People always scream about the Great Depression ... anybody remember OCT 87? That crash was supposed to bring on a Great Depression too, but it didn’t happen. We’re having a bit of a correction - not a depression.
Incorrect.
What we're having is a massive debt party. The government keeps deferring problems to the future in hopes alchemy will have been perfected by then.
Technicaly, I suppose this isn’t a recession or a depression. However, I was here in 1987 and the conditions today are far more serious with continued energy price increases that cause increases across the board and are decimating businesses and jobs. Today, more people are older and now depending on their savings and investments, which are, for the most part, performing negatively.
I really don’t care what we call it. In 6 months, my business has fallen to 50% of its 23-year-average, our investments have fallen over 12% and as people cut back to essentials, my husband’s service business, while doing ok for now, may not survive. Meanwhile, our essential costs of living, after severe budget trimming, are rising almost as fast as we can cut them back. Our hard assets would probably not find buyers if we were forced to sell right now and if we found buyers, we know we would take a loss. We are too old to find replacement work. We know many professionals and self-employed in the same situation.
This is a slow bleed compared to 1987, it does not seem to have a chance to improve before millions are without jobs, without adequate savings and some may endure real physical threat this coming winter as energy and food costs rise even further and municipalities are forced to cut services and raise taxes just to keep infrastructure running at a reduced level. Neither government aid, individual charity or self-reliance appear capable of doing much about the situations of those who will find themselves in drastically reduced circumstances within six months, if this continues and escalates as it seems that it will.
There are numerous objects of blame and the way government and the investment industry are responding is seriously lacking, to understate the situation. As we fall into socialism, the problems are going to accelerate.
I would go back to 1987 in a heartbeat.
But didn’t the savings and loans get bailed out? Did that prevent a recession? Or was that later, I’m bad with dates.
An out of control car with a drunk driver swerves against the Jersey barricade on the freeway, fishtails, almost rolls, and by pure dumb luck regains control.
The lesson? Open up another bottle of whiskey, and sell the steering wheel and brakes. We're invincible! We're America! Nothing can ever wreck our economy! YeeHah!
I think you are whistling past the graveyard.
Why? America cannot continue to eat out her own substance and survive except as a shell of her former self - and we have doing that headlong for years.
For example, our monthly trade deficit is around $50 billion per month. How long can this bleeding continue, especially as the dollar depreciates quickly against other currencies and inflation in core areas is rising just as quickly? That $50b sum equals about what our oil imports cost (and that price is rising quickly). Yet, our feckless "leaders" continue to ho-hum with business as usual, spending like drunken sailors on expanding government and subsidies at all levels, and insist this is somehow "our" fault for not having more solar power and windmills. There is little thought of doing the "right" things on almost every one of the host of issues we face. Instead we continue headlong with the politically correct but asinine things which have gotten us to the place we now are.
This house of cards is coming down, hard. As if the deficits and balance of payments aren't already killing us, wait until the full impact of the evaporation of trillions of dollars in mortgage and debt wealth hits. We are just at the beginning of this with the latest crash of the IndyMac Bank and the evaporation of Bear Sterns - not to mention the write-down of billions in "solvent" banks' wealth almost monthly. Oh, and of course, the government is assuming responsibility for this worthless paper by printing increasingly scores of billions in wildly inflationary paper and exchanging it for the even more worthless assets of paper held by the huge banks and investment companies.
I suppose this will all stop when we run out of ink?
Anecdotal evidence? I see it all around me. I won't bore you with details. Look around yourself and see if these are mirrors of other recessions we've had. They aren't.
For one thing, when the heating oil season hits hard this November, you will see personal economic contraction and pain like we haven't seen in 70 years. And all this is on top of falling jobs and increasing gas prices. Oh, and did I say "increasing taxes" as government continues to eat an even larger part of the pie? And this doesn't even begin to address the moral rot and it's consequences which has taken place in huge segments of our culture since the '60s. And don't forget we are also in a long and expensive war which we cannot abandon in the hopes our enemies will somehow go away.
The economic chickens of poor public and personal policy at all levels are coming home to roost, and it is not going to be pretty. We can only hope somebody doesn't try and take a nuke or two to us and make matters even worse.
It’s not surprising that the ‘87 stock market crash didn’t precipitate another Great Depression. The stock market crash of 1929 affected a small percentage of the American people and didn’t cause the Great Depression. The major factor was the collapse of over 30% of American banks from 1930-33 and the resulting deflation and scarcity of money.
Fed and Treasury officials are worried because of major problems in the banking and credit markets. The collapse of asset prices when a trillion dollars of loans go bad is a recipe for deflation.