Understanding The Coming "Depression"

Glenn adds an update to a post on financial issues facing old media. BCB highlights some seemingly positive online shopping news.

What’s Wrong With This Picture?

While it's certainly fair to argue "Depression" is a poor word choice to describe where we are economically, as well as where we're headed for a spell - one should also keep in mind that all things are relative.

There are support systems today we didn't have in place in the 1930s. I would imagine after they extend it, unemployment insurance will run a full year if it already doesn't. And wealth is far more abundant and more widely distributed today than it was during the Great Depression. Still, things have begun and will continue to turn for the worse just ahead.

There will be more saving and less spending, parents will re-think college choices based upon economic realities. Older cars will stay on the road a couple more years, an appliance or computer nornally replaced every few years might end up lasting five, or six. There will be more unemployed and they will find themselves competing for a diminishing number of jobs. Some folks on the lower end of the scale will indeed find themselves hungry. From an email I'll be posting on tomorrow, the NJ Food Bank, a charitable organization that provides foodstuffs to the poor, is nearly empty and not seeing typical holiday-time donations.

We certainly don't want, nor need the type of panic a word like "depression" can produce. But it would also be foolish to simply whistle in the dark. From home values to stocks, trillions of dollars of presumed "wealth" have gone and will continue to go away. You or someone you know will "feel it."

It won't look like the Great Depression and we'll come out the other side more prudent economically as a society, perhaps even as a world. Recent trends - low savings, high debt and credit ratios - aren't actually sound economics. Changing it isn't all bad.

But be smart and don't fool yourself into thinking this is all mostly a media inflamed problem. The area of Virginia I drove through yesterday had four or five shuttered businesses that were there six months ago. If you haven't started noticing available real estate in strip centers, look, it's there - on top of several such venues that were in process of being built.

It isn't the end of the world. Though, with many younger folk never having experienced a real downturn, some may well react that way. While not pretending that it's worse than it is, or is going to get, it would also be smart to realize things are going to continue to change significantly for the worse economically for a spell. Manage to it as carefully as you can.

Comments

[jharp]

Thank you George Bush and those who vote republican.

Heck of a job.

And just wondering, is Limbo still promoting the idea that it's only a small subprime problem?

[rockdalian]

Thank you Democrat congress. Everything has cratered since the 2006 takeover.
Worst ratings ever for Democrat congress.

[WAHOO WILLIE]

You ain't seen nuthin' yet.........................

[Rachel]

please. This stuff was eventually going to happen, no matter who was in office. That low-saving high-spending Dan is talking about is mostly US, not the govt (that's a given). So stop blaming W or Pelosi. That's lazy thinking to make them totally responsible. We're responsible for our own actions in the long run.

[Lala]

The boutique my friend worked for in Manhattan closed down last week. The lease was sold for half a million dollars. It wasn't even the boutique and the good will that was sold. It was just the lease for an empty store.

My friend will collect $405.00 for 39 weeks even though he only worked two quarters out of the last 18 months, and the rate will be based on the one quarter where he made the most money.

The housing prices where I live have gone down a bit where I live but not that much. They were vastly overpriced anyway.

Glenn had a little poll on his site asking people if they were cutting back on Christmas shopping and most people said they were spending the same amount as last year.

Latvia is arresting people who spread rumors about their banks and economy being bad.

[WAHOO WILLIE]

YOOHOO Pookster!!!!
I need my savoir faire....Someone with plentys o' time to google..... Does anyone know if someone born in Samoa, USVI or Puerto Rico can become president?

[jeff]

With 41 states heading for bankruptcy in '09, just where is the money for your social safety net going to come from? Growth in GDP since 1996 has been on borrowed money-- in other words, a lie. Do you really think China, Korea, and Japan are going to be giving us carte blanche any longer? The Japanese are talking about buying treasuries denominated in Yen, for god's sake. The dollar is losing it's reserve status. Never in the history of modern finance, that I'm aware of, has the the govt. become the lender and spender of last resort. M3 estimations are parabolic-- wild-ass money printing is going on. Dollar devaluation is coming, then inflation on steroids. The more the govt. interferes in the mechanisms of the economy, the worse this will get.

Seen the foodstamps numbers? Using pre-1970's calculations, unemployment is 16%. McDonald's is the number two credit card vendor now-- people have to buy cheap food on credit, and banks are going to be cutting two trillion in credit lines because people aren't paying their bills. That's the equivalent of what Hoover did that made the depression 'great'-- tightened the money supply.

The writing was on the wall in '02. Greenspan didn't let the Tech collapse follow its natural course. He dropped interest rates, and the great credit bubble began. Anyway, if you didn't cash out of stocks and buy gold by 2003, then you really shouldn't be prognosticating about where this is going, and how we shouldn't 'panic', as you have been totally frickin' blind, sir. Blind.

We have just started the Greater Depression; the great de-leveraging of worthless credit leveraged by a quadrillion dollars' worth of derivatives has begun. It's a sure thing. Man the lifeboats - but fight off the panic-stricken profligate and chav queue-jumpers with any weapon you can bring to hand.

[Lala]

Here's Virginia Postrel

http://www.dynamist.com/weblog/archives/002920.html

If anyone should fear a Depression, it should be journalists, who are already the equivalent of 1980s steelworkers. But instead, they seem positively giddy with anticipation at the prospect of a return to ’30s-style hardship–without, of course, the real hardship of the 1930s. . . . Oh the thrill of imagining a Great Depression. It’s an opportunity for Great Design and Really Cool Government.

[jharp]

You ain't seen nuthin' yet.........................

Posted by: WAHOO WILLIE | Sunday, December 07, 2008 at 11:01 PM

You are correct. And I figure things are fucked up enough to finally actually see something done about our horrible health care system.

I hope you the best with your coverage but it's more important to me to see something that benefits all Americans.

[jharp]

"If anyone should fear a Depression it should be journalists"

The newspaper business is dead. It's over.

Television? I don't know. Don't watch TV.

I think the online journalists will do just fine.

[Mark A. Flacy]

"McDonald's is the number two credit card vendor now-- people have to buy cheap food on credit [...]"

Oh, for the love of crap.

I don't even carry cold cash any more. I charge damn near everything. *And* I pay off my credit card each month.

So just because a lot of people use a credit card to buy a happy meal doesn't mean that they are paying credit card interest rates to do so.

[Lala]

I charge everything too. I get miles on Delta and Lufthansa so I can go on glorious vacations.
And now that the pound and euro are sinking my vacations will be even better.

[Chad]

"Thank you George Bush and those who vote republican.

Heck of a job.

And just wondering, is Limbo still promoting the idea that it's only a small subprime problem?"

This message brought to you by George Soros and MoveOn.org. Remember MoveOn.org for all your disinformation needs.

[Lala]

Why blame the government when we have this -

'PONZI SCHEME' AT CITI
SUIT SLAMS RUBIN

The lawsuit said that when the bottom fell out of the shaky assets in the past year, Citi's stock collapsed, wiping out more than $122 billion of shareholder value.

However, Rubin and other top insiders were able to keep Citi shares afloat until they could cash out more than $150 million for themselves in "suspicious" stock sales "calculated to maximize the personal benefits from undisclosed inside information," the lawsuit said.

http://www.nypost.com/seven/12042008/business/ponzi_scheme_at_citi_142511.htm

[Scrapiron]

I live in Va and we have been asking for several years, who is going to purchase all of the big fancy homes being constructed and who is going to occupy the 'new' industrial parks being opened in every small town in the country? The answer has always been, no one, but getting all the government grants to build them made politicians 'feel' good.
I'm just and old country boy who's home was built by my own hands and on a pay as you go basis. It's three times the size I need but I just close off what I don't use so I don't have to heat it. If I decided to sell tomorrow it wouild bring 4-5 times the construction cost. With the acreage I can grow most of my food (if I don't have to pay a fart tax on the cows and pigs) and kill game for meat. With my retirement + SS I expect to do quite well, thank you. I guess everyone else can get one of the 'millions' of welfare jobs Hussein O will be creating. I see a pattern here, Everyone on the government dole, fed and housed by the government. Isn't that called communism or is it Islamism?

[Lala]

My nephew works in DC and lives nearby in Va. He says that little cottages near him are being bought for 400 to 500 thousand by contractors and are being torn down in order to build bigger houses in their place.
The newly built houses then go for a million bucks.

[xerocky]

"Latvia is arresting people who spread rumors about their banks and economy being bad."

If we had that in the US, Chuck Schumer would be behind bars.

But really though, I know that self reliance is important and all that, but if you can, donate to your local food drive. Hunger is a terrible thing and the idea that there are hungry children in the United States frightens me and makes my blood boil at the same time.

[xerocky]

Dear Lala, thanks for sharing that article from dynamist. Depression porn is something that I've been thinking about for a while now but couldn't quite put my finger on. The left is full of depression mongers, as long as, of course, they're for the most part ok.

I was watching some Bob Dylan documentary or another and they were talking about the folk movement from the late 50's early 60's in Greenwich Village, and all of these folksy types are sitting around and affecting a look and style of the depression, some openly lamenting that there is no true radical movement!

Mind you, WW2 had only just ended, and here these people are pining for the freaking depression. The left thrives on economic downturn. They love it and they crave it, so long as it doesn't really touch their own asses, it's their favorite thing. It lets them feel all dramatic, and they get to be rich again.

[Bob]

You got it, xerocky. This is all the left's justification for the next attempt at instituting worldwide communism and punishing those who won't go along. We face some big tests in the next few years if we hope to remain free...and they won't necessarily be economic.

The meatheads, who can't do anything for themselves, are going to show us how everything should be done. May God help us.

[WAHOO WILLIE]

" hope you the best with your coverage but it's more important to me to see something that benefits all Americans."

Oh harpie, the differences are minor. We worked hard to get a decent home, put kids through college and did without a lot of nifty shit to be able to retire at fifty. It was nothing that any healthy American can't do....nothing. Frankly, if I couldn't get the health coverage I needed to take care of my kids in one state....I'd have moved. Particularly owning my own, highly mobile business. Now, we agree that one should not have to do that. A person should be able to buy the same coverage anywhere in the country. Doctors and hospitals should not have to pay millions for malpractice insurance either but lawyers line their pockets with other people's honest mistakes. The doctors, nurses and other health care workers are paid waaaay too much. It's not like they contribbute anything like Britney or Lindsey....right?

[Lala]

xerocky
yes, hippies, flower children, playing at being poor, mocking the really poor who despised them for it.

[fiona]

Ah, the good old days of Jimmy Carter - when 6.7% unemployment was a fantastic decrease and full employment hovered around 6.5 AT BEST.
Also remember when the NUMBER of unemployed today is compared with the Number 30x years ago, that there are now a lot more Americans in the workforce today.
Since the media get cash from advertisers and talk to them a lot, you can understand how the loss of ads for realtors and developers could be hurting - not to mention that the echo chamber contains a lot of unemployed among those groups.

[WBestPresidentEver]

You ain't seen nuthin' yet.........................

Posted by: WAHOO WILLIE | Sunday, December 07, 2008 at 11:01 PM

You are correct. And I figure things are fucked up enough to finally actually see something done about our horrible health care system.
Posted by: jharp | Sunday, December 07, 2008 at 11:26 PM
_________________________________________________________________________
YOU NEED TO WATCH YOUR DAMN MOUTH YOU FILTY CREEP !
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Thank you George Bush and those who vote republican.
Heck of a job.
And just wondering, is Limbo still promoting the idea that it's only a small subprime problem?
Posted by: jharp | Sunday, December 07, 2008 at 10:35 PM
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YOU ARE QUITE WELCOME AND I WILL ALWAYS VOTE REPUBLICAN AND I WILL ALWAYS ADMIRE MY
PRESIDENT G.W.BUSH. ONE HELL OF A GOOD MAN !!!! He was elected President of the greatest country in the World. CAN YOU TOP THAT. !! HA HA.
And..I don't give a damn what you are anyone else thinks of him. He did not cause all the problems going on today. GOT IT ?
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That you democreeps for screwing everything up over the damn years.

[WBestPresidentEver]

"It isn't the end of the world. Though, with many younger folk never having experienced a real downturn, some may well react that way. While not pretending that it's worse than it is, or is going to get, it would also be smart to realize things are going to continue to change significantly for the worse economically for a spell. Manage to it as carefully as you can."

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Ebay is still doing fine. I am swamped with orders. Almost more than I can handle.
Saving every dime I make. I will be just fine. I am not worried about it.

Only ones worried are the welfare freaks. They are afraid they will run out of money to give them.

[Fred Beloit]

Lala points out the need for more McMansions in suburban DC. Much of the loose money that is causing a shortage of high-cost housing comes from the miasma of malfeasance emanating from the Democratics with Rangel as one of their star tax evaders.
http://www.nypost.com/seven/12072008/postopinion/editorials/more_rangel_muck_142992.htm