Will the recession become a depression?

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Not really, relative austerity is working very well for Germany. What's clear to me is that the countries that managed their finances prudently before the crisis are booming or at least having solid growth (China, Germany, Brazil, Canada, Chile), those that kept borrowing are facing stagnation or recession (US, Japan, UK) and those that behaved like banana republics are bust or nearly so (Iceland, Greece).
What is striking to me is how different the booming countries are - some export mainly commodities (Chile, Brazil, Norway, Peru), others export manufactured goods (China, Germany, Switzerland), some are developed democracies with fairly expensive labour (Germany, Switzerland, Canada), China is a dictatorship with cheap labour, etc. Some reacted to the crisis with massive fiscal stimulus (China), others with relative austerity (Germany). Basically the only thing they have in common is foresight during the good years - there is something to be said for living within your means and saving for a rainy day; the countries that did so are laughing all the way to the bank, while the feckless ones like Greece have to go cap in hand for a loan.

Living within one's means is not austerity. It is good sense.

ruveyn

[quote="oddone"

Our real challenges are not the current recession, but what is coming - an aging population, an oversized state, peak oil and climate change. Challenges we are quite capable of rising to.[/quote]

Climate change is absolute crap. There is not enough evidence/proof whether climate change in natural - a natural cycle or man made.
Peak oil is no big problem. Alternative energy sources can replace fossil fuels.
Immigration and increased birth rates to offset aging population.
Overpopulation: population control is the solution. One child policy just like China.

Climate change is absolute crap. There is not enough evidence/proof whether climate change in natural - a natural cycle or man made.
Peak oil is no big problem. Alternative energy sources can replace fossil fuels.
Immigration and increased birth rates to offset aging population.
Overpopulation: population control is the solution. One child policy just like China.[/quote]\\

In addition to which there is enough oil in the tar-sands of Canada to keep the West lit up for 250 years.

I would prefer nuclear energy extraction, but better to burn thick gooey oil than freeze to death in the winter.

ruveyn

A "double dip" would imply recession >> recovery >> recession. I'm curious when and where the "recovery" bit has occurred/will occur. I've seen no evidence of it.

BTW, the word "depression" actually entered the lexicon due to the negative associations with the word "panic." (eg. The Panic of 1907 (link)). The word recession came along in place of depression because of...the negative associations with the word "depression." And doubtless there's some term waiting in the wings to subsume "recession" in our vocabulary. Meaning I'm skeptical that there's any meaningful difference in the terms used anyways.

The whole "Germany did well with austerity" is a myth. For one thing, Germany did not carry out austerity until 2010 despite Merkel's posturing. This is because she depended on the Social Democrats to stay in power until the autumn 2009. It was the Social Democrats who were behind the work sharing programme which is the key to Germany's keeping the unemployment rate down. Right now Germany is benefiting in part from the stimulus-fuelled growth of China and other countries who are buying their exports.


This idea that the prudent financial managers and savers are doing well and the deficit countries are not is another myth. This suggests Paul Krugman's Confidence Fairy is smiling on the virtuous and the Bond Vigilantes are ravaging the profligate. I'm sorry, but if this was true, the interest rates in Japan, in the USA, they'd be sky high. They are not!

A recession is when your neighbour/friend loses his/her job. A depression is when you lose your own job. It becomes a depression when it hits you personally.

Good question. In my mind yes and no.

The great depression was based on inadequate spending of the populous. What happened is that people were not earning money, therefore they did not buy goods and businesses went bust.

The difference between then and now is that goods are disposable. While in the 1920's you could have clothing and goods last 20-30 years now that is not the case. You have to repurchase goods on a regular basis as they break or fall apart. Therefore the spending can never stop only diminish.

However other changes are at bay. The current exchange rate with China is huge because the yuan is fixed. If this even changed by 20% which is more than likely all goods would go up considerately. This would cause a bigger slump in the economy.

The best way to get over the slump as a country is to increase interest rates which then forces more prices of housing and other things to fall. However the cost of labour still continues to go up even in China.

Will there be a recession? Definitely, we are in it. Will there be a depression? I do not think so because people love to spend money too much and need items to live these days that are non-essential.

The reason we may never climb out of this recession is the government owes too much debt. Bankruptcy should come automatically during the Jubilee year so that everyone can have a fresh start.

Government is a Ponzi, based on inflation and debasing the money supply.

The day comes when they can no longer sell their debt, Bonds, and then they are broke and in debt. All paper money has become worthless.

This time it is the whole world. Greece and Ireland are paying high interest now, Others will follow. The Great Depression was caused by over production. When you have three times the cloth the world can use, market share lead to wars. Now it is computers and robots, machines, with price deflation.

Where America bailed out auto companies, Wall Street, and major banks, China kept the price of rice down.

Germany spent on small companies, less than ten employees, and supported wages to keep from out sourcing to Eastern Europe. They also supported the latest tooling, and the education of workers. Two year Tech Schools, rather than our useless four year degrees.

The result is they are the best in many fields, best in the world, and are getting better. It is the advance of technology that cannot be copied, China can try, but last years model is old, and three years to market, obsolete.

America was to be the money center, but the banks are hollow, Wall Street has been bypassed, and Main Street is shuttered. Jobs do not pay for houses, and our learn on the job workforce is not productive.

While China is a cheap producer, they killed Dell when 30% of computers did not work out of the box. Rice farmers do not become techs in a year or two. They have been building a copy of the German BMW motorcycle of WWII, for decades, The Chang Jaing is junk, They got the factory from Russia, but had no mechanical aptitude. 1938 BMW R-71.

They import German cars, because they work. For a while, when America imported European cars, later Japanese, most were killed by mechanics, who knew Fords. China will have the same problem. They are importing an alien technology.

Their cheap labor will soon be replaced by machines, lights out factories, with a few German techs keeping it running.

When Germans fall, they clean off the bricks and rebuild. When Americans fall they complain and blame Washington or Wall Street, but do nothing. When China falls, it is back to The Warring States Phase.

China and India have more people with Degrees, than there are Americans, and also more people living on the streets in total poverty. They too have a two tier system. Famine will return.

America has been driving the world since WWII. We consume, and produce. It worked till we all had a large home, several cars, a boat, vacation cabin, TV, Sound system, computer, and there was nothing left to buy. We were a disposable group, clothing lasted for a fashion, a season, then we bought new. It kept the world working.

Where the world thought 100 square foot per person was huge, we had a thousand. We bought computers when they were $3,000. If we downsize, there is enough room in Texas for all of us to have a cabin on a few acres. .

We work too much. In the Latin countries, two weeks off at Christmas, Easter, five weeks summer vacation, and long weekends are normal, with child allowance, and pension.

It is not a Depression, it is living like the rest of the world does. We have been wage slaves in the factory for so long we have forgotten how to live.

Latin countries are more social, family, and hobbies. They still get indoor plumbing, better food, cooking is an art everywhere but America. Their children are happy and well fed, and go to school bright and clean every morning.

Being a commuter who spends several hours a day in travel, works 60-70 hours a week, is not the only way to live.

It was worth doing. Over the last hundred years America produced the steel, the food, that lead to two world wars, and America brought both the countries in ruins from the wars, and the countries that had never developed to a high standard of living.

Industry spread, and with it self rule. We do have a Global Economy for the first time. China got it's start selling us cheap goods, but those same goods go to South America, Africa, at prices they can afford. Cell phones are everywhere, computers, internet, the world is connected.

The whole planet now has a share in our common future.

We will invent a lot of that future, it will be made everywhere, and used worldwide. We will eat and live somewhere, educate ourselves, and produce even more.

The post WWII generation were consumers, grew up during the depression, fought a world war, and wanted things. They worked hard and produced a better world. A world economy, people ruling their governments,

Now it is our turn, we have the web, cheap everything, and few are starving, everyone can be educated.

I came in in 1945. Our time was spent watching it happen. Millions died the years before I was born, fifty or so million. The world was in ruins. Most of my family fought in the Pacfic, or Europe, some never returned.

They were the warriors, we were the poets.

"Teach your children well, their parents hell, did slowly go by, and feed them on your dreams, the ones they pick, the ones you will know by,
and dont you ever ask them why, if they told you you would cry, and know they love you."

So? The key word here is 'relative' - compared to the massive stimulus packages enacted elsewhere.



Yes, and it has proved an excellent policy. No contradiction with austerity, as otherwise these employees would be collecting unemployment benefits.



So? Other countries could do the same in principle. If the Germans are exporting successfully, that's because they make things others want to buy.



I posted a substantial list of examples that proves the contrary. The prudent ones, pretty much regardless of the nature of their exports, degree of development or political system, are thriving.



Who said anything about interest rates? I wrote about growth and employment. There is more to an economy that what the interest rate is.



It doesn't really work, as these countries have sky-high unemployment. Spain has the highest unemployment in Europe, and in various Latin European European countries such as Italy basically the only way for the young to get ahead is to emigrate.



Agreed about the cooking, but the last part is really only true of Latin Europe, countries that re net recipients of EU subsidies (structural funds, CAP). My vire is that if you want a model for how the US could reinvent itself, you could do a lot worse than look at Germany and Switzerland. Instead people have bought into the myth that you can't export manufactured goods unless you have dirt-cheap slave labor (despite the examples of Japan, Switzerland and Germany), that finance is everything (look how that's worked out for Iceland), that everyone has to own a home yet housing prices cannot be allowed to fall (anyone else see a problem with this attitude? must all homeowners be above average?), and a denial that if you want something from the government, then you must either pay for it via taxation or do without (instead all too many have the attitude of 'keep the government out of my Medicare'). This combination of a can't-do attitude and denialism is all the more surprising for being so un-American - contrary to the historical ethos of optimism, confronting problems head-on, etc.

So? The key word here is 'relative' - compared to the massive stimulus packages enacted elsewhere.



Yes, and it has proved an excellent policy. No contradiction with austerity, as otherwise these employees would be collecting unemployment benefits.



So? Other countries could do the same in principle. If the Germans are exporting successfully, that's because they make things others want to buy.



I posted a substantial list of examples that proves the contrary. The prudent ones, pretty much regardless of the nature of their exports, degree of development or political system, are thriving.



Who said anything about interest rates? I wrote about growth and employment. There is more to an economy that what the interest rate is.



It doesn't really work, as these countries have sky-high unemployment. Spain has the highest unemployment in Europe, and in various Latin European European countries such as Italy basically the only way for the young to get ahead is to emigrate.



Agreed about the cooking, but the last part is really only true of Latin Europe, countries that re net recipients of EU subsidies (structural funds, CAP). My vire is that if you want a model for how the US could reinvent itself, you could do a lot worse than look at Germany and Switzerland. Instead people have bought into the myth that you can't export manufactured goods unless you have dirt-cheap slave labor (despite the examples of Japan, Switzerland and Germany), that finance is everything (look how that's worked out for Iceland), that everyone has to own a home yet housing prices cannot be allowed to fall (anyone else see a problem with this attitude? must all homeowners be above average?), and a denial that if you want something from the government, then you must either pay for it via taxation or do without (instead all too many have the attitude of 'keep the government out of my Medicare'). This combination of a can't-do attitude and denialism is all the more surprising for being so un-American - contrary to the historical ethos of optimism, confronting problems head-on, etc.

So? The key word here is 'relative' - compared to the massive stimulus packages enacted elsewhere.



Yes, and it has proved an excellent policy. No contradiction with austerity, as otherwise these employees would be collecting unemployment benefits.



So? Other countries could do the same in principle. If the Germans are exporting successfully, that's because they make things others want to buy.



I posted a substantial list of examples that proves the contrary. The prudent ones, pretty much regardless of the nature of their exports, degree of development or political system, are thriving.



Who said anything about interest rates? I wrote about growth and employment. There is more to an economy that what the interest rate is.



It doesn't really work, as these countries have sky-high unemployment. Spain has the highest unemployment in Europe, and in various Latin European European countries such as Italy basically the only way for the young to get ahead is to emigrate.



Agreed about the cooking, but the last part is really only true of Latin Europe, countries that re net recipients of EU subsidies (structural funds, CAP). My vire is that if you want a model for how the US could reinvent itself, you could do a lot worse than look at Germany and Switzerland. Instead people have bought into the myth that you can't export manufactured goods unless you have dirt-cheap slave labor (despite the examples of Japan, Switzerland and Germany), that finance is everything (look how that's worked out for Iceland), that everyone has to own a home yet housing prices cannot be allowed to fall (anyone else see a problem with this attitude? must all homeowners be above average?), and a denial that if you want something from the government, then you must either pay for it via taxation or do without (instead all too many have the attitude of 'keep the government out of my Medicare'). This combination of a can't-do attitude and denialism is all the more surprising for being so un-American - contrary to the historical ethos of optimism, confronting problems head-on, etc.

I honestly think another wide-scale war (possibly WWIII) will happen before the UK and United States hit depression rates. Wars are great getting the economy going again.

Due to the lack of manufacturing jobs, increases in the price of basic necessities; the United States will not get out of this recession anytime soon. There is just no way to grow. It will get worse. Can anyone realistically tell me how it's going to get better?

Personally, I am getting sick of capitalism and economics in general. I'd like to live in a community of like-minded people who concentrate on conservation of resources rather than consumerism.

How I can be so sure? I knew there would be a U.S. recession and a global recession and often blogs about a year ago when people call me a pessimist and darkness Guy punishment. Nobody can predict the future and I hope I'm wrong. As the saying goes “hope for the best".

-syeds-

Life in a Zero Sum Game. No, thank you.

What is a "resource" is often a matter of technology and that requires innovation. You are proposing stagnation. A ration card society. Again. No, thank you.

ruveyn

Last edited by ruveyn on 13 Jun 2011, 4:55 pm, edited 1 time in total.