This just isn’t true. We just had a drought that matched the Dust Bowl, only a few years ago.* Didn’t you notice? The agricultural community did, I assure you, but vastly improved farming practices prevented any large-scale shortfalls of grains and mitigated the week-long dust storms, and with agriculture being a much less prominent sector of the economy these days the general economy scarcely felt a thing.
*I’m not sure if it was quite as widespread, but it was comparable in severity throughout the Canadian prairies. The driest year on record in Saskatoon by a huge margin was 2001.
Climate date taken from Environment Canada’s website:
Annual precipitation - Saskatoon
Average 1971-2000 350mm
Outside of '36 and '37, the drought of the 30’s wasn’t that bad here. From what I’ve heard from my parents and grandparents, the biggest problem in the 30’s (aside from those two years) wasn’t that there was no crop, but that the crop was worth virtually nothing. In raw precipitation, the drought of the late 80’s was similar to the 30’s, and this most recent one blows it away.
I am more concerned with a variant of stagflation - a stagnant/recession combined with inflation that is beyond our control.
Oil and other key commodities keep going up, while the dollar is still very low. Anything not produced in the US gets more expensive, and our own economy does not grow enough to really afford things.
I’m not very worried about the mortgage crisis, or even oil prices. Things are so different from 1929 that internal issues are unlikely to get that bad. Recession, sure, but not depression.
If China stops buying our debt, though, perhaps because of a foreign policy crisis, I don’t know what would happen, but it won’t be pretty for anyone.
I need to address some of these statements because many of them don’t make sense:
The rich HAVE been doing well, and their numbers have been increasing. There are more millionares and people with investable assets greater than $5 million than ever. Doesn’t really matter what happens with those people as they have enough money to weather any recession (unless most of their assets are tied up in stocks that tank.)
The fact is many upper and upper-middle income people ARE in danger of layoffs. While the populist view is “who cares if bunch of investment bankers and finance professionals lose their bonuses or get laid off?”, the problem is that it trickles down through the rest of the economy as people’s 401ks and retirement funds are affected
Based on what? Your annecdotal experience of your friend running out of unemployment insurance? Whether or not you receive unemployment has no bearing on the unemployment rate. It is whether you are actually looking for a job.
The economy is not “run” by anyone. The government has certain levers they can pull to influence growth and trade. But to suggest that the government or anyone can plan out what will happen over the next x years is nonsense.
Well, there is a rigorous definition if I ever heard one. So…by your definition we were having a depression in 1999 but are doing fine now, right? Since I got laid off (by the fact that the company I worked for went tits up due to the whole dot com bust thingy) then but have a job now?
Well, at least now we have an accurate gage of how the economy is doing…
:rolleyes:
The rich have been doing well for the last few years. But then, the middle class (as a whole) has been doing pretty well the last few years to, especially if we are talking about the last 2-3 years. The economy was just percolating along right, though it seems to be in a bit of a down turn now (which, you know, happens from time to time). A country wide dump of 26,000 workers (though I’m guessing you made that figure up) IS no big deal…unless you happen to be one of those workers of course. There are 10’s of millions of people that work in the US…even a hundred thousand is a drop in the bucket on those scales.
BTW, rich people get laid off to…in the real world.
And those would be…?
Ok, I’ll bite…what is the ‘real’ rate? Is it double? Triple? Is it, say, as high as France?
Did you know that the ‘real’ rate has nothing to do with running out of unemployment insurance? I’m guessing…no.
And did you know that even if it DID, your one anecdotal example basically illustrates…nada? Again I’m guessing…no.
Just out of idle curiosity…who exactly do you thing runs the ‘economy’? And how exactly do you think it’s ‘run’?
Well, enough fun. Could we have another depression? Sure, it’s possible though as others have said fairly unlikely. My guess is that as another posters said it would take something on the order of a natural disaster to throw the US into an actual depression (for those of us wanting a more rigorous definition than friend Gonzo of depression I always heard it as when there is a real downturn in GDP…on the order of 10-20% decrease. IIRC at it’s worse there was a real downturn of something like 15-19% decrease in GDP during one of the really bad years in the 30’s).
We are probably headed for a recession…most likely as bad or worse than the one following the dot com bust…but an actual depression would take a major economic disaster.
I think we have a pretty high risk of an extended period of stagflation. Think Japan post bubble to now (15 years). There are a lot of parallels to the messes we are both in and the government response.
Rather than pop the big equities bubble in 1997 with the irrational exuberrance speech, the internet boom was allowed to continue. Rather than take the pain of the internet bust, the cheap home financing and refinancing sucked a huge amount of savings out of peoples homes. Then of course, we piss away what a billion dollars per day on damn fool wars with very limited economic stimulous, and now are in quite a pickle. I don’t think depression but stagflation is the risk.
Well, when I said it, I was quoting a joke. (The third leg is, “…and it’s a panic when your spouse is laid off.”)
Your claims are unsubstantiated.
The 2000s haven’t been all that hot for the median wage earner. Actually, things haven’t been great for the median wage earner since 1973, with the prominent exception of the 1997-2000 Clinton boom. Check out the 1992- present wage chart at the bottom of this post: Charts for 1/7 column - The New York Times
To take 2005 as an example, total income (not adjusted for inflation methinks) rose by 9%.
But the bottom 90% of the income distribution saw their incomes fall slightly. “The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.” http://www.nytimes.com/2007/03/29/business/29tax.html?ex=1332820800&en=fb472e72466c34c8&ei=5088&partner=rssnyt&emc=rss
OTOH, doe-eyed conservatives benefited from the non-stop patter yakked by our blow-dried media chatterers. Personally though, I’d rather have more bread and less circus.
PST: China Guy: Stagflation refers to simultaneous high inflation and low growth. I think you mean stagnation.
The biggest bubble around is the value of the dollar itself.
It being used as the yardstick to measure all else has meant that everybody has high stakes in it keeping its value high. But it’s only artificial.
Ever since we have let go of the gold standard.
The effect has been that the US has been allowed to spend like crazy, at the cost of the rest of the world buying the debt. Indeed China now being the biggest buyer.
Oil has however slowly but surely become a yardstick too and is close to becoming a new kind of gold standard. Not quite the same though, yet.
Imagine what would happen if the dance between the dollar and a barrel of oil was interrupted and people would no longer want to be paid in dollars.
It could happen if confidence in the dollar were to fail.
And confidence is sliding. Everybody knew that this system could not last but as long as everybody pretends nothing is wrong, nothing is wrong. Today at least.
The gigantic debt of the Iraq war has put quite few countries on edge that this just might be the point where the bubble bursts.
The mortgage crisis in the US has had quite a severe impact in financial links between banking systems all over the world. Although an immediate crisis has been averted there are clear indications that people are looking out for more dependable assets. People are buying gold again.
Confidence is low. Still the fear for popping the bubble is tremendous and someone would have to make a conscious decision to actually do it. Like an OPEC switching to Euro’s or something.
But I think the financial world is quite on edge and a small trigger could lead to a race for everyone to dump their dollars.
Latro, I hope that’s not a hint of glee I detect in your post. A broken and desperate (but still heavily armed) US is probably not something the world should wish for.
It’s not only the US that would suffer. Valuta all around the world will turn to quick-sand. That’s why everyone is affraid.
In the end a new way to establish rates will no doubt be found but even a short period of unrest will surely cause very much upheavel.
The new system will probably be more stable but also fairer to the rest of the world. Which will indeed mean that an upset and heavily armed US will have feelings of betrayel or will go to extreme lengths to try prevent it from even happening.
Who knows, could be the Iraq war was fought exactlyfor this reason. I still remember the rumours that Saddam had intentions of switching to Euro’s.
We still haven’t been given any good other reason for the war, now have we?