[Sixstrings]

Today's employment report, showing that employers cut 533,000 jobs in November, 320,000 in October, and 403,000 in September -- for a total of over 1.2 million over the last three months -- begs the question of whether the meltdown we're experiencing should be called a Depression.

We are falling off a cliff. To put these numbers into some perspective, the November losses alone are the worst in 34 years. A significant percentage of Americans are now jobless or underemployed -- far higher than the official rate of 6.7 percent. Simply in order to keep up with population growth, employment needs to increase by 125,000 jobs per month...

...When FDR took office in 1933, one out of four American workers was jobless. We're not there yet, but we're trending in that direction.

http://www.huffingtonpost.com/2008/12/0 ... 49005.html

[Leanan]

Robert Reich has been warning about the coming Depression for at least a year.

Now we have a mess on our hands. Bernanke has the only pooper-scooper in town, but it is too small for the job.

[Novus]

Remember this is just the initial estimate loss. The real loss is likely even worse. In September the initial estimate was just 150k loss. This was later revised to be over 400k. After the revision November will likely surpass the 600k worst month on record which go back to 1939. December is not looking any better as the previous month's gloom snowballs into the next month. By this time next month we can make it official and call it a depression.

[uNkNowN ElEmEnt]

IN 1933 US population was 125,578,763 so 1 in 4 unemployed meant that 31,394,690 were without means.

US population today is now 303,824,640 so 1 in 4 would mean 75,956,160. Thats 76 million people...could a country handle having that many out of work and still function in any way, shape or form?

would not a tax revolt or chaos descend long before that? say around 42 million?

[3aidlillahi]

Remember this is just the initial estimate loss. The real loss is likely even worse. In September the initial estimate was just 150k loss. This was later revised to be over 400k. After the revision November will likely surpass the 600k worst month on record which go back to 1939. December is not looking any better as the previous month's gloom snowballs into the next month. By this time next month we can make it official and call it a depression.

It's hard to compare these numbers to the World Depression One because, as UE points out, our population and thus workforce were much smaller back then. That 600,000 number would have to be about 1.4 million in today's numbers. I'll say that's around February*. Call me an optimist.

*Yes, even in 28 days!

[Leanan]

IN 1933 US population was 125,578,763 so 1 in 4 unemployed meant that 31,394,690 were without means.

It might not have been quite that bad. In many areas, women found work more easily than men, because their pay was lower. (Businesses had strong incentive to cut costs.) So even if hubby was out of work, the wife could enter the workforce and the family had some income. A lot of people were forced to get by with reduced means, but 1/4 without means may be too high.

Now...I suppose we could absorb a fairly high level of unemployment if we returned to the single-earner family. (It doesn't have to be the woman who stays home with the kids.)

During the Great Depression in Germany, the government passed laws to encourage the limited number of jobs to be given to married men, and gave married women money to stay home (assuming the marriage was "racially correct").

But it's a different world now, with so many people who are single parents. Those people are the most vulnerable now, and this will be even more true in the future.

[uNkNowN ElEmEnt]

Now...I suppose we could absorb a fairly high level of unemployment if we returned to the single-earner family. (It doesn't have to be the woman who stays home with the kids.)

the only way that is going to happen is if government claws back taxes and there is no way in hell they are going to do that. most believe that a big tax increase is the next logical step to fighting this, how else are they going to get the tax payers to foot the bill if they don't start paying it at some point.

if they raise taxes that means reduced standard of living AND more spouces trying to get a job, which means more job competition.Hell if it repeats like the last depression you are going to see all the elder kids going out looking for work to contribute to the family pot.

If those jobs go to women or other family members (like older retired memebers) then that means even less jobs out there for those who are being displaced.

[Bas]

In economics, a depression is a sustained, long downturn in one or more economies. It is more severe than a recession, which is seen as a normal downturn in the business cycle.

Considered a rare but extreme form of recession, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression.
....

Definition

There is no widely agreed definition for a depression, even though some have been proposed. In the United States the National Bureau of Economic Research determines contractions and expansions in the business cycle, but does not declare depressions.[1]

A proposed definition for depression is a sustained recessionary period in which the population is forced to dispose of tangible assets to fund every day living, as was seen in the US and in Germany in the 1930s.


Characteristics

Generally, periods labeled depressions are marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced using current resources and technology (potential output).[2]

http://en.wikipedia.org/wiki/Depression_(economics)

according to this definition I think we might very well be headed for a depression but you can't call it that quite yet. Maybe joblosses will stabilize next year, credit will start flowing again, and inflation will steady around the 1-2%. I'm hoping for it anyway.

[Leanan]

the only way that is going to happen is if government claws back taxes and there is no way in hell they are going to do that.

No, the only way it's going to happen is with a severe drop in the standard of living.

People won't do it voluntarily, of course, but they won't have a choice.

I think a lot of things that had been considered good investments before - like private schools, college degrees, and yes, home ownership - will simply become unaffordable.

Taxes...my guess it they won't really enter into it. It will be tough to raise taxes with the economy so bad. State or local governments may try, but how do you tax people who have no jobs and are going into foreclosure?

One thing we might get is a European-style VAT. It's basically a tax on consumption, which probably isn't a terrible idea, at least if you believe the earth is finite.

[uNkNowN ElEmEnt]

One thing we might get is a European-style VAT. It's basically a tax on consumption,

this is probably a good way to go for the future, though it flies in the face of Keynesian economics, goes the exact opposite direction doesn't it? and if might be a lot harder to float an economy on by penalizing the one thing they want more of ...consumption.

[Leanan]

this is probably a good way to go for the future, though it flies in the face of Keynesian economics, goes the exact opposite direction doesn't it? and if might be a lot harder to float an economy on by penalizing the one thing they want more of ...consumption.

Yeah. Even Obama doesn't seem to get it. Like most other politicians, he wants an economy where each year, there's more consumption than the year before. Whether this is possible or even desirable doesn't seem to be something mainstream politicians ever consider.

[RdSnt]

I don't believe we should compare directly between the dirty 30's and now.
Then, industry was much broader, more diverse and each company was much smaller. This lent a flexibility to the industrial system, however labour mobility was much more restricted.

We are in a much more dangerous situation. Industry, such as it is now in North America, is much more specialized and concentrated in fewer, large companies. I would suggest that a much smaller percentage of job losses will have larger influence on the general economy.

In the 30's the rural population was larger than the city, the converse is true now.

[dinopello]

this is probably a good way to go for the future, though it flies in the face of Keynesian economics, goes the exact opposite direction doesn't it? and if might be a lot harder to float an economy on by penalizing the one thing they want more of ...consumption.

Yeah. Even Obama doesn't seem to get it. Like most other politicians, he wants an economy where each year, there's more consumption than the year before. Whether this is possible or even desirable doesn't seem to be something mainstream politicians ever consider.

Your use of the word "seem" is very apt I think. Even if a pol did get it, they cannot come out with a consumption reduction policy across the board. People have been conditioned to think of themselves as "consumers". Most people's job depends on consuption. In energy, it is becoming more acceptable to talk about reducing consumption, but even there a politician must be careful of getting too far ahead. It's a big ship and takes time and a lot of effort to turn. Yes, it is too late to be starting, but that's where we are. Note, I'm not saying Obama does get it, I have no way of knowing. I do know people in agencies that do get it and I believe they will hold more sway in an Obama administration than in either the Clinton or Bush. Congress is still a problem though, they will do what will get them elected every 2 years - therefore it is up to the people on that front.

[r101958]

When figuring unemployment numbers only those people of age should be considered.

[Heineken]

Any happy talk about the economy stabilizing is worse than useless. We've hardly begun. To determine where we are, merely ask this question: have house prices declined to a value that is payable by entry-level home buyers and loanable by new-era lenders? Everything else revolves around housing. Most people are in denial and determined to just keep on going in their homes. The lost equity is real, however, and has hardly begun to work its way through the economy. Even for well-off people, the drop in the stock market plus the drop in home equity has been disastrous, although it is still possible for people to be in denial about it: the stock market will go back up, home prices will recover. Instead, the stock market will go down further, and so will house prices.

Another direct way of appreciating the severity of the decline is the fall in oil prices, which is truly incredible and apparently still not over.

Beware "the dollar trap": once the value of the dollar starts to plunge, people will become desperate to convert into something else, but their 401ks often do not allow this, and they will be "trapped" in dollars. That's when a gold rush might happen.

But the gold thing is highly speculative. I note continued complete correlation between the Dow and gold and gold stocks. I expect really bad stock market action after the new year and especially after Obama's inauguration, when the market has absolutely nothing left in the way of good news to anticipate. I anticipate the Dow testing at least the 5000 level at that point.

We could still get very bad action before the end of the year, though, due to tax loss selling and other technical phenomena in the market. But the tone should get worse after the beginning of the year.

I think it reasonable to expect the term "depression" to apply to the coming era.

[Zardoz]

Any happy talk about the economy stabilizing is worse than useless. We've hardly begun.

It certainly appears so, which makes smiley-face news stories like this and this really seem like something out of Alice In Wonderland.

Everybody knows a whole new wave of home foreclosures is coming next year, and it appears there's no way to avoid a commercial real estate disaster as well. How can anybody think we're not facing a long, grueling, worsening ordeal?

[vision-master]

House values will drop at least another 20% before bottom is hit.

[bratticus]

House values will drop at least another 20% before bottom is hit.

Not just housing but mortgages on other properties as well.

Holiday Inn Fort Lauderdale faces foreclosure
South Florida Business Journal - by Brian Bandell
Friday, December 5, 2008 - 4:35 PM EST

The Holiday Inn hotel near the beach in Fort Lauderdale faces a foreclosure lawsuit from Fifth Third Bank.

The 93,824-square-foot, five-story hotel sits right near the ocean, at 4116 N. Ocean Drive. It has 186 rooms, a meeting room big enough for 75 people and a beach cafe. It is the latest in a line of South Florida hotels slipping into foreclosure amid the recession. The Comfort Inn in Palm Beach Gardens has been scheduled for a foreclosure sale.

Commercial loan "nightmare" projected for 2009-JPMorgan

Reuters
Mon Dec 1, 2008 11:50am EST

...

General Growth Properties Inc GGP.N, the No. 2 U.S. shopping mall owner, said on Sunday it received a two-week extension on the maturity of $900 million in Las Vegas loans as it tries to negotiate a longer-term plan. Results of the negotiations are closely watched in the $750 billion commercial mortgage-backed securities market, which has been battered on expectations a recession could boost bondholder losses.

The imminent default of two of the largest loans in CMBS less than a year old, including one for the Promenade Shops at Dos Lagos in a foreclosure-ridden area of California, this month helped propel bond risk premiums to record levels.

...

By the time they call it a "downturn" it's a recession. By the time they call it a "recession" it's a depression.

[Ludi]

Your use of the word "seem" is very apt I think. Even if a pol did get it, they cannot come out with a consumption reduction policy across the board.

Telling the citizens "you're going to have to get by with less" is not a way to be a popular politician, and unpopular politicians rarely get elected. However, Obama has said several things hinting around at reducing consumption.

http://www.debates.org/pages/trans2008c.html

http://www.politicususa.com/en/node/5842

He's not stupid, he's not ignorant, but he is a politician. It doesn't matter if he "gets it" or not if he isn't, as a politician, able to do and say things that will be really useful. If they are so unpopular they can't be implemented, then it's somewhat pointless for him to mention them publicly.

[vision-master]

Your use of the word "seem" is very apt I think. Even if a pol did get it, they cannot come out with a consumption reduction policy across the board.

Telling the citizens "you're going to have to get by with less" is not a way to be a popular politician, and unpopular politicians rarely get elected. However, Obama has said several things hinting around at reducing consumption.

http://www.debates.org/pages/trans2008c.html

http://www.politicususa.com/en/node/5842

He's not stupid, he's not ignorant, but he is a politician. It doesn't matter if he "gets it" or not if he isn't, as a politician, able to do and say things that will be really useful. If they are so unpopular they can't be implemented, then it's somewhat pointless for him to mention them publicly.

Like Ron Paul. He could never get elected for Pres.