Posted on 11/22/2008 4:01:21 PM PST by dano1
I AM endlessly charmed by chatter about when this slowdown/recession will end. (snip)
But this does not look like a typical recession. A typical recession is brought on by Federal Reserve tightening in the face of excessive demand and rising prices. The economy still functions normally, but purposeful credit tightening slows activity. When the Fed loosens up and money starts flowing, demand increases and growth returns. This, at least, is the pattern of the large recessions we have had since the Great Depression, which was a special case, as we shall see.
Smaller recessions have been brought on simply by the inventory-business cycle, but they, too, were amenable to Fed stimulus.
That was because normal credit mechanisms were working.
This time it’s different. Or, because that is a dangerous phrase, let me say that maybe this time it’s different.
The problem now, as in 1929 to 1940, is that the economy is not functioning normally. It is shot through and through with fear, even terror. Worse yet, and unlike the situation in the Depression, government miscues have been only a part of the problem. This fear is so pervasive that it has brought the credit sector to a virtual shutdown, even to borrowers with good credit. At this point, the lending sector is so panicked —largely from the government’s inconsistent behavior and failure to rescue Lehman Brothers — that it is frozen. Not totally, but way too much for ease of lending and maybe even for the survival of a robust economy. And if a colossal worldwide deleveraging spreads to Treasury debt owned by foreigners, the situation will be deadly serious.
The unemployment rate is rising. Housing is in collapse. Manufacturing is weak. The unionized auto sector is dying before our eyes. Commodities are falling hard and fast.
(Excerpt) Read more at nytimes.com ...
August 18, 2007 - Peter Schiff Versus Ben Stein - Merrill Lynch was so cheap, they should have put them in Cereal boxes.
http://www.youtube.com/watch?v=RYX1AgEV0vo
Ben Stein is a caricature of a whore.
“Perhaps that is what happens when one lives and works in close proximity for a lengthy period of time surrounded by other liberal airheads.”
You mean, like Ron Reagan?
Let’s agree to disagree, shall we?
You ask your rhetorical question as a high minded intellectual.
Yet, you have no command of the English language.
“Whats your credentials”
Credentials is a plural noun.
Your sentence should have been written as follows.
What are your credentials.
Economics 101 lecture is planned for your next post.
The FCC just auctioned off a new area of spectrum set to release in February. The cool things about this spectrum are that they are a huge slew of bandwidth to play with, and easy as pie to get through walls (unlike WiFi). That plus the netbook ($300 tiny laptop) phenomenon means connectivity everywhere for cheap. It allows for far greater connectivity than anything we have seen so far. I would look there.
I’ve never used credit (other than one mortgage; 7 yrs left to go out of a 15 yr mortgage) and I’m mystified about this whole credit thing. Guess I didn’t realize how many people take equity out of their homes, take out loans for cars, etc. I drive old cars that I bought used with cash. . .pay off credit card balances in full each month. ..
I’m surprised how much people really live on loans. It really never occurred to me to take equity out of my house for anything (I guess because I don’t care about updating or remodeling or adding on).
I must be relatively non-materialistic.
It’s a shame our economy is so overwhelmingly based on credit.
Maybe things will be changing now and people will learn to live more frugally.
So much of what Detroit produced in 1944 was destroyed, either in battle, or in the boneyards of spent junk after the war. You are equating government war spending with economic growth, but the two are not the same. American industry committed stupendous feats of production and ingenuity that were unmatched by any other mortal, but it was done to win a war. Our losses far exceeded any gain that war "stimulus" spending is purported to have obtained. As far as getting us out of the Depression, well, all we really got was the worst war in history and a ruined world, probably a bad trade.
Thank you for taking the time to write 104; I find it invaluable.
I think the same thing could happen in our future.
Wow.....looks like tomorrows news .
Thanks for the excellent synopsis! Do you have a particular book in mind that would more fully explain what happened yet is not too dry?
Thanks for the ping Travis!
Thanks POF for pointing out that read.........history seems to repeat itself.
http://www.cato.org/pubs/journal/cjv14n2-7.html
As we once posted months ago, we are in the front row seats of history and history is nonlinear. Protect yourselves from all threats, financial and physical, because that nonlinear history can be a bitch.
Outstanding read........ Thanks ! I will share that link with my email lists as well !
thanks again !
http://www.jeffhead.com/obamamarketsoil.htm
Stay safe !
If that shoe drops, we're third world in a day...
Suicide. It’s the only way we’re going to survive this.
Travis - if foreigners who own are debt get scared - we'll have to raise the rates. Won't that the start of hyper inflation?
However, James Dale Davidson wrote two books that cover a lot of economic history and put a lot of this in perspective. One is The Great Reckoning, and the other is The Sovereign Individual.
During the GM/F/C testimony in DC they said if the Big 3 fail that 3 million jobs will disappear. This seems like a stretch. What would a reasonable number be?
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