Posts Tagged ‘Depression’
Thanks to Wikicommons
Some of our readers may recall we recently suffered from a minor inconvenience called “the World Financial Meltdown”.
If you are still asking yourself, How the @#$%&!! did that disaster happen?…we have good news!
The US Government has the answers in the Financial Crisis Inquiry Commission Final Report.
It is a beast of a report so rather than have you wade through hundreds of pages of financial analysis, we’ll let the Internet do the mining for you.
The wonderful financial blog Calculated Risk highlights the reports BIG conclusion that the
financial crisis was avoidable. …
Despite the expressed view of many on Wall Street and in Washington that the crisis could not have been foreseen or avoided, there were warning signs. … Yet there was pervasive permissiveness; little meaningful action was taken to quell the threats in a timely manner.
Expanding on the points produced in the report Calculated Risk describes
the keys to the crisis are 1) the willful lack of regulators to do their jobs, combined with 2) the rapid “innovation” in the mortgage market
For a deeper look at who’s to blame check out Frum Forum’s collection of posts on the report.
The system may have failed in the past but this new information should let us prevent future meltdowns right?
Don’t count on it. As Sewell Chan, of Economix, notes:
The Wall Street overhaul enacted last year hopes to blunt the impact of such boom-and-bust cycles — by reining in the use of exotic financial instruments, better supervising big banks and limiting the damage if one of them fails.
But the first two efforts are under attack by the new Republican majority in the House, and the new process for containing the fallout from a giant bank’s collapse is untested. Meanwhile, the financial sector’s outsize role in the economy hasn’t changed; the giant banks that were considered “too big to fail” have only gotten bigger.
Not very comforting is it?
Remember the good old days ? By that we, US Democrazy, mean the good ole days of the Great Depression. Well, not “great” for anyone (except shanty contractors and bindle factories), but you get the idea.
So… how does this new-fangled economic turmoil stand up to the Big Bozo of Financial Fiascoes?
Poorly. But before y’all get up in arms about how bad it is now, let’s compare some numbers.
Currently unemployment is around 8.1%. If you add in people who are working part time but want to work full time you get about 14.8%.
This seems bad until you compare it to the 29% unemployment rate in 1932. Based on this factor alone the current hiccup does not seem so bad.
BUT WAIT! There are some nasty similarities between our financial crunch and the Greatest of all Depressions.
Christina Romer, head of the White House Council of Economic Advisors, (who is also a Great Authority on the Great Depression) provided some valuable insights.
In her words “the worldwide nature of the decline” today is similar to the Great Depression.
But don’t panic; Romer points out people during the Great Depression had “painfully few of the social safety nets that today help families.” Phew! But painfully few still sounds kind of painful.
So put a smile on! With a little luck (okay… maybe a lot of luck) we won’t have any stories for our children about the good ole Great Depression of ’09.
… but we at USDemocrazy are fairly certain the that does not apply to our US economy.
A few weeks ago, we posted a blog that basically said: if you talk about too much about recession, you could end up with a depression . Well, apparently no one has learned their lesson!
This article in the New York Times tells us how upset we should be about the loss of our jobs. And this article from the Wall Street Journal is especially nice and perky. It gives us the odds of the United States stumbling into a deep dark depression!
We at USDemocrazy kinda prefer stories like NPR’s story on “Laid Off Camp”. This is about unemployed or furloughed people who seek out others in the same bind. One guy said he just wants to meet someone who can go to museums in the middle of the day with him. The Laid Off Camp counselors say that you should embrace unemployment, not stress about it! If you’re going to be out of work… be happy out of work.
In these tough times stories of optimism are great (and hard) to find. As all of us who have been jobless know… being happy and unemployed is easier said than done!
And words will hurt the economy…
Let’s talk for a minute about the recession… NO, LET’S NOT! That’s because all this talk of the economics could be damaging to your health!!! (Financial health, that is…)
The crack team at USDemocrazy has noticed that any time an Obama adminstration official starts to talk economics… the stock market screams, runs and hides!
Now the brainiacs at the New York Times have started to wonder if all this talk of America launching into a depression is going to, well, launch America into a depression. Same with the folks at New York Magazine who have dubbed the US economy’s weakened state “The Greatest Depression.” Newsweek is fielding questions on whether or not we are in a depression, and Google yields 68.5 million hits when you type in “Are we in a depression?”
There’s an old saying that goes, the economy is in recession when your neighbor loses his job, but there’s a depression on when you lose your job. Well, maybe if we all hush up about this lousy depression, maybe the economy will just stay in a lousy recession instead.
Okay… maybe this isn’t a good strategy. We at USDemocrazy think it is important to discuss issues like recessions and depressions… (But please don’t blame us if the market starts to fall!)
Photo courtesy New York Magazine
