When will it end?! (user search)
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  When will it end?! (search mode)
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Poll
Question: What do you think will happen?
#1
The worst Depression ever, DOW around 800, 30% unemployment, Obama drops the ball badly, does not even run for reelection.
#2
A very bad depression. DOW around 2,000, unemployment around 15-20%, a Hooveresque Obama term.
#3
Severe Recession. 3-4,000 DOW bottom, 15% unemployment. Obama gets trounced.
#4
Bad recession 12% unemployment, 5-6,000 DOW bottom. Obama has a chance at re-election, but thinks aren't that great in the world.
#5
The Economy will recover within Obama's term, be at 2004-5esque levels. Obama wins reelection by a decent margin
#6
DOW reaches a new high by the end of Obama's term. Reagenesque victory
#7
Huge increase in economy, a new definition of landslide for the president.
#8
What are you talking about? The fundamentals of the economy are still fine.
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Partisan results


Author Topic: When will it end?!  (Read 8299 times)
Sam Spade
SamSpade
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« on: March 03, 2009, 01:01:00 AM »

The last four options given are simply not realistic in my book (less than 0.0001%, maybe).

Right now, the most likely of the options to me is "Severe Recession", which would be more like Great Depression 2, and would bottom out at more like 3600 in the DOW, with 20% unemployment.  I give this option about 40% chance or so.

AS always, I would hope for the "Bad Recession" option, except this means more like 4500 on the DOW, with 15% unemployment.  It should probably be termed a depression, and would be.  I would give this option about 25% chance of occurring.

Btw, the "Very Bad Depression" is clearly a depression worse than the Great Depression and would bottom out around 1987 crash levels (i.e. 2000 in the DOW), 25-30% unemployment - a whole host of S&P 500 companies go bye-bye (which will also happen in the "Severe Recession" scenario - just not the same amount).  You need to include the fact that this type of depression has, I figure, about a 1 in 3 chance of taking out our form of government permanently (the others are, of course, much lower).  The odds of this one occurring have risen a lot of late to me - I put it at about 30% (note - higher than the good scenario).

The Worst Depression ever scenario more likely than not results in our form of government changing permanently.  It cannot be discounted, given present actions - even though I would have, in the past, put it at the level of kookdom.  I must give it a 5% chance now.
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Sam Spade
SamSpade
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Posts: 27,547


« Reply #1 on: March 03, 2009, 10:06:15 AM »

The last four options given are simply not realistic in my book (less than 0.0001%, maybe).

Right now, the most likely of the options to me is "Severe Recession", which would be more like Great Depression 2, and would bottom out at more like 3600 in the DOW, with 20% unemployment.  I give this option about 40% chance or so.

AS always, I would hope for the "Bad Recession" option, except this means more like 4500 on the DOW, with 15% unemployment.  It should probably be termed a depression, and would be.  I would give this option about 25% chance of occurring.

Btw, the "Very Bad Depression" is clearly a depression worse than the Great Depression and would bottom out around 1987 crash levels (i.e. 2000 in the DOW), 25-30% unemployment - a whole host of S&P 500 companies go bye-bye (which will also happen in the "Severe Recession" scenario - just not the same amount).  You need to include the fact that this type of depression has, I figure, about a 1 in 3 chance of taking out our form of government permanently (the others are, of course, much lower).  The odds of this one occurring have risen a lot of late to me - I put it at about 30% (note - higher than the good scenario).

The Worst Depression ever scenario more likely than not results in our form of government changing permanently.  It cannot be discounted, given present actions - even though I would have, in the past, put it at the level of kookdom.  I must give it a 5% chance now.

Spade, should this 'doomsday' scenario occur, what form will this new government take?

whoa, I have no clue...

Actually, if I were to make a reasonable guess, given the history of this country and the makeup of the people likely to be the most "wanting blood", I would place my money on a low-level military dictatorship.

I should just note on the side that it is interesting to see the love for Keynesian government pump-priming (even though that's really not what is going on, but whatever) and the belief in its effectiveness.

We're living right now in the middle of a paradigm shift in thinking with the ends being unknown, of course. 

However, some ideas will be so discredited that people will not rely on them for at least a generation. 

One of them may be the classical/neo-classical idea (i.e. the Republican model at present - I see no reason to see that determine they have changed for now) that private individuals and companies can borrow and spend into infinity without negative consequences and that government should be encouraging such actions.  This will bring certain growth to the populace.

Well, the introduction of government encouragement to the equation (to such a large extent) is somewhat a new phenomenon, but the rest of this is the same old game we've seen played time and time again in the past - see 1837, 1873 and 1929 for example (if not 1715 or so).  It has been discredited before and it will be discredited again.  It will probably be played again at some point in the future - at points unknown.

The second idea is a good bit more pervasive in the US (considering its origins are older - 1933 compared to mid-1980s AND, more importantly, belief in its healing effects are strong, due to misplacement of its success) and its discrediting will probably consummate the paradigm shift referred to above.  It is the concept that government can borrow and spend into infinity without negative consequences.  Its origins are Keynesian in principle.  Note the connection to the other model.

This, too, is actually not a new phenomenon (whether hyper-inflationary or deflationary in effect), but its collapse will be new to the United States (we've come close before).  Depending on the scale of the collapse, this is the type of collapse that often leads to governmental collapse.  I am not predicting such - but I really don't know.  It will probably be played again at some point in the future. 

I will note that if it is discredited less than the private capital spending model (noted above) - another one of its collapses will occur again before the private model does.  That type of scenario will almost certainly lead to dramatically lessened living standards for the US over the long-term, unless one of a few very unlikely scenarios occurs in my mind.
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Sam Spade
SamSpade
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Posts: 27,547


« Reply #2 on: March 03, 2009, 02:40:20 PM »

Then again, I'm not quite as pessimistic as Sam. I do believe there is more competence to deal with this stuff today than there used to be.

I understand.  However, you're wrong here.  There's less competence in dealing with this stuff than in the past.  Much less.  Let me count the ways.
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