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Old 09-25-2008, 06:02 AM   #1 (permalink)
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Another Great Depression?

Do you think in our current times is another "Great Depression" really possible?

Several people I know think so, but I don't think it'll look like it did in the 20's, partly because of governmental controls. Obviously, it doesn't work completely, yet there's more scrutinous eyes open and, I'm guessing, a heightened awareness of the stakes.
That, and I hope to think we know a little bit more about the economy than we did back then, despite it's differences today.
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Old 09-25-2008, 06:14 AM   #2 (permalink)
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I think its entirely possible. I also think it's going to happen unless whoever is chosen as President is 1000% better at dealing with the economy than either of them seem to be capable of. I know that it's not all the Presidents fault, but he's got to be able to -mobilize- Congress and -get shit done-. Kind of like FDR with his 100 days. Congress and the President need to -work together- or we're heading straight into another one.

I think these bailouts are necessary to at least delay the inevitable right now.
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Old 09-25-2008, 06:20 AM   #3 (permalink)
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I haven't been around much because work has gone absolutley insane in the last 10 days. I mention that because it directly ties into the topic.

I do not see a depression looming. Recession, yes, depression, no. Money will not shrink, but the economy is going to have to slow, even if the Fed cuts rates soon, like they almost certainly will. The "bailout", which by the way will make Bush a socialist on par with Lenin without the pesky revolution thing, will most likely look very different than proposed. From my perspective, the idea of it is more important than the actual thing, but if it gets through Congress intact (which it might), it will create a new bureaucracy whose scope I have trouble imagining and whose reach would be incredibly deep into the lives of the "little people".

That said, I have never seen the insurance market behave like it is, nor did I even imagine it could do so. I may have more to say on that later, but I doubt how interesting casual observers would find it.
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Old 09-25-2008, 06:24 AM   #4 (permalink)
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As far as I know (but I'm not an economic expert), Great Depression happened mostly because the Federal Reserve sat idle while banks ran out of money, turning a recession into a depression. As long as there is a serious effort to save the banks from collapsing, I don't think there will be another depression.
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Old 09-25-2008, 06:26 AM   #5 (permalink)
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Keep in mind that the US national debt is currently 10 trillion dollars. This was entirely accumulated in the past 8 years. We're not really in the position to be loaning out tons of money willy-nilly. So while I think it's -necessary- right now, we shouldn't overdo it.
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Old 09-25-2008, 06:34 AM   #6 (permalink)
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Buffett said that, while this recession will be longer and deeper than usual, "the economy will be fine in the long run". I believe in what he says
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Old 09-25-2008, 06:44 AM   #7 (permalink)
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Originally Posted by Jozrael View Post
Keep in mind that the US national debt is currently 10 trillion dollars. This was entirely accumulated in the past 8 years. We're not really in the position to be loaning out tons of money willy-nilly. So while I think it's -necessary- right now, we shouldn't overdo it.
Umm, I don't think that debt was "entirely accumulated in the past 8 years." We've been in debt for decades.

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Old 09-25-2008, 07:07 AM   #8 (permalink)
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Umm, I don't think that debt was "entirely accumulated in the past 8 years." We've been in debt for decades.

What happened there in the early 80's that started the upward trend?
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Old 09-25-2008, 07:21 AM   #9 (permalink)
 
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i think the name to recall here is ronald reagan.
but without stuff done by the nixon administration, there'd have been no ronald reagan, structurally speaking. internationalization of stock, going off bretton woods---big deals.
ideologically, it is strange that debt is a problem--back when the keynesians were dominant and capitalism relatively functional (comparatively speaking--fordism anyone?) debt was not an issue--the system was about movement and the state was a motor. it is an index of the slide into neoliberalism that state debt has been reframed entirely, shifted as to meaning.

another great depression?
probably not.
a mutation in capitalism, definitely.
the endgame for the neoliberals? if we are all lucky, they will begin the process of creeping back under the herbert hoover rock whence they came.
end of the american empire? the opening rounds.
recession?
probably.
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Old 09-25-2008, 07:58 AM   #10 (permalink)
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MY BAD. I've been touting this statistic for a long time without ever looking it up. I thought Clinton -erased the national debt-, not just earned us a surplus for two years running .

Clinton's 'budget surplus'.
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Old 09-25-2008, 08:06 AM   #11 (permalink)
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I'm not an economist, but I remember in high school economy class (Holy shit, was that 9 years ago?) that my teacher said that the economy runs on a cycle.. recession is followed by depression. I don't know if this is actually true, but it has me wondering if it could happen.
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Old 09-25-2008, 08:17 AM   #12 (permalink)
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Well, we've had many many recessions since the depression, but that's been our only recent depression. The economy -does- cycle with bull and bear markets, but it can break the cycle and get into a long depression with the right stimuli.
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Old 09-25-2008, 08:20 AM   #13 (permalink)
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Hal, your teacher was wrong. Depression does not follow recession. They are variations on economic slowdowns. A recession generally means less money moving throughout the economy and moneyholders using their funds more conservatively. A depression is the actual contraction of money. That means that the moneyholders have less funds to use and is a very different problem. A recession CAN lead to a depression, but its not necessarily so.
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Old 09-25-2008, 08:28 AM   #14 (permalink)
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Nope, don't see it happening - but I do see people talking themselves into a serious recession in the US. When enough people are predicting gloom and doom, it can become a bit of a self-fulfilling prophecy.
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Old 09-25-2008, 11:46 AM   #15 (permalink)
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Quote:
Originally Posted by The_Jazz View Post

That said, I have never seen the insurance market behave like it is, nor did I even imagine it could do so. I may have more to say on that later, but I doubt how interesting casual observers would find it.
I'm interested to hear what you have to say.
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Old 09-25-2008, 05:11 PM   #16 (permalink)
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Quote:
Originally Posted by Jozrael View Post
MY BAD. I've been touting this statistic for a long time without ever looking it up. I thought Clinton -erased the national debt-, not just earned us a surplus for two years running .

Clinton's 'budget surplus'.
Yeah I thought that too. I guess I was giving Clinton way too much credit.
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Old 09-25-2008, 05:14 PM   #17 (permalink)
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Quote:
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I do not see a depression looming. Recession, yes, depression, no. Money will not shrink, but the economy is going to have to slow, even if the Fed cuts rates soon, like they almost certainly will. The "bailout", which by the way will make Bush a socialist on par with Lenin without the pesky revolution thing, will most likely look very different than proposed. From my perspective, the idea of it is more important than the actual thing, but if it gets through Congress intact (which it might), it will create a new bureaucracy whose scope I have trouble imagining and whose reach would be incredibly deep into the lives of the "little people".
I'm not so sure comparing him to Lenin is very fair.
Few of us here, I'm guessing, trust President Bush too much... However in his Wednesday speech he claimed that his economic leanings are to let the market be and allow it to self-correct, to which I believe him. He is a Republican, after all... I'm kinda figurin this is the last thing his crew would have wanted.
.

In contrast, were someone else president and in this situation, a democrat for instance, how different might their response be?
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Old 09-25-2008, 05:17 PM   #18 (permalink)
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Recession but not depression.

I am still not convinced that there will be a major shift in the flavours of capitalism. I don't think there are enough people around, and in positions to make a difference, to chart a new course.
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Old 09-26-2008, 05:22 AM   #19 (permalink)
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I don't think that depression is what is going to happen... but holy smokes, we were just getting our acts together financially after the last governance snafu... and this sub-prime shit happens?

and now this. These americans are starting to irritate me:

US wrangling and mutual collapse sparks new market fall - Yahoo! Canada News


WASHINGTON (AFP) - Deadlocked talks on a bailout of the US financial system and the collapse of Washington Mutual bank sparked new falls on global markets Friday despite the injection of tens of billions of dollars by central banks.

ADVERTISEMENT

Democrats accused Republican White House contender John McCain of sabotaging a 700-billion-dollar rescue package, which President George W. Bush has said is crucially needed to save the US economy from a prolonged recession.


Pressure on markets increased with the collapse of Washington Mutal, the biggest US bank failure, which was taken over by JPMorgan Chase for 1.9 billion dollars.


Washington Mutual's shares have fallen 85 percent this year and Standard and Poor's credit ratings agency recently estimated it had some 14.4 billion dollars in debt.


Key stock markets fell because of doubts about the US rescue package and the collapse. Tokyo's benchmark Nikkei-225 index closed down almost one percent.


Shortly after the open, London's FTSE 100 index and the Paris CAC 40 were both down 1.71 percent. Frankfurt's DAX 30 lost 1.46 percent.


US shares had rallied on Thursday amid hopes for a rescue deal , but before talks broke down. The Dow Jones Industrial Average rallied 1.82 percent and the Nasdaq composite jumped 1.43 percent.


With hopes dented, the US Federal Reserve and central banks in Europe and Asia pumped tens of billions more dollars into money markets which analysts say are under extreme tension, and to shore up general market sentiment.


The European Central Bank and the British and Swiss central banks used reciprocal currency arrangements to inject 13 billion dollars.


The Bank of Japan pumped a total of 1.5 trillion yen (14 billion dollars) into the Tokyo money market. South Korea announced plans to pump at least 10 billion dollars into the foreign exchange swap market to ease dollar shortages.


Hundreds of billions of dollars have been used to stabilise markets since the collapse of Lehman Brothers and the forced takeovers of American Insurance Group and Merrill Lynch in the deepening sub-prime crisis.


President Bush met McCain and Democratic presidential contender Barack Obama as well as top Democratic and Republican lawmakers at the White House, but failed to clinch a deal.


"We are in a serious economic crisis in the country, if we don't pass a piece of legislation," said the president.


Senior lawmakers had announced the outlines of a deal to rescue Wall Street, but some Republicans dragged their feet.


Democrats called for limits on pay for executives whose companies get rescued under the government deal. And they said that any deal must include strict oversight by federal regulators.


After the White House meeting, Senator Harry Reid, leader of the Democratic majority, held new late-night discussions with Treasury Secretary Henry Paulson and Federal Reserve chief Ben Bernanke.


These also broke off without an accord and were to reconvene Friday.


Democrats said that McCain's intervention only made the negotiations more difficult.

McCain "only hurt the process," Reid told a joint news conference with Senate banking committee chairman Christopher Dodd.

Barney Frank, the Democratic chair of the House of Representatives financial services committee, said: "I think this was a campaign ploy for Senator McCain."

The crisis has sparked mounting international political concern.

Germany's Finance Minister Peer Steinbrueck warned that "the United States will lose its superpower status in the global financial system" as a result of the crisis that has humbled some of the greatest names in US finance.

French President Nicolas Sarkozy called for an overhaul of the world's financial system and warned that the global financial crisis would hit French growth and jobs.

"The crisis is not over, it will have lasting consequences. France is too involved in the world economy for us to think for one second it could be sheltered from the events currently rocking the world," he said.

UN Secretary General Ban Ki-moon said the crisis now threatened the world's most vulnerable populations as well.

"The current financial crisis threatens the well-being of billions of people, none more so than the poorest of the poor," he said.

On top of the Washington Mutual collapse, the finance world was also hit by news that banking giant HSBC is to cut 1,100 jobs worldwide.

Around half of those losing their jobs would be in HSBC's British operations, Hong Kong-based spokesman Gareth Hewett said.

"The steps we have taken today are in the light of the current global business and economic environment and our cautious outlook for 2009," he said in a statement.
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Old 09-26-2008, 02:57 PM   #20 (permalink)
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What happened there in the early 80's that started the upward trend?
Ronald Reagan. The whole 'trickle down' economic policy. Cutting capital gains taxes and printing more money. Outspending the Russians and building the military-industrial complex.

Interest rates went down though. And a bunch of rich people were able to get rich easier.
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Old 09-26-2008, 03:14 PM   #21 (permalink)
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Yeah... I've been feeling pretty low as of late...


Oh... The economy... got it...



Nevermind.
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Old 10-03-2008, 01:29 AM   #22 (permalink)
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Of course it's possible (anything's possible)

but, because of the lessons learned from the first one, the government has backup plans against another depression, I'm sure.
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Old 10-03-2008, 06:25 AM   #23 (permalink)
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The simple and obvious answer to this is a resounding NO.

We're not even close to recession numbers. I wish people would quit freaking out about this shit. We're in a recession people. A recession that could last another 8 months or so. You can take any sampling of numbers you desire..and compare them to the Great Depression and it's not even remotely close to those levels. We're in this because of a couple factors.. one being banks loaning bad paper, and the other was a Bear Run on stocks and then of course idiots freaking out and pulling money out etc etc.

Calm down, breathe, look at past trends and be cool. The market will adjust itself eventually..with or without this stupid bailout plan.
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Old 10-03-2008, 08:05 PM   #24 (permalink)
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I'm still trying to figure out what was so great about The Depression.
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Old 10-03-2008, 10:49 PM   #25 (permalink)
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We need to remember that the economy is cyclical. Right now we are on the suck end of the cycle. Eventually, we will get out of it and go back up towards number that are happier. My generation (I am 25) grew up and came of age during the high 90s. We haven't know a huge downturn. We just have to tuck in and get it over with.

The Great Depression was so great because it was a pile of numerous causes. It was the banking problems, with people pulling their money out causing unstable banks. It was also the use of very cheap credit. The stock market dropped something like 25% (from a high of 217 down to 68 points). The market did recover in 1930 but on top of this, there was huge droughts in the Midwest. This caused the loss of income and jobs. Unemployment hit a high of 25%. For comparison, the unemployment is about 6%. All of this effected various parts of the world which just impacted it.

Basically, it wasn't just one thing that made the Great Depression such a hard time. One thing happened which caused another and it snowballed into a hard decade.
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