[TheDude]

The world economy is tracking or doing worse than during the Great Depression | vox - Research-based policy analysis and commentary from leading economists

In fact, when we look globally, as in Figure 1, the decline in industrial production in the last nine months has been at least as severe as in the nine months following the 1929 peak. (All graphs in this column track behaviour after the peaks in world industrial production, which occurred in June 1929 and April 2008.) Here, then, is a first illustration of how the global picture provides a very different and, indeed, more disturbing perspective than the US case considered by Krugman, which as noted earlier shows a smaller decline in manufacturing production now than then.

Figure 1. World Industrial Output, Now vs Then

Conclusion

To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.

The good news, of course, is that the policy response is very different. The question now is whether that policy response will work. For the answer, stay tuned for our next column.

Great piece, quite brief and to the point. Focusing solely on one country's outlook then was short-sighted and this is even more the case today. Ilargi posted it at TAE on the 7th, and has this to say about their conclusion:

Ilargi: Great graphs, important article. But then there's this:

The good news, of course, is that the policy response is very different. The question now is whether that policy response will work.

Why is something good news if you have no idea what it will lead to? Am I the only one who sees that as complete nonsense? isn't it just simply true that if the present policy response fails, we will be untold trillions deeper in the hole than even in the 1930's? "Oh, it's great that you don't do what they did in the past, because that didn't work." Yeah, I understand, but why is that so much more important than that what is done now actually works? It seems like nobody in the economic policy field can look beyond its narrow boundaries anymore.

[eastbay]

Nice find!

We seem to be dealing with our economic crisis in much the same way as the last one too, although the process of buying our way out didn't start until 3.5 years after the initial stock correction last time.

We're nine months or so after our current stock market correction started. We won't wait three + years to make-work this time, so I fully expect a CCC WPA type of employment/public works system to get underway by this time next year if not sooner. And if that doesn't work quickly enough expect much more war. Just like last time.

[RdSnt]

What I find most annoying about most of these comparisons is that the majority of them do so as a direct comparison, 1929=2008. My opinion is that this is an enormous and dangerous (let's be generous and say) oversight.

1929 saw the US as still primarily a rural, agriculturally driven economy. Yes it had manufacturing, but the majority of the populations still lived in the country. International trade was still either commodities or specialty goods. Most of the population still understood how to be self-sufficient. They didn't trust the banks, worked with cash and worked at jobs that primarily benefited their local community.
The US was still on the gold standard, as was all other currencies; and it was rapidly becoming the nation others borrowed from.

None of these conditions apply today or in 2008. The United States is insolvent, has been for some time. The majority of people live in cities and haven't a clue how to look after themselves, more importantly there is no means to shift a meaningful percentage of these people to a self-reliant lifestyle, even if they wished to.
The majority of jobs in the US only re-enforce the current problems since they are based on a consumption model. You can not recover by consuming you recover by producing.
What follows from this is that the US can't finance a recovery, they must borrow to do so. There is no capital base to draw from and so the printing presses have to be cranked up, debasing what's left of the $US, putting the country further into the black hole it created for itself.
As for public works, as was used in 1929. What public works? Fixing up the roads and bridges, to support the current overfed, consumption based systems that got the US into trouble to begin with?

[mattduke]

It's a great thing for production to fall when you have been producing the wrong stuff.

[shortonoil]

RdSnt said:

None of these conditions apply today or in 2008. The United States is insolvent, has been for some time. The majority of people live in cities and haven't a clue how to look after themselves, more importantly there is no means to shift a meaningful percentage of these people to a self-reliant lifestyle, even if they wished to.

The difference between 1929 and today is that 7-8% of the population can produce all the goods and services that the other 93% require. The problem is that we have no equitable means to distribute those goods without tearing down the system that we have presently.

Even though it will happen eventually, the plutocracy now in control are going to resist this change vehemently. It will mean the end of their 300 year reign of control; their death grip on society through the monetary system will have to be eliminated.

Whether or not this can be done without wide spread blood shed will be a reflection on how much civilization has advanced since the fall of Rome or the French Revolution. The present system is dissolving as we speak. In lieu of killing each other off, let’s give its natural evolutionarily process a chance. If we can attain some wisdom as a society, we could win without a shot being fired. Let’s give the thieves enough rope to hang themselves and then cheer from the balconies!

If that doesn’t work, we’ll get the thumb screws out later!


Available Energy

[PrestonSturges]

As conservatives say it was WW2 which got us out of the Depression, not the New Deal.........

But in WW2 we essentially banned consumer spending, instituted rationing, and made everyone work for the government. We may be doing that again before we're out of the debt hole.

[ReverseEngineer]

As conservatives say it was WW2 which got us out of the Depression, not the New Deal.........

But in WW2 we essentially banned consumer spending, instituted rationing, and made everyone work for the government. We may be doing that again before we're out of the debt hole.

Basically, the solution for the original Great Depression was a World War which you had to Win in order to reboot Capitalism. Said War was essentially financed by the wealth of Oil present on the North American continent at the time. Win the War, you are able to force feed the rest of the world your Economic System at Betton Woods, and then proceed to spend the next 60 years or so using it to rape the planet of every last resource and enslave virtually the entire world to support it.

Unfortunately, Oil resource is so thin worldwide now that running a mechanized World War for economic domination is about impossible. There certainly isn't enough of the stuff in North America to peacefully run Big Factories selling military hardware to the Brits to fight a War against the Nazis. The Chinese certainly don't have enough local Oil to do that either, even though they have plenty of Factories with which to build military hardware.

The only kind of World War which could be run nowadays isn't one where you have Marines landing on the Beaches of Normandy and fight town by town until you surround Germany and force them to capitulate. Nowadays, the only kind of World War you can run is an Air War, dropping bombs from above while the local populace hunkers down, or a thermonuclear war of the exchange of ICBMs, which does nobody any good of course which is why it never has been pursued by TPTB. We discovered the limitations of running an Air War in Vietnam, where espite the fact we Napalmed the living shit out of the jungle and fried numerous Vietnamese peasants along with the trees, we never really could take control of a place like that.

War on the Grand Scale is basically OUT as an option to pull us out from this economic collapse, it simply needs too much in the way of easily accessible Oil to run big mechanized armies around the world. Heck, even just projecting power to stupid hellholes like Afghanistan (which has no Oil of its own, just is a good transit corridor for Oil through pipelines) cost an arm and a leg, LITERALLY when you consider American soldiers are coming back from there crippled for about no good reason at all.

The problem of course is after so many years living high off the hog on Oil, TPTB don't want to give up their hegemony over the world throught he control of the banking system and Capitalism, and suckers here in the US still buy the idea "growth" is still possible. They also have been sold since childhood on the concept that Communism is EVIL, and are none too fond of the idea of living under Fascism either. So you have a Hobson's Choice here, which is no choice at all. NONE of these political solutions work, and you can't afford to run a mechanized war EITHER.

So basically you have a lot of cognitive dissonance IRL, and here on the board also as people are pretty much lost at sea, with no real ideology to grasp hold of they think will work, little hope for the future and the sinking feeling its all going to hell in a handbasket a LOT quicker than most people think possible. To me, the truth is plain as day, the society will fracture, nation-states which built up over centuries will come apart in a dissolution of the One to the Many. NO "Big Solution" will work here, Big is EVIL. Small is GOOD. Many will die, society will reform along smaller lines in smaller ways. At least so long as we haven't completely disrupted the ecosystem to such a point it won't support ANY human life at all, which certainly is also a possibility. Barring that one however, there is no doubt in my mind at least that the destiny of the world and the human population is one of small societies which support themselves on their own little piece of the earth. There will NOT be One World Order controlled by the Illuminati in perpetuity. The Illuminati are finished, and we move into a new era where small is the only way anyone survives at all. The Meek Shall Inherit the Earth.

Reverse Engineer

[vision-master]

We shall C..........

[Buggy]

You can not recover by consuming you recover by producing.

Possibly the most intelligent statement I have read since this all started.

[Buggy]

Reverse Engineer,

I must say that you are my favorite poster. Insightful, bold and to the point. It helps that I agree with most everything you post. I was very encouraged by logical conclusion that a large scale war machine will not be sustainable.

[ReverseEngineer]

Reverse Engineer,

I must say that you are my favorite poster. Insightful, bold and to the point. It helps that I agree with most everything you post. I was very encouraged by logical conclusion that a large scale war machine will not be sustainable.

Thank you. I just call it as I see it though. Up to each reader to decide whether its the Truth.

Reverse Engineer

[TheDude]

The US military "only" consumes 320kb/d: Top 5 facts on US Military Oil Consumption - Newlaunches.com I really doubt the US going to war on a massive scale is out of the question, even if a major crude producer was out of the picture - which would likely be the case quite early in the game. Very stringent rationing would be implemented but that was the case in WWII as well.

[ReverseEngineer]

The US military "only" consumes 320kb/d: Top 5 facts on US Military Oil Consumption - Newlaunches.com I really doubt the US going to war on a massive scale is out of the question, even if a major crude producer was out of the picture - which would likely be the case quite early in the game. Very stringent rationing would be implemented but that was the case in WWII as well.

That is all they consume NOW, in a time of *relative* peace without the whole country mobilized for war. You talk putting a million men into tanks you are talking raising the level of oil expenditure by an order of magnitude at least.

Beyond the fact you would need way more oil just to produce all the tanks is the fact that as soon as full scale World War breaks out, about all Oil Production facilities and transport are sitting ducks. Heck, dipshit Somali Pirates can take a tanker easy, can you imagine how easy it would be for a Chinese warship to hijack a tanker? Which means of course that both the Chinese and US would be engaged in sinking each other's battleships as fast as possible, and very little oil would move from Saudi Arabia to EITHER China or the US.

Think of World War as turning the Oil Burner up on HIGH. the Oil Burner right now can barely keep pace with it set down LOW. The ONLY reason there is enough oil around right now is practicaly every Chinese Factory and Steel Plant is shut down. You rev up those factories for war, you run out of Oil in a heartbeat now. The productive capacity simply is not there to meet the demand of building enough disposable tanks to take over the world with. Not that tanks are even all that much good in the jungle, as demonstrated in Vietnam, or in the mountains as demonstrated in Afghanistan.

A World War would virtually instaneously take all production facilities offshore out of production. Oil Rigs are freaking sitting ducks. You don't even need high tech weaponry ot take them out, a speedboat loaded with Plastique or just Dynamite will do the trick of knocking them off their moorings. IMHO, WWIII on a mechanized level could last MAYBE a year at best before the production and distribution system of oil is knocked out. The refineries will go down, the rigs will go down, the tankers will go down. Oil just won't MOVE out of the earth and into the tanks after a very short period of time.

Reverse Engineer

[eastbay]

The US military "only" consumes 320kb/d: Top 5 facts on US Military Oil Consumption - Newlaunches.com I really doubt the US going to war on a massive scale is out of the question, even if a major crude producer was out of the picture - which would likely be the case quite early in the game. Very stringent rationing would be implemented but that was the case in WWII as well.

I wonder if that number from that website includes state National Guards, leased commercial flights, private contractors, the Coast Guard (part of DHS now) and all the rest. Still, with all the military-related fuel consumption added together it's likely less than 3% of the US total.

[ReverseEngineer]

Still, with all the military-related fuel consumption added together it's likely less than 3% of the US total.

Granted as true, but thing is as soon as you rev up to full scale World War mode, this percentage goes up to 20% or more in a heartbeat, and the productive capacity isn't there to meet the demand. Right now its barely there to just keep the infrastructure working. Already they shut down the pumps to part of Mexico City. You don't think that can happen in the US? Of course it can, and it would virtually instantaneously if you started diverting oil fromt he water pumps to try to build more tanks. All you do this way is more quickly devolve your own society.

Reverse Engineer

[eastbay]

Still, with all the military-related fuel consumption added together it's likely less than 3% of the US total.

Granted as true, but thing is as soon as you rev up to full scale World War mode, this percentage goes up to 20% or more in a heartbeat, and the productive capacity isn't there to meet the demand. Right now its barely there to just keep the infrastructure working. Already they shut down the pumps to part of Mexico City. You don't think that can happen in the US? Of course it can, and it would virtually instantaneously if you started diverting oil fromt he water pumps to try to build more tanks. All you do this way is more quickly devolve your own society.

Reverse Engineer

Yup. And the SPR will get drained faster than a fat lady in an SUV can drain a Big Gulp. Then we'll see some HUGE price jumps and rationing.

[TheDude]

This was updated on the 9th, for those interested: The world economy is tracking or doing worse than during the Great Depression (update) | vox - Research-based policy analysis and commentary from leading economists

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