Will there be a new great Depression?

[Heretic_Cata]

Only in Greece

 

[Skwink]

No, I'm pretty happy.

 

[innonimatu]

No. I see slow growth in th US, Japan, and especially Europe in the next few years, though.

I have some doubts as to how well-balanced can the other regions keep their economies. If they don't lock themselves into the folly of fueling them with debt, all will ok. But China is reportedly doing it, and so is Brazil, afaik. 30% growth yoy in private debt isn't sustainable.
Those countries are, however, more likely to just inflate it away or otherwise cancel in, instead of trying the "japanese remedy" of zombie banks.

 

[Cutlass]

No.

Defining a "Depression" as a drop in demand (PQ) by one-third or U3 unemployment rising beyond 15%...the Fed simply wouldn't let that happen. We'd be on QE20.

And I do claim to be 100% sure.


(EDIT: more conventionally, "Depression" is a drop in output of 10%, though there's no hard definition. I use one-third because that's how large the drop was in the 1930s.)

You have a lot more faith in the ability of monetary stimulus than I ever would.

 

[carmen510]

Our economy has been growing, it's just that we haven't been growing fast enough. Generally after a recession ends, growth rebounds to pick up the slack, but that hasn't happened.

Unless we start seeing reductions in output, we haven't gotten ourselves in a depression.

 

[Antilogic]

While I agree with Integral's analysis (we aren't actually in a depression by the numbers), I'm just so utterly pessimistic that I voted 'yes'.

 

[Integral]

You have a lot more faith in the ability of monetary stimulus than I ever would.

I know, right?

The only way I see a Depression happening is if there's some God-awful supply shock, something the Fed can't handle.

(Europe might count, but I'm hopeful...)

 

[Core Imposter]

I think that as the world changes old definitions mean less because they become less relevant.

The real issue is simply when will the Free Pony policies of the Progressive movement push the fiat money schemes, used to purchase political power, to the point of no return, thus yielding a real collapse of the global economic system. Most wealth will disappear overnight. We may be over the event horizon already, just as the Towers were doomed at impact the collapse gave the lie that the event was in our hands. So also will be the Calamity, sudden and unlooked for. Famine, war and destruction is our collective future.

 

[Antilogic]

EDIT: Whoops... just watching.

 

[Omega124]

We're not in a depression, nor will NA will get one in the next 10 years. It's too early to see for Europe, but I will say that the inevitable Eurocrash will be worse than the Dollarcrash, both in the crash itself being bigger and the fallout being more destructive.

 

[Tee Kay]

downtown will stop the Depression.

 

[Commodore]

I don't know, with the lack of hiring, no wage increases, and a sour consumer confidence, It feels were entering a depression and the recession never ended.

There is no lack of hiring. I can go out there and provide you with links to sites that have thousands upon thousands of job listings from all over the US. Just because many people don't meet the requirements for those jobs does not mean businesses aren't hiring. They just won't hire underqualified people just because the unemployment rate is a little higher than usual.

In fact, one of the biggest complaints from businesses now is that they can't find properly qualified people to fill their positions.

 

[Antilogic]

There is no lack of hiring. I can go out there and provide you with links to sites that have thousands upon thousands of job listings from all over the US. Just because many people don't meet the requirements for those jobs does not mean businesses aren't hiring. They just won't hire underqualified people just because the unemployment rate is a little higher than usual.

In fact, one of the biggest complaints from businesses now is that they can't find properly qualified people to fill their positions.

It's so weird that all those unemployed people were apparently qualified enough to have a job a mere three years ago. Do you think the world has changed that much in three years that businesses no longer need all these previously-qualified but now apparently-useless individuals?

And we aren't even talking about the imbalance between thousands of jobs and millions of unemployed. There is a lot missing here.

 

[Elta]

I don't think we are going to be in a depression.


However I think this is the new normal and will be for a long time. I think we ought to take heed not to look at the economy as purely cyclical, no two years are a like. We are slowly destroying our ecosystem and our debt based monetary system is soon to reach it's mathematical limit. The United States no longer produces physical goods like it use to, finance as a percentage of our GDP grows every year, people trade paper and produce nothing /incoherent rambling.

Whatever happens in the long run, we were asking for it.

 

[Commodore]

It's so weird that all those unemployed people were apparently qualified enough to have a job a mere three years ago. Do you think the world has changed that much in three years that businesses no longer need all these previously-qualified but now apparently-useless individuals?

And we aren't even talking about the imbalance between thousands of jobs and millions of unemployed. There is a lot missing here.

Yes I would say the world has changed that much. Well not the world, but the US since that is what I'm referring too. Most of the people who lost their jobs were the unskilled laborers. We are talking the factory workers, tech support (the ones you talk to over the phones, not the ones who actually come to your house), and your run of the mill office worker. Those are all jobs that are now either done by machines or outsourced to foreign workers due to cost effectivness. Now the US is more about skilled labor, technical work, and services.

This transformation didn't happen over the past three years though. This has been happening over the past two decades, but people just refused to see the warning signs. For years the American people were told that their unskilled jobs would disappear due to automation and cheap foreign labor. What did the American people do in response? They laughed it off and continued in their jobs without preparing for the layoffs that were looming on the horizon.

Like I said in a previous thread, people stayed in their jobs without expanding their skillsets despite predictions about the changing economy and what jobs would be in demand in the future (which is the present now). Now they cry foul when the company they worked for for twenty years tells them they are no longer needed because this fancy new robot or software program can do their job more efficiently, when they should really be looking at themselves.

The reality of the economy we live in is that if you want to remain employed you have to know what jobs will be in demand in the future and work to become proficient in those jobs. You have to be ever-changing in this world now. Gone are the days of having one career in your lifetime or just going out and getting a job. It is now not uncommon or that outlandish to hear of people who end up being in three or four different careers in their lifetime. You also have to research trends constantly.

Now your average American worker doesn't like to be ever-changing. It's frustrating, time-consuming, and it makes for a stressful life; but it will keep you employed. People need to get it out of their heads that an education can be completed. The realities of our world demand that you must always learn new things if you want to remain marketable to employers. A person who just completes high school then goes to college for four years and stops once they get their degree will find themselves in the unemployment office at some point in their life. I guarentee it.

 

[Monsterzuma]

there won't be a great depression. the economy has reached a permanently high plateau.

 

[luiz]

I have some doubts as to how well-balanced can the other regions keep their economies. If they don't lock themselves into the folly of fueling them with debt, all will ok. But China is reportedly doing it, and so is Brazil, afaik. 30% growth yoy in private debt isn't sustainable.
Those countries are, however, more likely to just inflate it away or otherwise cancel in, instead of trying the "japanese remedy" of zombie banks.

You are correct. China is already experiencing a slowdown, the current rate of growth cannot last forever. But they will still grow at a quite fast pace in the next few years, even if the advanced economies remain stagnant.

Brazil is indeed growing on borrowed money. What is worse, consumption is booming while production is growing at a very slow pace (in fact industrial production has fallen in the last two months). I wish I could take solace in the fact that I warned the present government's policies are unsusteinable, but the slowdown hurts me as much as anyone else. The GDP growth rate was 7.5% last year, fuelled by an orgy of government spending to elect their candidate (in which they succeeded). But the cost of that was an exploding internal debt and a quickly deteriorating balance of payments. GDP growth for 2011 was originally forecasted (by the government) to be 5%, then it was 4.5%, then 4%, then 3.5%, and now nobody believes in even 3% (and the potential GDP growth for Brazil is estimated at 4.5% at least). Inflation is already above the superior limit of the target (the target is 4.5% with 2% tolerance, and YTD inflation is over 7%). Things are not pretty. Obviously, the situation is not as bad as in Europe, and indeed the fact we have our own currency helps a lot. But all the limitations of the present "growth model" (a complete fraud) have been exposed. And of course when the Brazilian economy slows down so does the Argentinean, Uruguayan and Paraguayan economies. They might even go into recession.

 

[Elta]

You are correct. China is already experiencing a slowdown, the current rate of growth cannot last forever. But they will still grow at a quite fast pace in the next few years, even if the advanced economies remain stagnant.

Brazil is indeed growing on borrowed money. What is worse, consumption is booming while production is growing at a very slow pace (in fact industrial production has fallen in the last two months). I wish I could take solace in the fact that I warned the present government's policies are unsusteinable, but the slowdown hurts me as much as anyone else. The GDP growth rate was 7.5% last year, fuelled by an orgy of government spending to elect their candidate (in which they succeeded). But the cost of that was an exploding internal debt and a quickly deteriorating balance of payments. GDP growth for 2011 was originally forecasted (by the government) to be 5%, then it was 4.5%, then 4%, then 3.5%, and now nobody believes in even 3% (and the potential GDP growth for Brazil is estimated at 4.5% at least). Inflation is already above the superior limit of the target (the target is 4.5% with 2% tolerance, and YTD inflation is over 7%). Things are not pretty. Obviously, the situation is not as bad as in Europe, and indeed the fact we have our own currency helps a lot. But all the limitations of the present "growth model" (a complete fraud) have been exposed. And of course when the Brazilian economy slows down so does the Argentinean, Uruguayan and Paraguayan economies. They might even go into recession.

Define growth model, what do you mean by that? The current administrations economic policy?

Because a lot of people question the idea of an economic system based "growth" at all. There is a big difference in my opinion between a nation producing things of wealth and value for their people and balance sheets.

 

[luiz]

Define growth model, what do you mean by that? The current administrations economic policy?

Because a lot of people question the idea of an economic system based "growth" at all. There is a big difference in my opinion between a nation producing things of wealth and value for their people and balance sheets.

Growth model is the model used to achieve economic growth. Sorry for the tautology, but that's it.

Brazil is a poor country, in which most people do not have an ideal standard of life. We need a bigger GDP so that people can buy more stuff.

The present government seems to think that by stimulating debt-fuelled consumption they can achieve eternal and strong GDP growth. Obviously they're wrong, and we see the results: de-industrialization (the consumption boom is being fed by imports), inflation and falling growth rates following a short boom.

 

[Kal'thzar]

Maybe the Long Depression? (Woefully under-qualified to say anything else, needless to say 5 minutes on Wikipedia and I think I have something worthwhile to add ). I.e. my take is that we are in a period of low growth that might last for a while...