2009-03-02 20:50:38
Is This a Depression or a Recession?
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Are we currently struggling through a REALLY bad recession, or is this something worse?
I think more and more people are starting to come to the conclusion that we are currently in a depression.
We've gone from downturn to recession to deep recession to depression. There are now some people in the media saying that we are going through a "mild" depression, or a depression with a "small D".
As we've mentioned before, many notable people have already proclaimed that we are currently in a recession. This includes the managing director of the International Monetary Fund and the chief economist of Merrill Lynch.
Now, there is no exact definition of a depression - it's completely subjective. Many people prefer to say that a "depression is worse than a recession, and lasts about twice as long".
Based on that simple definition, can anyone actually argue that we aren't in a depression right now?
This downturn has now lasted 15 months, and there is absolutely no indication that things are on the verge of stabilizing. When all is said and done, this downturn will likely last 24-30 months, perhaps even longer. Whether you want to call it a depression or "super" recession, it is still much worse than a standard recession.
The American economy was absolutely crushed in the fourth quarter of 2008. The American consumer, who is the grease in the engine of the global economy, closed their pocketbooks and started saving wherever and whenever they could. This sent a shock-wave through the global economy, and is one of the leading reasons as to why there is a global recession/depression.
Those who felt as though a significant downturn in the U.S. economy would result in a "re-balancing" of global economic power have been proven dead wrong. The United States is going down, but most countries throughout the world are going down faster. Countries such as Russia and China are suffering tremendously through this global recession.
Wall Street, as we know it, will never be the same. The global banking system is on life support, with many governments being forced to prop up their biggest banks.
Real estate values throughout the world have been decimated. Most major market indexes are now down 60%+ from their peaks.
Major industries are crumbling before our very eyes. The auto, banking and newspaper industries are just a few of the casualties of this unprecedented downturn.
Many major countries are taking on massive amounts of debt in order to throw money at the problems that currently plague us. Trillions upon trillions of dollars have been thrown at the problem already, with no end in site.
Companies such as AIG, C and GM are in constant need of billions upon billions of dollars in bail-out money. Where will it end? And how will we afford it?
Some of the (previously) largest and most revered companies in the world are now worth just a fraction of what they once were. BAC. C. GM. GE. The carnage just goes on and on, and this doesn't include the companies that went bankrupt.
The entire banking system is being re-made before our very eyes. Wall Street will never be the same. Many of the most prestigious newspapers and periodicals are on the brink of going under, if they haven't already. Unemployment numbers are spiraling higher. Banks aren't lending. Oil is plummeting due to a sharp fall-off in demand. Car sales are non-existent, as people are too terrified to make any new purchases with so much uncertainty.
How is this not a depression?
If it sounds like a depression and looks like a depression, then it is probably a depression.
To those who email me and say "stop saying there is a depression, because there isn't" - what's your evidence? I would love to hear your argument as to why this isn't a depression. Feel free to comment below if you feel that I am wrong, and that this isn't a depression. I would love to hear from you.
Filed under: The Economic Meltdown
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COMMENTS
Comment by Maven on December 08, 2009 @ 10:45 am
It' pretty hard to take your word on what constitutes a "depression" when you can't even figure out what the word "decimate" means. Holy shit, we're on the friggin' INTERNET. Couldn't you have pulled up Dictionary.com long enough to avoid looking like an idiot?
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Comment by Dave on November 01, 2009 @ 6:03 pm
This is a depression. I have no doubts and you know what people this is only going to get worse, being in denial is not going to solve anything or make it go away. If we admit to what is happening then we can be better inclined to help each other through it. If we choose to stay in denial we will watch each other fall by the wayside because we don't see the real situation. It's like wanting the band to play while the titanic is sinking. The news media has lost all credibility because it no longer says the truth. It prefers the lie.
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Comment by jack ward on July 19, 2009 @ 6:09 pm
All the indicators point to recession. The alarming fact is the speed of the descent in purchases by the American people. Retail stores are practically empty. Auto dealerships....well, we all know the answer there. Unemployment is at 40 million and still going up. The media has been quite quiet lately regarding the economy. The major networks are constantly gorging us with M.Jackson and other celebrety deaths eating up valuable air space, protecting the image of Obama and the stupid congress. We are in a depression folks.
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Comment by Hawke Lin on March 07, 2009 @ 6:47 pm
Americans have all along want to hear only 'Good' news. So as long as this thinking persist a depression is only a recession!
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Comment by JayZ on March 07, 2009 @ 12:38 pm
If the 70-83 time frame was the great stagflation, this is certainly the beginnings of a depression. Why oh why were all of the smart people ignored? Mises institute, Cato, Paul C Roberts, Stiglitz, Rockwell, Ron Paul... This could have been mitigated to some degree if we had just listened to them.
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Comment by Mike on March 07, 2009 @ 12:59 am
See, this is how it will unfold...
WW3 will start, they will finally find KilRoy, Glen Miller, and a time machine....dated 1944
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Comment by Tom on March 03, 2009 @ 2:27 am
This is WITHOUT A DOUBT a depression. There is no two ways about it.
I too would love to hear someone try to argue that this is only a recession.
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