This diary grew out of a comment I made to
another's diary, yesterday:
It's already a Depression...it's just that GOP...
...is leading the MSM and the Dems off of a cliff under which they'll be able to attempt to lay claim to the false meme that "Bush had us in a Recession, but Obama took us into a Depression."
Nothing could be farther from the truth here, by the way. But, since when did the TRUTH have any bearing on the Republican's campaign tactics?
In fact, not only is it already a Depression, but it's the
"Bush Depression." And, it's time we started calling it that, too.
(Taking a look at three sets of statistics, below, with regard to: i. unemployment, ii. bank failures and iii. consumer confidence indices, supports my comments herein. And, then, in two very critical respects, it's far worse than what this nation endured back in the 1930's, too. But, more about that in a moment.)
Got it? Good! (And, if you don't get it, here's a little history before we get into the main purpose of this diary.)
First, if you're going to start quoting the National Bureau of Economic Research's definition of "Depression," don't bother. Why? Here's their explanation: They don't have a definition for a "Depression!"
As many of you were probably already aware, "The Business Cycle Dating Committee of the National Bureau of Economic Research" met by conference call on Friday, November 28, 2008, and they had an epiphany: We were in a Recession.
Then, they told us Americans something which most (apparently, judging from their comments through November, our President and his administration were clueless, however) of us already knew: We've been in a Recession for a year.
The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.
Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.
In the USA Today article, linked above, there's this critical answer to a question in the FAQ section of the article:
The NBER does not separately identify depressions. The NBER business cycle chronology identifies the dates of peaks and troughs in economic activity. We refer to the period between a peak and a trough as a contraction or a recession, and the period between the trough and the peak as an expansion. The term depression is often used to refer to a particularly severe period of economic weakness. Some economists use it to refer only to the portion of these periods when economic activity is declining. The more common use, however, also encompasses the time until economic activity has returned to close to normal levels. The most recent episode in the United States that is generally regarded as a depression occurred in the 1930s. The NBER determined that the peak in economic activity occurred in August 1929, and the trough in March 1933. The NBER identified a second peak in May 1937 and a trough in June 1938. Both the contraction starting in 1929 and that starting in 1937 were very severe; the one starting in 1929 is widely acknowledged to have been the worst in U.S. history. According to the Bureau of Economic Analysis, real GDP declined 27% between 1929 and 1933, roughly ten times as much as in the worst postwar recession. If the term Great Depression is used to mean the period of exceptional decline in economic activity, it refers to the period from August 1929 to March 1933. If it is used to also include the period until economic activity had returned to approximately normal levels, most economists would judge that it ended sometime in 1940 or 1941. However, just as the NBER does not define the term depression or identify depressions, there is no formal NBER definition or dating of the Great Depression.
In other words, again, there is no precise definition of a Depression.
Here's how About.com handles this: "Recession? Depression? What's the difference?"
The difference between the two terms is not very well understood for one simple reason: There is not a universally agreed upon definition. If you ask 100 different economists to define the terms recession and depression, you would get at least 100 different answers.
Recession: The Newspaper Definition
The standard newspaper definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.
This definition is unpopular with most economists for two main reasons. First, this definition does not take into consideration changes in other variables. For example this definition ignores any changes in the unemployment rate or consumer confidence...
So, you could say that I have a couple of "issues" with much of the current Progressive punditry on the economy--at least with folks that aren't acknowleding it's a Depression--now.
DEMOCRATS (AND SANE REPUBLICANS): STOP FOLLOWING THE MSM AND THE GOP OFF "THE SPIN CLIFF" WHEN IT COMES TO OUR ECONOMY!
Everytime President-elect Obama, Vice President-elect Biden, Harry Reid, Nancy Pelosi, Barney Frank and the other 532 members of the House and Senate utter the word, "Recession," for all intents and purposes, they're falling right into the GOP's gameplan, essentially, it's a trap to mount a comeback in 2010, 2012, and beyond.
They all virtually agree that 'the economy is in the worst shape it's been since the Depression."
Maybe...just maybe...that's because we're already in another depression.
First, much of the comparative nature of Progressive writing of late, in terms of where the American economy is, today, versus where it was in the early 1930's, equivocates deceptive and downright inaccurate, current, government-supplied statistics with statistics as they were presented within an entirely different context, more than 75 years ago. (Read: "Apples to Oranges comparisons on the numbers.") This has been further compounded by the current administration's self-evident attempt to obfuscate our financial realities both from the MSM and then the public, in general.
Second, and as a byproduct of what I mention in the previous paragraph, I would also put forth the concept that it's in the best interests of Progressives and Democrats everywhere to stop referring to our economy as being in a Recession and to start calling it--right now--what it is: a Depression.
Case in point: It wasn't until the 2008 Presidential Election was virtually over that the government even acknowledged we were in a Recession--one which the Bush administration finally acknowledged had "officially" commenced almost a year earlier, no less! (Gee, do you think the fact that there was a Presidential election going on most the year had anything to do with the Bush administration coming up with this epiphany 11 months after the fact?)
So, does this mean that a year from now, after Obama's been in office for practically as long, we'll then start acknowledging what all self-respecting Dem's should start shouting from their hilltops right now, while Bush is still in office: "It's a Depression, dammit!"
(I can already hear my redneck in-laws chiding me in 2012: "Bush might have caused a Recession, but Obama turned that into a Depression." Uh, huh. Right. Whatever you say. Hey, if some of my in-laws can believe we invaded Iraq to get Al Qaeda; and if they can believe Obama's a Muslim; and if they can believe John Kerry was a coward; then it is not a ridiculous notion, by any stretch of the imagination that, a little less than four years from now, they'll believe 'Bush screwed up the economy and put us into a Recession; but Obama made it worse and sent us into a Depression.' As we all know, truth has no bearing when it comes to the subject of Republican Party communications policies!)
I do believe that Obama will shepherd us out of this, given the time and our support. But, things are going to get (much) worse before they get better, due to no fault of the incoming administration.
And, speaking of the incoming administration, here's a very simple and elegant--if I say so myself--answer as to why Treasury Secretary Paulson and Federal Reserve Chairman Bernanke came rushing onto Capitol Hill in September with their "Emergency Bailout."
One of many really good reasons for Paulson's and Bernanke's timing: Fiscal Year 2009 started in October 2008! For accounting purposes, they could push the bailout funding right off of the Bush administration's books, and for historical purposes, put it right in Obama's lap.
And, guess what? That's exactly what they did!
(Make no mistake about what I'm saying here. I realize, there were plenty of other excuses given for their timing of all of this. But, certainly not at the bottom of Paulson's and Bernanke's list, there was the obvious reality that they could wait to let Congress know about all of this until such time as the administration--and the Republican Party for that matter--could be certain that, from an accounting standpoint if nothing else, this would go on the first year of books on the Obama Administration, as opposed to being tied into the Bush administration's numbers, at least from a historical accounting standpoint.)
I can practically hear Karl Rove--in the throes of a Presidential campaign no less--saying: '2009 Budget = Obama. 2008 Budget = Bush. Wait until Congress has no choice but to put it on the books for 2009 and not 2008.'
PRECISELY WHY WE MAY JUSTIFIABLY REFER TO IT AS A DEPRESSION RIGHT NOW.
Here are just three of the many very good reasons why we should be referring to our economic situation as a Depression right now:
1.) unemployment
2.) bank failures
3.) consumer confidence
All of these statistics have been grossly distorted, hidden or just ignored over the past 6-12 months, respectively, and then propagandized by the Bush Administration, and the MSM; and this has been further exacerbated by Harry Reid and Nancy Pelosi as well as most of our Congress as they've been buying into these GOP fabrications for many years, to boot.
Barney, Nancy, Harry, Joe and Barack: Stop doing that! (Aside from the fact that these statistics are grossly manipulated. The facts highlight the reality that you're playing right into the Republican Party's game plan by parrotting them about this now, too!)
Take a look at the propaganda and the reality, and you decide for yourself: "Recession?" Or, "Depression?"
WHY IT'S ALREADY A DEPRESSION:
REASON #1.) UNEMPLOYMENT
Current levels of unemployment in the U.S. are about to get almost as bad as they were when they were at their worst levels in the early 1930's, when 25% of our workforce was unemployed.
It's very likely that our 2009 reality, just months from now (before the Obama administration's employment programs kick-in) will eclipse the highest levels of unemployment during the previous Depression.
You might ask: How can that be? The government just announced that the unemployment rate was 6.7%
We currently hear about a fictitious 6.7% unemployment rate in the US, according to the Bureau of Labor Statistics (note below, even the government acknowledges elsewhere, even though the numbers are not widely reported, that unemployment is actually at 12.5% right now, not 6.7% as you've heard most recently in the MSM), but that's based upon calculations as they were modified during the Clinton administration so as not to reflect the underemployed, and those "discouraged" enough, for more than a year, with regard to finding a job.
Apparently, according to our government's new and improved (For whom? You might ask.) way of calculating unemployment statistics, these folks no longer count! I wonder how they'd feel if you asked them about that sentiment?
John Williams, the publisher of Shadow Stats, at http://www.shadowstats.com describes it this way: http://shadowstats.com/...
Courtesy of http://ShadowStats.com
Unemployment Rate. Shown are two official seasonally-adjusted unemployment measures, U.3 and U.6, and the SGS-Alternate Unemployment Measure. The various measures moved sharply higher again in November, reflecting rapidly deteriorating labor-market conditions. The November rates stood respectively at 6.7%, 12.5% and 16.5%, up from 6.5%, 11.8% and 15.8% in October.
General background note: U.3 is the popularly followed unemployment rate published by the Bureau of Labor Statistics (BLS), while U.6 is the broadest unemployment measure published by the BLS. U.6 is defined as total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers. Marginally attached workers include the discouraged workers who survived redefinition during the Clinton Administration. The SGS-Alternate Unemployment Measure simply is U.6 adjusted for an estimate of the millions of discouraged workers defined away during the Clinton Administration -- those who had been "discouraged" for more than one year.
General background note: Historical data on both the official and SGS-Alternate unemployment series are available for download on the Alternate Data page of www.shadowstats.com. The Alternate numbers are reported from the 1994 series redefinitions forward. It is planned to take the alternate series further back in time.
In summary, as far as UNEMPLOYMENT stats are concerned, even the government's own numbers currently tell us that unemployment is not at 6.7%, as widely reported, but at 12.5%, instead. Right now!
Add Mr. Williams' calculations into the mix, and it's more like 17% unemployed, right now. (For folks doing the math, right now, that's only 8% less than the worst levels of unemployment ever measured in the U.S., during the early 1930's.)
President-elect Obama's made statements over the past 48 hours regarding concerns that unemployment levels might reach 10% this year. That's based upon the most conservative (read: inaccurate and deceptive) of calculations. In effect, if employment went up 50%, from the current, BLS-reported 6.7% amount, that's 10%. Now, multiply the other BLS/government statistic ("U.6"), 12.5% now, which makes a 50% increase 18.75%. (And, again, that's the government's own numbers.) Then, look what a 50% increase does to Williams' "SGS" calculations on unemployment, and you arrive at approximately 26%. That's about 1% higher than the worst levels of unemployment at the very lowest point of the Great Depression.
WHY IT'S ALREADY A DEPRESSION:
REASON #2.) BANK FAILURE RATES
One of the most heavily obfuscated realities of the current economy is the cold, hard fact that most U.S. banks are (or, pre-TARP, were) insolvent.
That's not me saying this. That's Jim Rogers, George Soros' former business partner; and, that's noted Progressive Democrat and economist Nouriel Roubini, both being quoted as saying that in the past three or four weeks, among others.
Most major US banks are widely acknowledged as being insolvent. More then one pundit on our economy is now saying it: "Jim Rogers calls most big U.S. banks "bankrupt."
Jim Rogers calls most big U.S. banks "bankrupt"
Thu Dec 11, 2008 1:53pm EST
By Jonathan Stempel
NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors...
...Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector doesn't address how banks manage their balance sheets, and instead rewards weaker lenders with new capital.
"Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.
"What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent," he said. "What's happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics."
And, if George Soros' business partner doesn't float your boat, prescient economist Nouriel Roubini said the same thing about two weeks ago: "Roubini, Sunshine Say U.S. Banking System Is `Insolvent.'"
Here's something I dug-up, statistically speaking, about all of this from "A Case of Unemployment."
US GNP Deflator, 1929-41
People perceive the 1930s as a period in which business failures were very high, and they were when one compares them to what happened in the 1940s and 1950s. During the years 1930 to 1933, the annual failure rate was 127 for every 10,000 businesses. In contrast, failure rates in the 1950s were between 40 and 50, and for the 1940s they averaged only 23. However, during the years 1925 to 1929, a period usually considered prosperous, the failure rate averaged 104.
There was one segment of business that was unusually hard hit during the Depression, the banking industry. The table below shows the number of banks each year and the number of bank suspensions. A bank suspension indicates that the bank closed during the year, but it does not mean that the bank failed. Some banks closed only temporarily. Nonetheless, the total number of banks fell by about one third during five years, either through merger, failure, or voluntary liquidation. This process was not invisible to the public. The most dramatic banking crisis in the history of the United States took place in early 1933. In one of his first acts as president, Franklin Roosevelt declared a banking holiday and, as a result, no banks were open from Monday, March 6 to Monday, March 13. The drastic reduction in bank suspensions in 1934 reflects both new policies and the enactment of legislation to insure banks.
Numbers of Banks and Bank Suspensions
Year Number as of 12-31 Suspensions
1929 24,633 659
1930 22,773 1350
1931 19,970 2293
1932 18,397 1453
1933 15,015 4000
1934 16,096 57
So, all one has to do is take Wachovia, Citigroup, WaMu and IndyMac, four of the more prominent banking failures that were, effectively, absorbed by our soon-to-be-printed tax dollars, and realize that no less than three of the top ten banks in the U.S. failed in the past few months, while scores (if not hundreds) of others were "absorbed" by the TARP dollars blessed upon them by Messrs. Paulson and Bernanke, too. (We won't even talk about Fannie Mae, Freddie Mac, AIG, Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns, GE, GMAC and American Express, all of whom--instead of just "some" of whom--would arguably be defunct as I'm writing this if it wasn't for our government's largesse during these past few months, as well. Most of the ones that aren't out of business have either been absorbed by the system or...you guessed it...are now...banks!)
So, it may be stated that--although I'm sure many would argue the point--technically, based upon overall assets alone, that the entire investment banking industry and a good portion of the entire banking industry were wiped out in this Depression, in comparison to a much smaller percentage of the total banking industry's assets in the early 1930's.
It's just that this time, the losses were all obfuscated by the so-called "bailout."
WHY IT'S ALREADY A DEPRESSION:
REASON #3.) CONSUMER CONFIDENCE
This pretty much speaks for itself: "U.S. consumer confidence hits record low on job, business worries."
U.S. consumer confidence hits record low on job, business worries
By Ruth Mantell, MarketWatch
Last update: 11:55 a.m. EST Dec. 30, 2008
WASHINGTON (MarketWatch) -- Consumer confidence hit a record low in December, according to the monthly Conference Board index reported Tuesday, as worries increased about current labor-market and business conditions.
The December consumer confidence index fell to 38 from a downwardly revised 44.7 in November. Economists surveyed by MarketWatch had expected a December reading of 45.8.
"The further erosion of the consumer confidence index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008," said Lynn Franco, director of the Conference Board's Consumer Research Center. "The overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half."
Consumers' view of current conditions worsened in December, with those saying business conditions are "bad" rising to 46% from 40.6%, and those saying jobs are "hard to get" rising to 42% from 37.1%.
Near the top of this tome, I made the following statement: '...in two very critical respects, our situation (right now) is far worse than what this nation endured back in the 1930's, too.'
When one accepts the realities that we pretty much lost most of our banking and investment banking industries this time, and when we acknowledge that the entire government is actually bankrupt, as well, those are far more severe circumstances than what this country endured in the early 1930's, too. Truth be told, the rest of the world pretty much already knows this. So, perhaps it would behoove us Democrats to start telling it like it is now, as well.
So, Democrats, let's get this right, at least from a historical perspective...both for our near-term history's sake as it relates to future elections (and re-elections), and for our children's sake, if nothing else.