Comments on: Weakest employment market since the Great Depression

By: Is economic boom around the corner? « naked capitalism

Is economic boom around the corner? « naked capitalism — Fri, 11 Sep 2009 16:07:19 +0000

[...] steam, a lot of well-respected economists and policy makers have begun to construct what I consider a revisionist history of events. It goes something like [...]

By: doctorx

doctorx — Mon, 07 Sep 2009 14:51:00 +0000

Thanks, Ed!

At first I didn’t see the updated chart on your web site. This is most
interesting. IMO this puts the “boom” of the late ’90s in its place as
much more of a financial bubble than a transformative “true” boom.
Good times just rolling along for “banksters” but all the malinvestment
spawned by the boom has left us struggling to find a theme.

PS Did you come up with the term “Fake Recovery”? Love it . . .

Larry/DoctoRx

By: jake chase

jake chase — Fri, 04 Sep 2009 14:55:00 +0000

What we are still facing is potentially worse than the Great Depression. Government at least remained solvent through the thirties. It was running surpluses. Debt was liquidated and asset prices fell and there wasn’t much consumer debt, so all you had to do was to stimulate business men’s animal spirits and convince people who were hoarding money to spend it. Today, we have preserved all the debt, the government continues functioning only by the grace of China, credit is only available for speculation, business operates at sixty percent of capacity with no incentive to add new investment, and those in leadership roles are simply cheerleaders for a return to business as usual, which means blowing up another bubble. Unlike in the thirties, we cannot even look forward to a war which would destroy excess capacity (hopefully in other countries of course). So what exactly makes you think this looks like 1975?

By: Uncle Billy Hates Lies

Uncle Billy Hates Lies — Fri, 04 Sep 2009 07:46:00 +0000

Conflation. You’ve been reading Baseline Scenario, haven’t you.

****************

“Nowhere near the Depression

When it comes to this core question, I agree wholeheartedly with Meltzer. This is not the Great Depression II, nor will it be, nor was it likely to have been. I wrote a fairly personal post on this very point at the height of the panic last year called “Worse than the Great Depression.” My point was that America, the world really, is much richer than it was in 1929. The social safety net is much more robust. And policy makers are more knowledgeable than they were eight years ago. Comparisons to the Great Depression are misplaced.”

Two things that might be worth reflecting upon: 1) Your outlook would probably a lot more sober if you were facing unemployment yourself. 2) Social safety net? Are you insane? Charities and soup kitchens and shelters are already closing down because they’ve run out of funding. States writing IOU’s. Unemployment Insurance? Good grief, is that what you’re counting on? Either you are being paid to lie, or you incredibly closed off to the real world, or both. People knew vaguely how to survive back then. These days knowing how to program the microwave is considered useful. Millions of people who don’t know how to care for themselves adequately in a crisis, with millions of guns. Do the math.

By: Edward Harrison

Edward Harrison — Thu, 03 Sep 2009 23:25:00 +0000

This is the chatter in markets about the surge in gold prices:

http://blogs.wsj.com/marketbeat/2009/09/03/strategist-golds-surge-suggests-investor-jitters/

By: LavrentiBeria

LavrentiBeria — Thu, 03 Sep 2009 22:07:00 +0000

“But I do think it is that sort of severe downturn which gave us Hitler and Mussolini and I worry about a 1937-style outcome.”

We’re in the grip of a two party, one party state that hands the operation of the economy over to the largest banks and corporations, that lies us into aggressive wars and proudly announces that it tortures people and you’re worried about us falling into fascism? Its not clear to you that that’s already happened? Don’t let the absence of marauding street toughs fool you, they’re doing their warm ups at the town hall meetings.

By: Anonymous

Anonymous — Thu, 03 Sep 2009 21:40:00 +0000

Any explaination for the surge in gold recently?
Have we hit the inflection point on the dollar?
where does one place your money when the fed is debasing the currency and the economy has ratched down several notches?
Sitting in a bank savings account or money market earning zilch is not going to cut it while the value of the dollar could possibly plunge any day.

By: Edward Harrison

Edward Harrison — Thu, 03 Sep 2009 21:07:00 +0000

100%. The question is how best to undo this malinvestment. Libertarians would tell you that we need to allow free markets to work. Keynesians would advocate stimulus.

Either way, we are facing a long, hard road if we want to correct prior malinvestment and return to sustainable long-term economic growth. The last generation of growth was pure fiction which came largely from taking on more debt.

By: Edward Harrison

Edward Harrison — Thu, 03 Sep 2009 20:47:00 +0000

I just added that chart for you now doctorx.

By: dansecrest

dansecrest — Thu, 03 Sep 2009 20:45:00 +0000

Excellent post, Edward. You nailed it…

By: Anonymous

Anonymous — Thu, 03 Sep 2009 18:36:00 +0000

Nice article ed. Unfortunately the dopes that created this disaster are still running the show. It is time to clean house and take the medicine now before this spirals into something far worse for our country. 10-20 years of malinvestment cannot be solved in a year or two.

By: doctorx

doctorx — Thu, 03 Sep 2009 17:39:00 +0000

I ignored the Meltzer piece because of your points: too ideological.

The chart is interesting. Is it possible to update it adjusted for population/work-force growth over the decades?

Also interesting how the nadir in 1961, following 3 recessions in 8 years, was followed by a rapid rise in this parameter.