# Will the national/world economy completely collapse? **URL:** \ **Category:** Great Debates\ **Created:** [September 20, 2008, 9:01am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415 "2008-09-20T09:01:48Z")\ **Posts on this page:** 10\ **Page:** 4
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [September 28, 2008, 8:49am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/61 "2008-09-28T08:49:48Z")
> [@Leaper](#): > > For those of you who’ve replied to this thread already, does this change your mind about the government’s willingness to do what’s necessary to avoid a total collapse before it’s too late? Or for their ability to come up with something that’ll actually work? It depends upon how you define “Total collapse”. Seriously. I agree that we have an extremely serious problem on our hands. But 1. I think the Dems and the Bush admin are going to cut a deal (indeed the wires say that they have come to agreement) and 2. If they don’t now, they will later. Remember that Rome wasn’t burnt in a day. And the Great Depression experienced banking failures from 1930 to March of 1933. So if the less constructive forces in Washington prevail now, there will be a lot of unnecessary suffering. And that could mean recession. But I just can’t see gridlock extending over the next 2-3 years. There are a number of bad scenarios that I consider more likely that 20% unemployment, as averaged over a full calendar year. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 28, 2008, 9:29am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/62 "2008-09-28T09:29:15Z")
I do get your point; just want to address this particular part: > [@Measure\_for\_Measure](#): > > It depends upon how you define “Total collapse”. Seriously. Good question, actually. How about the scenario outlined in the link I mention in post 25? The concerns mentioned in the Telegraph link a couple of posts ago? (I’d mention the Kristol warning, but he is a little short on vision detail.) Based on these, some possible ideas: massive bank runs across the nation? Near cessation of all credit? All worldwide stock markets losing a quarter to almost half of value? Is “another Great Depression” close enough, or is it too inapplicable to today’s conditions?) (Mind you, I’m not saying anything about likelihood or anything like that. Just trying to toss out ideas about what it might mean. Other suggestions are welcome.) ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [September 28, 2008, 7:20pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/63 "2008-09-28T19:20:04Z")
Enough about me. [Barry Eichengreen](http://www.voxeu.org/index.php?q=node/1718), one of the country’s best economic historians and an expert on the Great Depression opines that: a) We won’t have another Great Depression, but b) Unemployment could top 10% (though I emphasize that he did not say that it will top 10%). Most are not even talking about b). > [@Barry Eichengreen](#): > > That said, we are not going to see 25% unemployment rates like those of the Great Depression. Then it took breathtaking negligence by the Fed, the Congress and the Hoover Administration to achieve them. This time the Fed will provide however much liquidity the economy needs. There will be no tax increases designed to balance the budget in the teeth of a downturn, like Hoover’s in 1930. Where last time it took the Congress three years to grasp the need to recapitalise the banking system and provide mortgage relief, this time it will take only perhaps half as long. Ben Bernanke, Hank Paulson and Barney Frank are all aware of that earlier history and anxious to avoid repeating it. But Professor Eichengreen also says, > [@](#): > > I suspect that I am now less likely to be regarded as a lunatic when I ask whether unemployment could reach 10%. ## Now I’m willing to predict that unemployment won’t go to 10%, but I sure as heck am not saying that it can’t go there. All those interested in this topic should skip the stuff below and read Eichengreen’s article. It’s short, good and gives the informed alarmist view (though Eichengreen is a sensible and deliberate man). Back now? Ok then. -------------- Near cessation of all credit? Possible, but it won’t last indefinitely. It won’t even last a month. -------- All worldwide stock markets losing a quarter to almost half of value? From their peak? All _major_ stockmarkets? Sure, that’s plausible. -------- Is “another Great Depression” close enough, or is it too inapplicable to today’s conditions? If US unemployment tops 20% for a calendar year, and it doesn’t drop below 10% for another 5 years, that would be “close enough”. But that won’t happen. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 28, 2008, 11:47pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/64 "2008-09-28T23:47:19Z")
> [@Leaper](#): > > [Bill Kristol sez we’re about to hit 1933,](http://weeklystandard.com/Content/Public/Articles/000/000/015/636zbhel.asp) and his solution. Well, Fortis (one of the banks mentioned above) [has failed.](http://money.cnn.com/2008/09/28/news/international/fortis_nationalized.ap/index.htm?cnn=yes) BTW, I want to thank **Measure for Measure** for taking my queries seriously. Honestly, I’m uncertain why there hasn’t been more concern and folks leaving replies here; I mean, will the Presidential election really matter if our economy is a smoldering crater? Perhaps it speaks to general confidence that things will chug along somehow. Nevertheless, thoughts on any of my queries (such as above, post 47, or post 60) are still appreciated! ---
**Author:** ![Hank\_Beecher](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hank_beecher/32/7275_2.png) [@Hank\_Beecher](https://boards.straightdope.com/u/Hank_Beecher)\ **Post date:** [September 29, 2008, 12:46am UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/65 "2008-09-29T00:46:15Z")
> [@Measure\_for\_Measure](#): > > Why would they want to do that? [All depositors are fully protected and there will be no cost to the [FDIC’s] Deposit Insurance Fund](http://www.fdic.gov/news/news/press/2008/pr08085.html). Nicely played, Mr. FDIC. Raise a glass to the army of federal bureaucrats and analysts who hold the ship together. CNN just had a financial adviser on warning people that FDIC refunds could take six months to two years to receive. ---
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [September 29, 2008, 9:08pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/66 "2008-09-29T21:08:27Z")
Okay, I think it’s pretty clear that my OP’s question is a lot more likely now than it was 24 hours ago. I know some have expressed an opinion in the bailout failure thread, but given the panic in the markets, I’d like to ask the following: 1. Do the events of the past twelve hours change your mind? 2. How long do you think the panic will last? How deeply will it affect the economy? 3. What do you think are the chances of any bailout passing at this point? 4. Fine, we don’t see America a smoking ruin. How bad will it actually get, then? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 30, 2008, 3:32pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/67 "2008-09-30T15:32:19Z")
Market is up 250 today. If that is an indicator .all is well. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [September 30, 2008, 4:37pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/68 "2008-09-30T16:37:21Z")
> [@gonzomax](#): > > Market is up 250 today. If that is an indicator .all is well. Some investors are now betting that a deal will be worked out. Watch what happens if no deal emerges. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [September 30, 2008, 10:53pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/69 "2008-09-30T22:53:37Z")
> [@Rune](#): > > Don’t worry. Now that you’ve embraced socialism you’ll be fine. This is American-style socialism: Tax the workers & borrow money from investors to prop up the moneylending/investor class, who will take the money taxed & borrowed from themselves & lend it to those poor overtaxed workers & the poor underfunded government for more money…:rolleyes: ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 30, 2008, 10:59pm UTC](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415/70 "2008-09-30T22:59:43Z")
> [@spoke-](#): > > Some investors are now betting that a deal will be worked out. Watch what happens if no deal emerges. So if the market goes up or down it is in support of the bailout? It wound up near 500 up today. [Previous page](https://boards.straightdope.com/t/will-the-national-world-economy-completely-collapse/464415.md?page=3)