Talk Elections

I heard this being floated around at work.  With several major financial institutions biting the dust the past week, my co-workers are comparing this to what happened in late 1929 into 1930 at the onset of the Great Depression.  They are tossing around the idea that this is looking eerily similar to the events 78 years ago.  What say you?  I don't necessarily agree with the idea that we're headed to a depression.  One reason is, the American Economy of 2008, while in a recession, is much stronger than the American Economy of 1929-1930.  80 years has made our economy very strong.  Plus, with several "recessions" in those 80 years, those events have made our economy very resilient and we have been able to bounce back nicely from all the recessions we've had in the past 70-80 years.  I want to get your honest, non-partisan, opinion, though.

No; certainly not anything nearly as severe.  We may hit a fairly bad recession, but it won't be nearly as bad as the Depression was.

No

No and if we did we'd better hope we don't get a president who extends it (like FDR).

Perhaps that president would end it by declaring an unnecessary war even sooner than FDR did

YES WE'RE ALL DOOMED AND ITS THE RETHUGLICANTS FAULT!!!!!!!!!! LOLZ!!!!

Nope, unless we repeat the same mistakes Hoover and FDR committed.

Obama raising taxes in the middle of this al la FDR is a good way to cause one. We know he's rooting for it right now.

It's looking like the worst since the Great Depression,but there's no evidence that it'd be as bad as the Depression. Bush did screw things up pretty bad, so you never know.

Most people would get a tax cut, at least if they still have jobs after the Bush economy.

Okay. Let's raise taxes on the wealthy, capital gains, payroll, and social security and see how the economy responds. I bet it would turn around!

I highly doubt Obama is going to attempt to do all of that at once. That said the immense costs of what he seems to be advocating make me extremely nervous. We have enough unfunded liabilities as it stands without him promising to use government to practically part the seas.

Depression, probably not.  Severe and lengthy recession, probably.

His tax cut is much cheaper than McCain's.

How will he pay for his 500 Billion in new spending?

There is, of course, no formal economic definition of a "depression." The question is meaningless.

JFern, your signature line proves FDR's failures in improving the economy - despite the fact that there was a 9% rise in unemployment under Hoover, in all his years as President, FDR was only able to grow the economy enough to bring back half the jobs. So despite the fact he's at the top of your list, he was probably the least successful in improving the unemployment rate of all the presidents on there.

What would you do after Pearl Harbor? Stick your head in the sand? Invade Iraq?

Go to war with Germany of course, duh.

They were allied with Japan, duh.

Well, Obama is calling for billions more in spending. Last time I checked, McCain wanted to cut spending, something his record has shown for a long time. Cutting taxes and increasing spending makes little sense, and this is what Bush did that got him in so much trouble.

McCain isn't going to cut spending. He will continue wasting money on this Iraq war and corporate bailouts. Palin will push for some more Bridge to Nowheres in Alaska.

Goodness. It's kind of impossible to win with you. The war in Iraq is drawing to a close and both candidates will begin to draw down troops fairly soon. Obama wants to delay it so he can win the Presidency first. Statements like Palin pushing for a bridge to nowhere is pretty silly to say.

And what would Obama have done with the financial crisis? He wouldn't have supported the bailouts?

You claimed McCain wanted to cut spending. Obama is irrelevant to that claim. Do you really think that McCain plans on leaving Iraq soon? He was strongly against any sort of timetable before.

He was against cutting and running, but now that the Iraqi government is calling for a timetable, I would surely hope he isn't for overriding their wishes and staying in. And I don't think he is.

Probably not a depression.  Altho if the WTO collapses, we could have one.  The Doha round is dead, but that's not the same as going backwards on true free trade.

Not a depression, but it will be pretty negative. And McBama won't stop it.

Of course 'tax increases' or 'cuts' do not have any effect on a 'recession' or 'depression'.  Only demand-led State actions such as massive spending increases or redistribution to the oppressed can alleviate economic downturns (particularly severe ones).  Alas the only method our current ideological dead-end allows us for redistribution is through 'interest rate cuts', which is a very weak and round-about method.

So, is the country headed for severe economic misery?  Very probably, but this will not be any innovation for the majority of american workers, who have been living in severe economic misery for decades now.

People who think that this is like the Depression (or clearly heading that way) obviously have no idea quite how ghastly the Depression was.


The Nazis declared war on the U.S first.

How many times do I have to show you how wrong this is?

Things just got much worse.

The feds have made it clear that if you are rich, you want piss away as much money as you want and not have to worry as the taxpayer will be stuck with the bill.

I got out of the market when I say just how incredibily out of control the system was, now I'm told that as a taxpayer I'm going to be on the hook for totally irresponsible behavior.

It was a joke, get over yourself.

Well, I've recouped some losses over the past few days. I've bought 300 shares of Citigroup at $15 which has rocketed to $21 today. I guess I can just sit back and enjoy the ride. Things will turn around in due time. It may take a while, though.

“It's a recession when your neighbor loses his job; it's a depression when you lose yours.”
                                                                                                  --Harry S. Truman.

The unemployment nationwide is about 6.5 percent, which is high, and failed business will probably raise that figure, but that's a long way from the 25% that was reached in 1933. 
Who knows, anything can happen.  But a major depression, defined as an any economic downturn where real GDP declines by more than 10 percent, won't have the same flavor as the 1929 crash.

You have to look at the causes of the great depression:  debt, money supply, trade decline, bank failures, and lack of government deficit spending.  And the structures are different today.  The government isn't shy about massive deficit spending, for example.  And banks are FDIC insured.  And the government has taken a kneejerk response to large business failures. As Carl pointed out, we're all on the hook now. 

Also, the Great Depression of the 1930s is two separate events:  an incredibly severe depression lasting from August 1929 to March 1933 where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression of 1937-38.  The US hasn't experienced this type of depression in the post-war period.  Even in the worst period of recession, November 1973 to March 1975, real GDP fell by 4.9 percent.  The current forecast calls for a growth, albeit small, in real GDP over the next few years.

Then again, if you lose your job, it's fair for you to call it a depression.  And I think Opebo makes a fair point about the widening gap, which doesn't show up in most of these economists' definitions.  The income inequality has been increasing for some time now, just as it did in the 1920s, and it is something to keep in mind.  Top five percent in terms of wealth seeing massive income increases, while the bottom 20% are seeing small increases, or none.  Ominous, for sure, but not as bad as in the Roaring Twenties.

Also, the core problem over the coming decades will be ecological in nature.  Soil erosion, unsustainable population growth, anthropogenic global climate change, more frequent tropical storms, and the like.  I think this may have a bigger economic effect than is currently realized, so if any depression does occur--and I don't think it would be as staggering as that of the 30s because of safeguards and knowledge learned--it would definitely have a different flavor.

Good cover.

While I agree that its unlikely that unemployment will be allowed to go much beyond ten per cent, and the government will pump massive amounts of money into the system, I am really concerned that the system has been really screwed up so that those who run amok are bailed out by the responsible people.

Why bother creating of saving when those who destroy finanicial institutions gain by their deceits and those who act responsibly are soaked with the bill?

Are you fu(king stupid?

And you think the Free Market alone would bring back all of those jobs?

No, but increasing taxes, regulations, AND backing strikes during a depression was one of the stupidest possible things anyone could have done. In fairness though it would have lasted longer than most prior crashes anyway thanks to Hoover's protectionism and tax hikes too.

Quit being an ass.

Um.. you do understand that when one is in a recession one needs to discourage 'savings' and increase consumption, do you not?