THE AMAZING DEPRESSION
I always wondered why they called the depressionary period in the early 1900's "the great depression" as it was a horrible period of time. I just figured it was one of those oxymoron things. Yet, after learning about the the depth & breadth of the financial collapse & subsequent economic downturn I came to understand why it got the name & why it was appropriate, even if it was an oxymoron. The Great Depression was just that...great in its devastation of the economy & its impact on Americans lives & the country at large.
It seems apparent to me that we are currently on the precipous of the next deep & long period of economic distress & weakness. What we call it is yet to be determined as we are just first acknowledging it. As of early last week the NBER, which is charged with the duty of calling & marking recessions, its official that we are in & have been in an extended period of economic weakness...sometimes referred to as a recession. Others are still waiting for the text book example with two consecutive quarters of declining GDP, to admit the obvious, but statistics aside, we all know where we are & what is happening.
Now for the naming of it. So far, the best I've seen is "The Great Recession", which is referring to the fact that this economic weakness is now being seen to have began in December 2007, making this recession a full 12months in duration (so far we have only Q3 2008 at a down 0.5%, hardly a decline at all according to the data)& most are looking for it to intensify this quarter (Q4 2008)& for it to last through at least the middle of 2009 (Q2 2009). That would make it an 18+ month long recession, which is much longer than the average 10 month recession & longer than the 16 month weakness of the longest recession on record.
While I am in agreement that the weakness will last longer then usual, I am not so sure when it will end or how we will emerge from this extended period of weak economic activity. In fact I see many things that could make for an even worse forecast, something like a depression, defined as an 'extended' period of declining GDP growth lasting longer than two consecutive quarters.
If that were to happen, everyone would be amazed. Amazed that it could happen again even though we have learned from the past & have experts in charge looking out to prevent just such a scenario. I think its very possible that this generation is about to experience the biggest "come down" in the country's history. And I offer what it should be called... The Amazing Depression.
It will be amazing from many standpoints not the least of which will be how could this happen even with all expert knowledge of the first depressionary experience. Amazing that it occurred even with all the heroic efforts of the FED, Treasury, regulators, & congress trying to prevent it from happening. With Bernanke being the depression historian & having the hindsight to be proactive & learn from past mistakes. With Paulson's wall street smarts, unorthodox & inventive actions he has initiated to halt the momentum towards the abyss. With Congress nationalizing entire industries while doling out trillions to arrest the financial collapse. With regulators on the job with creative tools to manage the market participants. And the president continuously pointing towards positive & productive resolutions to the economic malaise. Still we head towards further economic weakness & uncertainty with the financial system seemingly broken.
As hard as it is for us to believe & accept, we may very well be in for that dreaded extended period of declining economic activity, also known as a depression. The powers that be are on the job & working feverishly to prevent that. Much of what is being done has never been done before & so the results & consequences are unknown. It is painfully obvious that so far at least, all that has been done has not worked to arrest the economic weakness from getting worse.
Going into the year end of 2008, a historic year on many fronts, not the least of which will be the crash of the equity markets here & around the world. 2009 will be greeted with further terrible economic data & corporate downsizings. Hopefully Barak Obama will be able to lift our spirits enough to overcome the financial hardship that looks poised to impact rich & poor alike. Businesses are bracing for the most significant economic reorganization of the last century & government is prepared to put in place rules & regulations to make sure this will not happen again...another really bad thing.
The trillion dollar stimulus of the new millennium will be set forth & the US will try to lead the world from the brink of financial & economic collapse. If it doesn’t work, we will be in the midst of what may be called..... The Amazing Depression.
I always wondered why they called the depressionary period in the early 1900's "the great depression" as it was a horrible period of time. I just figured it was one of those oxymoron things. Yet, after learning about the the depth & breadth of the financial collapse & subsequent economic downturn I came to understand why it got the name & why it was appropriate, even if it was an oxymoron. The Great Depression was just that...great in its devastation of the economy & its impact on Americans lives & the country at large.
It seems apparent to me that we are currently on the precipous of the next deep & long period of economic distress & weakness. What we call it is yet to be determined as we are just first acknowledging it. As of early last week the NBER, which is charged with the duty of calling & marking recessions, its official that we are in & have been in an extended period of economic weakness...sometimes referred to as a recession. Others are still waiting for the text book example with two consecutive quarters of declining GDP, to admit the obvious, but statistics aside, we all know where we are & what is happening.
Now for the naming of it. So far, the best I've seen is "The Great Recession", which is referring to the fact that this economic weakness is now being seen to have began in December 2007, making this recession a full 12months in duration (so far we have only Q3 2008 at a down 0.5%, hardly a decline at all according to the data)& most are looking for it to intensify this quarter (Q4 2008)& for it to last through at least the middle of 2009 (Q2 2009). That would make it an 18+ month long recession, which is much longer than the average 10 month recession & longer than the 16 month weakness of the longest recession on record.
While I am in agreement that the weakness will last longer then usual, I am not so sure when it will end or how we will emerge from this extended period of weak economic activity. In fact I see many things that could make for an even worse forecast, something like a depression, defined as an 'extended' period of declining GDP growth lasting longer than two consecutive quarters.
If that were to happen, everyone would be amazed. Amazed that it could happen again even though we have learned from the past & have experts in charge looking out to prevent just such a scenario. I think its very possible that this generation is about to experience the biggest "come down" in the country's history. And I offer what it should be called... The Amazing Depression.
It will be amazing from many standpoints not the least of which will be how could this happen even with all expert knowledge of the first depressionary experience. Amazing that it occurred even with all the heroic efforts of the FED, Treasury, regulators, & congress trying to prevent it from happening. With Bernanke being the depression historian & having the hindsight to be proactive & learn from past mistakes. With Paulson's wall street smarts, unorthodox & inventive actions he has initiated to halt the momentum towards the abyss. With Congress nationalizing entire industries while doling out trillions to arrest the financial collapse. With regulators on the job with creative tools to manage the market participants. And the president continuously pointing towards positive & productive resolutions to the economic malaise. Still we head towards further economic weakness & uncertainty with the financial system seemingly broken.
As hard as it is for us to believe & accept, we may very well be in for that dreaded extended period of declining economic activity, also known as a depression. The powers that be are on the job & working feverishly to prevent that. Much of what is being done has never been done before & so the results & consequences are unknown. It is painfully obvious that so far at least, all that has been done has not worked to arrest the economic weakness from getting worse.
Going into the year end of 2008, a historic year on many fronts, not the least of which will be the crash of the equity markets here & around the world. 2009 will be greeted with further terrible economic data & corporate downsizings. Hopefully Barak Obama will be able to lift our spirits enough to overcome the financial hardship that looks poised to impact rich & poor alike. Businesses are bracing for the most significant economic reorganization of the last century & government is prepared to put in place rules & regulations to make sure this will not happen again...another really bad thing.
The trillion dollar stimulus of the new millennium will be set forth & the US will try to lead the world from the brink of financial & economic collapse. If it doesn’t work, we will be in the midst of what may be called..... The Amazing Depression.
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