I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Posted: Mon Jul 14, 2008 12:32 am Post subject: The Great Depression 2
link This has some really good information and reveals startling similarities between now and 80 years ago. Bernanke comes from the school of thought that printing alot of money would have been an acceptable way to avoid the great depression and it's deflationary spiral. How can that work? Well the Fed would have to have an unlimited ability to lend money, which they are quickly working toward.
The one thing they did not have to deal with then was crude oil production peaking, most notably LSC peak. Inflation in the US affects the price of oil in the world dramatically and keeps us pinned between two evils. Higher prices could dampen consumer sentiment to the point that demand drops and people start saving and adjusting their lifestyles lower...
I still say the driver in the next two decades is oil supply, all of these other issues will eventually be tamed or destroyed by that.
Joined: Jul 04, 2008 Posts: 233 Location: Europe: European Historian
Posted: Mon Jul 14, 2008 1:07 am Post subject: Re: The Great Depression 2
Actually this would be more like Great Depression 6. Their have been 5 depressions in the USA since it became a nation...in the 1810's , 1830s, 1840's, 1887-92, and 1930s.
All of them were caused by panics. But what brought the nation out was they have money backed in something and it was stable.
This time I expect not only a deppression but a currency crisis that will not be workable. It will spell that the next depression will be worse then all previous.
Also the last dep...their were 30% of the people in the USA doing farm related works.."and over 1,000,000 people in the 30s went back to farm work. That was when the USA had a sustainable population also..and was fairly homogeneous.
What I see happening in the Fed will continue to inflate money until it becomes worthless "I for one see 500 USD a bbl of oil' becasue the dollar will keep falling and in todays dollars it will equal "200 USD bbl" and I see this within the next 10 years.
Posted: Mon Jul 14, 2008 1:20 am Post subject: Re: The Great Depression 2
What we are facing makes the Great Depression look like a small annoyance on the road to wealth and fortune.
I was talking to my old timer neighbor, WWII vet. I asked him about the great depression. He said "there were no jobs." He said people around here went fishing and crabbing. He said they tried to regulate it so that people didn't go fishing all day all the time. By and large though, people got their fish, they got by and life went on.
Fast forward to 2008. The population in the Puget Sound basin has increased by millions. The puget sound is depleted of fisheries. So we have millions of more people and no readily available food source.
This recipe can pretty much be expanded to the entire country. Millions of more people, primarily in urban settings, with no attachment to the land. Resources depleted. Bank account depleted. Gas tank depleted. 401K depleted, Pension depleted. Credit Card maxed out.
I think comparing the conditions of the Great Depression to now is a good way to understand how astronomically screwed we are, because the Great Depression is considered a really tough time in US history.
Joined: May 06, 2008 Posts: 422 Location: Omicron Ceti 3
Posted: Mon Jul 14, 2008 1:50 am Post subject: Re: The Great Depression 2
I agree that the term "great depression" will be inadequate to describe the astronomically colossal magnitude of the upcoming economic cataclysm.
Maybe the "Great Meltdown" of 2008/2009? No, not strong enough.
seldom_seen wrote:
What we are facing makes the Great Depression look like a small annoyance on the road to wealth and fortune. ... Fast forward to 2008. The population in the Puget Sound basin has increased by millions. The puget sound is depleted of fisheries. So we have millions of more people and no readily available food source.
This recipe can pretty much be expanded to the entire country. Millions of more people, primarily in urban settings, with no attachment to the land. Resources depleted. Bank account depleted. Gas tank depleted. 401K depleted, Pension depleted. Credit Card maxed out.
I think comparing the conditions of the Great Depression to now is a good way to understand how astronomically screwed we are, because the Great Depression is considered a really tough time in US history.
Posted: Mon Jul 14, 2008 6:33 am Post subject: Re: The Great Depression 2
In my post-PO novel, which takes place in the mid 2070s, it is remembered as The Great Collapse. People bicker all the time over what happened to the world of jets, computers, the state and its health care and all the rest. A few grasp that energy was the fundamental, but even in 2076 there are still economists to smother history.
Posted: Mon Jul 14, 2008 6:37 am Post subject: Re: The Great Depression 2
There are some similarities between 2009 and 1929. Both depressions were preceded by a housing bust. Both depressions were accompanied by calls for trade barriers and isolationism. Both depressions resulted in the evaporation of billions of dollars in paper wealth. Both depressions resulted in massive lay offs and unemployment. Both depressions were precipitated by reckless speculation. Both depressions resulted in massive property loss by the middle class. Both depressions threatened hundreds of banks.
Where they are different: In 1929 much of the country was still rural so it was possible for many people to rely on farms to feed their extended families. That safety net is no longer exists. In 1929 it was very difficult for congress or the president to see the widening crisis as the government’s responsibility. Both Hoover and congress thought the economy would right itself without government intervention. Ideas like the Civilian Conservation Corp or the Works Progress Administration were alien to government. They had to be invented. The FDIC did not exist neither did social security or unemployment compensation.
Today the federal government sees the minutest aspect of our daily lives as falling within the domain of their responsibility. Once congress links the current crisis with their own personal survival, there will be no limit to federal programs offered to calm the public.
Neither congress nor the president has any difficulty in spending money it does not have. There is no need to run the printing presses and flood the economy with truck loads of paper money to fund the various aid programs. The deed can be done with a check.
Obviously the system cannot continue if it devolves into a dichotomy divided between the bureaucracy and the underclass it feeds. Somebody has to produce something. Wisdom dictates that the welfare system will be expanded into a workfare system that resembles the old depression era federal programs.
Today, there is a large underclass with a sense of entitlement. That entitlement has been based to a large extent on notions of victimization and American guilt. Those same sentiments may not accompany the members of the working class and lower middle class as they join the ranks of the underclass.
We may very well see a lack of sympathy develop for the permanent under class as more of Middle America joins its ranks. Middle class guilt may disappear. The ethnic strife of the 1930s may come back to haunt us with a vengeance.
We may witness a decline in population like we did in the 1930’s. It might be remembered that Americans left the United States and immigrated to the Soviet Union looking for work. Mexicans will find life hard in Black and White America.
As the demand for isolationism increases, we will withdraw from the world much like we did after WW I. The tensions in Europe between the forces of Islam and the secular west may very well explode. When Paris and Amsterdam start to look like Beirut, the curtain will fall over much of Europe. China will play its own game with Russia.
Competition for the remaining oil reserves may very well usher in WW III. Half a dozen nukes may pop around the world. For the most part, most of the fighting will be conventional. Remember that poison gas was used in a very limited extent in WW II.
This war will provide the engine for the American recovery. The economy will be much different than it is today just like the economy of the first half of the twentieth century was much different than the economy of the second half.
Joined: Sep 29, 2004 Posts: 2330 Location: Pennsylvania, USA
Posted: Mon Jul 14, 2008 7:26 am Post subject: Re: The Great Depression 2
The financial policy during the Great Depression and today is very different. Back then, the Fed strangled the money supply, causing massive deflation. People going into the Depression with lots of cash, did well, as they could buy up a lot of cheap assets. Today, the situation completely different. There is too much money and that is causing inflation. Unlike the depression, today's fed has no problem with creating as much money as they feel they need. Today's problem is a currency crisis. The housing boom was created by a rapidly depreciating dollar which intern was reflecting in rapidly appreciating assets. As the prices of starter houses moved outside of what a first time home buyer could afford, the financial system responded with progressively looser credit. With corporate profits stagnating, a huge amount of investment shifted to the housing market.
The dilemma now is that what is really needed is a series of corrections in equity prices that reflect the realities of what a buyer, without access to ridiculously lose credit, can buy and sustain. Prices for housing need to fall back to what a non inflated market can sustain. IMO, that means that housing over the next several years will fall by half in many areas. Real estate is all local, so the effects will vary with region and those areas that largely sat out the real estate boom will be the least affected by the corrections. However, the corrections are inevitable and will produce loses in the trillions.
We got here via a different path, but the effect will be the same; deflation, bank failures, unemployment, starvation. _________________ "That's the problem with mercy, kid... It just ain't professional" - Fast Eddie, The Color of Money
Posted: Mon Jul 14, 2008 10:17 am Post subject: Re: The Great Depression 2
Cloud9 wrote:
There are some similarities between 2009 and 1929. Both depressions were preceded by a housing bust. Both depressions were accompanied by calls for trade barriers and isolationism. Both depressions resulted in the evaporation of billions of dollars in paper wealth. Both depressions resulted in massive lay offs and unemployment. Both depressions were precipitated by reckless speculation. Both depressions resulted in massive property loss by the middle class. Both depressions threatened hundreds of banks.
Where they are different: In 1929 much of the country was still rural so it was possible for many people to rely on farms to feed their extended families. That safety net is no longer exists. In 1929 it was very difficult for congress or the president to see the widening crisis as the government’s responsibility. Both Hoover and congress thought the economy would right itself without government intervention. Ideas like the Civilian Conservation Corp or the Works Progress Administration were alien to government. They had to be invented. The FDIC did not exist neither did social security or unemployment compensation.
-snip- This war will provide the engine for the American recovery. The economy will be much different than it is today just like the economy of the first half of the twentieth century was much different than the economy of the second half.
If we put the prognostication part into a separate section, this is a very good analysis in my opinion. Still I think a good risk assessment would include some consideration of the future scenario you propose.
Thanks.
Joined: Sep 25, 2004 Posts: 4686 Location: Boston, MA
Posted: Mon Jul 14, 2008 10:43 am Post subject: Re: The Great Depression 2
Cloud9 gets it.
The US spends a massive amount of money (literally hundreds of billions) on the military defense of OTHER countries.
When the recession really kicks in, President Obama will have no choice but to make America more isolationist.
We may not pull out of Iraq completely, but a major draw down in troop levels by 2012 is not out of the question.
Americans want their leaders to focus more on domestic problems and less on policing the world.
We'll lose some of our international influence but it's worth the trade off if we can cut into the wasteful spending on foreign policy.
Let Europe deal with the Russians, Muslims, and Chinese...America has its own problems.
The recession/depression will be the trigger for this new wave of isolation, IMHO. _________________ "www.peakoil.com is the Myspace of the Apocalypse."
Posted: Mon Jul 14, 2008 1:37 pm Post subject: Re: The Great Depression 2
malcomatic_51 wrote:
In my post-PO novel, which takes place in the mid 2070s, it is remembered as The Great Collapse. People bicker all the time over what happened to the world of jets, computers, the state and its health care and all the rest. A few grasp that energy was the fundamental, but even in 2076 there are still economists to smother history.
Do you have a pdf of that you'd be willing to share?
Posted: Mon Jul 14, 2008 2:52 pm Post subject: Re: The Great Depression 2
mgibbons19 wrote:
malcomatic_51 wrote:
In my post-PO novel, which takes place in the mid 2070s, it is remembered as The Great Collapse. People bicker all the time over what happened to the world of jets, computers, the state and its health care and all the rest. A few grasp that energy was the fundamental, but even in 2076 there are still economists to smother history.
Do you have a pdf of that you'd be willing to share?
If you, or others, were interested I suppose I could post the first chapter or two. I would be thrilled to have my writing read by complete strangers. At present it is at a literary agents in London. I have not heard anything from them - but these things take time and the chances of it being published are frankly tiny. The plus was, it was a fascinating adventure to write.
Posted: Mon Jul 14, 2008 2:58 pm Post subject: Re: The Great Depression 2
malcomatic_51 it would be very interesting to see those chapters you can count that people here will give you a lot of feedback. _________________ Stocking up on popcorn
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