Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Let’s Be Honest: We’re in a Depression, Not a Recession, And There’s No End In Sight
The New Republic ^ | 08/23/2011 | Judge Richard Posner

Posted on 08/23/2011 6:44:28 AM PDT by SeekAndFind

If the notion that we are merely living through the aftereffects of a mere “recession” that ended in 2009 sounds somewhat ridiculous, that’s because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions.

The American economy currently has both a short-term problem and a long-term problem. The short-term problem is that the economy is depressed; it is growing more slowly than the population, with the result that per capita income is declining. The high rate of un- and underemployment is a factor, but is itself the product of other factors, having mainly to do with the reluctance of over-indebted consumers (over-indebted in major part because of loss of equity in their houses, the major source of household wealth) to spend, the reluctance of the impaired banking industry to make risky loans, and the reluctance of businesses to invest and to hire, which is due in part to weak consumer spending and in part to profound uncertainty about the nation’s economic future.

The roots of this catastrophic situations lie primarily, I think, in the incompetent economic management of the Bush administration and the Federal Reserve. The persistence of the depression, however, is due in part at least to surprising failures of the Obama administration—poor leadership, poor management, the sponsorship of incomprehensibly complex health care and financial regulation laws that have created widespread uncertainty that has discouraged consumption and investment, and the inability to explain the nature of the economy’s problems to the general public. These failures caused the stimulus enacted in 2009 to be botched in both in its design and its administration, resulting in discrediting of deficit spending as a response to depression.

(Excerpt) Read more at tnr.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: depression; recession; unemployment
Navigation: use the links below to view more comments.
first 1-2021-4041-45 next last
As if this article were not depressing enough,

He asks, So what can be done now? Probably nothing.

1 posted on 08/23/2011 6:44:32 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind
We’re in a Depression, Not a Recession, And There’s No End In Sight

I beg to differ.


2 posted on 08/23/2011 6:50:09 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Would declining per capita incomes, high personal indebtedness, a depressed economy, high uneployment, underutilized production capacity not lead to deflation and lower prices rather than the inflationary cycle that almost all the talking heads have been predicting?


3 posted on 08/23/2011 6:52:05 AM PDT by Riodacat (And when all is said and done, there'll be a hell of a lot more said than done......)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Let’s Be Honest: We’re in a Depression, Not a Recession

This must be what liberals means when they say the recession is over.

4 posted on 08/23/2011 6:53:42 AM PDT by skeeter
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

The white president’s Great Depression is the black president’s minor economic downturn.

Mustn’t do anything to affect O’Bozo’s self esteem.


5 posted on 08/23/2011 6:55:16 AM PDT by Iron Munro (Muslims who advocate, support, or carry out Jihad give the other 1% a bad name)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Texas Eagle
None of the lightweights running are up to the job of solving this problem.
And whoever wins the title of POTUS will inherit a divided country and we know what will happen to a divided country..
6 posted on 08/23/2011 6:55:55 AM PDT by Riodacat (And when all is said and done, there'll be a hell of a lot more said than done......)
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind
I've always thought of this as a depression - just look at the chronic unemployment.....however the author says "the persistence of the depression, however, is due in part at least to surprising failures of the Obama administration". The failures are NOT surprising, he has have no clue how to run anything thing except into the ground.
7 posted on 08/23/2011 6:56:04 AM PDT by Newton (If Obama is the answer it's probably a stupid question.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Go read the abjectly idiotic follow-up posts to that article and weep.


8 posted on 08/23/2011 6:56:34 AM PDT by PetroniusMaximus
[ Post Reply | Private Reply | To 1 | View Replies]

To: Iron Munro

I, for one, would like to see today’s unemployment rate calculated AND REPORTED in the same manner it was during the Great Depression!


9 posted on 08/23/2011 7:00:29 AM PDT by catman67
[ Post Reply | Private Reply | To 5 | View Replies]

To: Riodacat
None of the lightweights running are up to the job of solving this problem. And whoever wins the title of POTUS will inherit a divided country and we know what will happen to a divided country..

With all due respect, it's not their job to solve this problem. It's their job to stay the hell out of our way so we can solve our own problems. I apologize for the snarfiness.

I get your general meaning, though. As White House Ironing Secretary, Che Carny, said the other day, The White House doesn't create jobs.

10 posted on 08/23/2011 7:05:32 AM PDT by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
[ Post Reply | Private Reply | To 6 | View Replies]

To: SeekAndFind

If this is a depression, I can handle it. I don’t want it getting worse as I know some who need jobs.


11 posted on 08/23/2011 7:07:30 AM PDT by Conservativegreatgrandma
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

We will remain in this depression until Perry takes office in 2013


12 posted on 08/23/2011 7:07:41 AM PDT by TexasFreeper2009 (Obama = Epic Fail)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Depression versus Recession

Recession is the falling down part. Depression is staying down. Normally, the recuperative powers of a market-oriented economy are sufficient that the falling-down part is immediately followed by a rising-back-up part. But, that’s not happening now and that didn’t happen during the 1930s.

Why?

According to the Great Obama, it’s because of earthquakes, “speed bumps,” and other bad luck events.

It’s like Global Warming. We continue to see CO2 building-up in the atmosphere, but global temperature has flattened out. At some point, you’d think, the scientists will look for another cause of global temperature. But, those who believe in AGW desperately cling to their Hockey Stick theory.

Similarly, Keynesian economics did not rescue the economy from an under-employment equilibrium during the ‘30s, and it’s not rescuing the economy now.

So, what constitutes the normal recuperative power of a market-oriented economy? At some point, investors perceive a profit-opportunity in hiring labor and other factors of production, because of their low cost and because of the low rate of interest, in anticipation of selling their production in the future at a profit.

Why isn’t this happening? Why is money staying on the sidelines? Why is cash building up in corporate treasuries, staying or moving off-shore, or being exchanged for gold and other such hedges against inflation and political risk?

Well, duh, could it have something to do with the socialists we have in Washington who attack profits every opportunity they get? Could it have something to do with the enormous fiscal mess of the government in Washington, that puts every dollar of private income and wealth at risk?

Do they really think people in the private sector to be so stupid as to not notice that their government is insolvent and could not ever make good on all the promises it has made to its bondholders, current and retired civil servants, the aged, the poor, the sick, green industries, farmers, etc., etc., not to mention those who own government-guaranteed mortgages, defined benefits plans and bank deposits?

Do they think we are as stupid as the people who vote Democrat?


13 posted on 08/23/2011 7:08:44 AM PDT by Redmen4ever
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

The garment industry in NYC is dead and buried. The Automobile Industry in Detroit done.

Guess who is responsible? Me?

I do not think so.


14 posted on 08/23/2011 7:10:14 AM PDT by Radix ("..Democrats are holding a meeting today to decide whether to overturn the results of the election.")
[ Post Reply | Private Reply | To 1 | View Replies]

To: catman67
I, for one, would like to see today’s unemployment rate calculated AND REPORTED in the same manner it was during the Great Depression!

Excellent point!

It is just government cover-up to remove people from the U3 unemployment numbers because they have been out of work too long!"


15 posted on 08/23/2011 7:10:23 AM PDT by Iron Munro (Muslims who advocate, support, or carry out Jihad give the other 1% a bad name)
[ Post Reply | Private Reply | To 9 | View Replies]

To: SeekAndFind
"...inability to explain the nature of the economy’s problems to the general public..."

Actually it is an unwillingness on the part of Obama and the Congress based on self-preservation. If they were to honestly explain to the American public why we are in the mess we are in and the decisions that have led us to this point, there would be an instantatneous revolt adn the lives of politicians wouldn't be worth diddly-squat.

16 posted on 08/23/2011 7:10:53 AM PDT by semaj
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
I've been a student of Posner's for years, especially on his interest in the economics of property rights. Indeed, my dissertation was based upon some of his ideas. However, his statement that anything that takes money of the economy, such as reducing federal spending will deepen the recession is suspect. The federal gov't spends money either by borrowing or from tax revenues. If the gov't reduces spending because taxes are reduced, it is actually a net plus for the economy. The reason is because the gov't expenditures multiplier (b/1-b where b=MPC) is always one less than the private sectors' expenditure multiplier (1/1-b). That is, a permanent and meaningful tax cut will enhance consumer spending, which leads to more demand, which leads to more inputs (labor) which actually leads to greater federal tax revenues as more people are hired back into the labor force, making a larger tax base. Also, borrowing by the gov't can crowd out real investment that might take place in the private sector.

In my mind, the path to recovery is clear: Cut personal and corporate income taxes across the board and cut gov't spending. Indeed, I'd love to see a flat tax of 17%, as suggested by Friedman years ago. (BTW, Poser and Friedman worked together at Chicago years ago.) In a nutshell, we can get along quite nicely with less gov't spending. The idea that the gov't knows how to spend my money better than I do is simply a position I don't agree with.

17 posted on 08/23/2011 7:11:46 AM PDT by econjack (Some people are dumber than soup.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
We're in an intended depression brought to us by the radical left dems and the illegal alien in the WH. It happened faster than the illegal intended...thought it'd happen after his re-election. But what does he know...he knows practically NOTHING....that's affirmative action for you...
18 posted on 08/23/2011 7:13:40 AM PDT by shield (Rev 2:9 Woe unto those who say they are Judahites and are not, but are of the syna GOG ue of Satan.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
My guess is that my grandkids and great grandkids will be studying this point in time in high school and college as the early days of the second great depression. They will read about the unsustainable debt levels, the huge annual deficit spending by the government, the levels (41mm+) of citizens that were on food stamps, and look at the market charts showing the large dip in 2008-early 2009 followed by the artificial pump up in mid-2009 to mid-2011 followed by wild up and down swings right before the market graph plunges steeply downward, and they will wonder (as I did when learning about the 30's Depression) how folks in this day could keep from seeing what was about to happen.

They will be amazed at our society's intent on ignoring all the signs of what was coming. And then they will realize why they are the first generation that will not live better and at a higher standard of living than the previous. Then they will be mad at what we did to their future.

19 posted on 08/23/2011 7:21:16 AM PDT by OB1kNOb (When scraping bottom of political candidates barrel, the top layer of scum isn't better than bottom.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

What a piece of blame and propaganda...

Of course letting the Democrats off the hook who wouldn’t do a thing to prevent all this, and in fact voted against it’s prevention...


20 posted on 08/23/2011 7:31:23 AM PDT by Freddd (NoPA ngineers.)
[ Post Reply | Private Reply | To 1 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-4041-45 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson