficit on brown people and lazy people!

Exactomundo.

[hayu_lol]

22. This is a depression. Most of us are aware of that...

for 30 years, government has been assisting companies in transferring their factories overseas. They have been wildly successful in this. Many job opportunities today are only for H1B visa holders...a factor apparently encouraged by both the Executive and the congress.

Cut off unemployment payments, cut off other funding of those who have fallen through the safety net, and the real face of depression will be seen openly.

Corporations have achieved 'corporate personhood.' All the advantages with the single exception of not going to prison for broken laws and regulations.

Depression? It is alive and well amongst us.

[The Midway Rebel]

25. +1! n/t

[Odin2005]

26. Fears? It's already here!

[WillyT]

34. K & R !!!

:kick:

[NeoGreen]

36. It wont be the Great Depression or the Long Depression but the...

Endless Depression.

Get used to it boys and girls, this way of life is going down.

[Th1onein]

38. In less than one year, I will have every debt I owe paid in full.

Everything. I'm sorry for anyone who doesn't. But, along with some others, I saw this coming. And I'm ready for it.

[DemocratSinceBirth]

43. A Depression Is Marked By Negative Economic Growth

The GDP is still growing but not fast enough to reduce unemployment. Unacceptably high levels of unemployment may well become a staple of American life. This will lead to all kinds of misery and social dislocation.

I don't think a semantic argument about whether we are a in a recession or depression is particularly instructive.

[DCBob]

56. Exactly... and the GD had 30% negative growth..

Totally different animal. This is clearly NOT another depression. Idiots.

[KeyWester]

46. Krugman is an idiot.

If he thinks we are in the "midst of a depression"

In order for us to be in a recession we have to have 2 consecutive quarters of negative GDP growth , yet he thinks we are in a depression ?

Does he even understand that job numbers are always a lagging indicator for a recovery ? ..the numbers went from losing 700,000 to positive thousands.

[KeyWester]

47. In poker terms , Krugman is all in.

He claims we are in a depression which is absurd to say the least.

If there is no double dip, then he loses his seat, stick a fork in him, he's toast.

And to think he won the Nobel :shrug: middle of a depression , jeeesh , talk about fear mongering. Do people actually listen to him ?

[walldude]

48. Do people actually listen to him ?

Well lets see, here we have an anonymous internet poster on a political website vs a Pulitzer Prize winning economist, who by the way has been right about nearly everything he has said so far. Yeah I think people will actually listen to him over you. Call me crazy.

[KeyWester]

52. and yet he thinks we are in the middle of a depression.

One of the dumbest things someone could say.

A depression we would be losing jobs, the market would be crashing, we would have negative growth in the economy, ect ...

The guy is a idiot for say that alone.

[walldude]

53. Right... things are going well for you so there is no problem...

Look around, people are losing jobs, the only reason the market didn't crash was because they stole money from us to stabilize it. The only reason there is growth in the economy is because we are spending billions a day on 2 wars.

And you are calling a Pulitzer Prize winner an idiot while using sentence structure like this:

The guy is a idiot for say that alone.

I'm supposed to take the word of a person who can't conjugate a verb over the Pulitzer Prize winner who has a track record of being right? :rofl: :rofl:

[KeyWester]

54. Oh please.

Name one other economist that thinks we are in the middle of a DEPRESSION.

Krugman is an idiot for saying so.

[DCBob]

55. These analysts are under pressure to make extreme predictions..

It grabs eyes and ears.. and ad dollars.