“Future Economic Historians” Will Probably Call the Period That Began In 2007 “the L-O-N-G-E-S-T DEPRESSION”
Sure, last year was the first pre-election year stock market loss since the Great Depression.
And admittedly, last week was the worst opening week of any year … EVER.
But that’s not the big news.
The bigger news is that the Baltic Dry Index has crashed.
And a prominent economist – University of California economics prof Brad DeLong – wrote last week:
Economist Joe Stiglitz warned back in 2010 that the world risked sliding into a “Great Malaise.” This week, he followed up on that grim prediction, saying, “We didn’t do what was needed, and we have ended up precisely where I feared we would.”
***
Joe Stiglitz is right.
***
In the aftermath of 2008, Stiglitz was indeed one of those warning that I and economists like me were wrong. Without extraordinary, sustained and aggressive policies to rebalance the economy, he said, we would never get back to what before 2008 we had thought was normal.
I was wrong. He was right.
***
Future economic historians may not call the period that began in 2007 the “Greatest Depression.” But as of now, it is highly and increasingly probable that they will call it the “Longest Depression.”
What’s he talking about? And how could we be in a depression when – until recently – the stock market has been soaring?
Well, the Fed intentionally created a stock market rally so that people would think that the economy was doing well. The wealthy have benefited, but everyone else has been left in the dirt.
But the real economy has been lying in a ditch on the side of the road since late 2007.
Indeed, the world’s most prestigious financial agency slammed the Fed before the 2008 crisis – and afterwards – for pursuing “bubbles, gimmicks and palliatives” instead of doing what was needed to stabilize the economy. So did the head of the World Bank … and many Fed officials.
Now, the Fed itself is starting to admit that all of its policies since 2008 may have been ineffective.
How Bad Is the Real Economy?
So how bad has the real economy been these last 7 years?
We noted in 2009 that more Americans will be unemployed than during the Great Depression.
We noted in 2010:
The following experts have – at some point during the last 2 years – said that the economic crisis could be worse than the Great Depression:
- Fed Chairman Ben Bernanke
- Former Fed Chairman Alan Greenspan (and see this and this)
- Former Fed Chairman Paul Volcker
- Economics scholar and former Federal Reserve Governor Frederic Mishkin
- The head of the Bank of England Mervyn King
- Nobel prize winning economist Joseph Stiglitz
- Nobel prize winning economist Paul Krugman
- Former Goldman Sachs chairman John Whitehead
- Economics professors Barry Eichengreen and and Kevin H. O’Rourke (updated here)
- Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb
- Well-known PhD economist Marc Faber
- Morgan Stanley’s UK equity strategist Graham Secker
- Former chief credit officer at Fannie Mae Edward J. Pinto
- Billionaire investor George Soros
- Senior British minister Ed Balls
We explained in 2011 that many economists agree we’re in a depression … and they only argue about whether we’re facing the “Great” depression of the 1930s or the “Long” depression of the 1870s. We also noted that housing prices fell farther than during the Great Depression.
In 2012, we wrote:
We’ve repeatedly pointed out that there are many indicators which show that the last 5 years have been worse than the Great Depression of the 1930s, including:
- The housing slump
- The level of inequality between rich and poor (too much inequality destroys economies)
- The interconnectedness of financial systems and economies worldwide (interconnectedness leads to financial instability)
- Runaway spending and greed
*** Indeed, the number of Americans relying on government assistance to obtain basic food may be higher now that during the Great Depression. The only reason we don’t see “soup lines” like we did in the 30s is because of the massive food stamp program.
We noted in 2013 that the British economy is worse than during the Great Depression, and more Americans are committing suicide than during the Great Depression.
We pointed out in 2014 that Europe is stuck in an economic malaise worse than a depression, that Americans fared better after the Great Depression than the 2008 crisis and that U.S. foreclosure rates are comparable to the Great Depression.
Last year, we noted that an important economic indicator – the velocity of money – has crashed far worse than during the Great Depression, and that the howling winds of deflation are hammering the U.S. just as much as Europe.
The Government Has Made It Worse
We’ve previously explained: “We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems. For example:
The world’s most prestigious financial agency said that the government’s attempts to blow bubbles would just make things worse
- An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”
- Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud
- All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger
- The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.
- Government policies send manufacturing jobs and dollars abroad
The bottom line is that we – and the wealth of our nation – have been looted. The great redistribution of wealth in history has created a depression.
Corrupt policy has caused medieval, king-and-serf levels of inequality. As we noted in 2011:
The 1% has caused a depression for the 99%.
(21 votes)
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Depression is an emotional word. Arguments over definitions ought be replaced with facts of shrinking economic activity. The price of stocks was an indicator before the Fed intervened in markets. A person with a fever can be immersed in cold water to lower his fever, but the health of the person is not improved by suppression of his temperature.
Manipulated market indicators are government/banker lies.
Who cares. Kardashian's ass just got two sizes bigger.
It's not hers anymore. Macys just bought it to use as a float in next years parade.
Who says there isn't any inflation ?
This is an important article.
I hope it does not get missed in the media beyond worthless articles of ranchers wanting more free government handouts of range land.
The Banksters have stolen our country and will kill the US for the next 30-50 years and we are reading about some yokels who take over some tiny building in a county that has maybe 15 people every 100 square miles....
Or do you mean the rancher in Wyoming who got fined $30 million because he failed to beg permission from the federal overlords?He got permission from his local county and state regulators which for every previous pond ever built was all that was required. Obama decided to change the definition of navigable waters, any water that drains into anything navigable is now under the control of the federal government.
Do you agree with a terrorism charge for burning 150 acres of federal land in an attempt to stop by 500,000 acre fire?
Please read up on federal land use your idiocy is amazing. Please read up on what BLM and the EPA are actually doing. I hate to tell you this but it's all about politics and the environmentalist win. All Americans lose.
Why does the federal government own 65% of all land west of Denver? Is that Constitutional when new states are to be admitted on an equal footing with other states.
1. As an example, the Feds own .4 to .7% of NY, RI, and CN while owning 84.5% of Nevada. Google a map on federal ownership of state land. See link.
2. Article I, Section 8, Clause 17 of the Constitution limits the Federal government to 10 square miles around Washington DC so where does the government get the authority to seize land from western states?
It gets it's authority from the fact that no one (large group of sheep) is trying to stop them. Remember a thief will steel all that you let him steel.
There is an old proverb, that when the philosopher points at the moon, the idiot looks at his finger. I think your attention has been distracted by an obvious diversion.
You dude, need to stop looking at the diversion in front of your face and look at what's going on that the evil men, the men that covet ruling others, don't want you to see. They don't want to you to know that they are really quite weak, and depend on you being a good citizen and voting, and getting that next loan, punching that time clock, and paying your taxes; and they hope you don't start working for yourself, withdrawing from their system, or saving money outside the banks.
The simplest thing people can do to revolt is to take all of your money out of the banking system, and buy gold I am not sure that will help in the short term but it is a start.
The biggest change will happen when we reach critical mass of the sheeple, knowing that we are being gamed.
Good god! What Race is telling you is to start paying attention to the important stuff. Your dick gets hard about some welfare ranchers yet you remain silent, or worse unaware, when the big banks are bailed out with $23 trillion of taxpayer's money.
Two thefts
1. The Federal government seized and continues to seize huge amounts of western land that should have remained with the states.
2.The Federal government also stole taxpayer money to rescue Wall Street banks from poor investment decisons.
Who lost in both of these transactions? The Middle Class. We are now on the hook for hundreds of trillions in derivatives that are coming home to roost all across the globe.
The Bankers needed to own the Politicians to be able to rob the worlds people blind and now that they have stolen too much blood from the patient the patient and the system will die...
It's just like the big corps sending all the manufacturing abroad for fast profits but they killed all the manufacturing jobs and therefore there is no one left to buy ther product.. but they are all rich now...and as for the rest of us stupid people ( they are still trying to figure out what has happened) nothing will change for a long time because the sheep dont even know they are falling nor who ran them off.
Good times ahead. /s
Drop dead you WS stooge
If things continue on this trajectory, they might end up calling it "The good old days".
This isn't just a depression ala 1930...this is a depopulation causing deflation, depression and fought by CB's with rate cuts and debt. This is unlike anything we have faced and cannot be endured within our current financial / economic structure.
The truth of what ails us isn't debt or interest rate suppression or so many other coping mechanisms...the nexus of our "problem" is an economic system premised on growth...but infinite growth in a finite world is a pretty tough trick to pull off. So, it was just a matter of time before something gave out...
Global population growth started decelerating from the bottom up in the advanced nations and soon spread across advanced and developing alike and spread from the bottom up. Interesting to note that the 0-24yr/old population ceased growing across the OECD nations in 1982, the same year the Federal Reserve began what has been a 99.9% decline in the cost of credit and has resulted in spectacular increases in debt...all to maintain demand for a population whose growth is decelerating.
Global 0-24yr/old population has slowed 80% from it's 1968 peak...and all net growth is now occurring in Africa offsetting declines across the rest of the world.
These are just some of massive declines among these nations and all are estimated to see their 0-24yr/old populations decline by 50%-60% from peak by the time we hit 2050 (and this assumes good economic growth between here and there...if things get rough, those numbers are likely to be far lower). Ultimately, these massive declines are working there way through the entire population…depopulation is well under way from the bottom up.
But China, Brazil, India...they'll save us, right???
By 2050, China and Brazil estimated to be down over 40% and India at 10% but picking up speed to the downside.
The above explains why central banks have seemingly gone mad...why governments worldwide are throwing dollars or Yen or Yuan or Euro's into the wind. Depopulation is coming from the bottom up and declining demand is inevitable. Unfortunately, central banks actions have retarded the business cycle and free money has created massive overinvestment and overcapacity which is now becoming so apparent in commodities and elsewhere (here).
Will Zero Hedge or any outlet ever acknowledge how simple the issue we face truly is? They are welcome to run this story or you can read about it yourself here...(btw, this is a non-profit blog and all proceed benefit Special Olympics).
here
Of course, the solution is likely also simple but god awful in it's implications...a global bankruptcy where all bad debts (aka, somebody else's assets and future income) are cancelled. Reset and hopefully start with an economic premise which can stand the test of time and not the desires of a few.
Ham - Correcr demographic imbalance and attempted monetary policies to maintain consumption. On top of a global reset or call it massive haircuts of debts, labor costs will have to rise.
The foreign labor solution also has a shelf life and the welfare system it takes to support dirt cheap labor without them starting business means a locust like effect on the economy. Also stirring nationalism which in my opinion good for America right now.
Foreigners paid minimum wages do not get the job done right, they now costs more then produce or consume but old habits die hard. We may stabilize at 7 B people even in 30 years as we approach ways to defeat mechnical death and get off planet. Views toward consumption and nut gathering because of old age as longevity is increased greatly will change. Maybe that will take 60 years but its on its way. We are very near the end of our human evolution.
Compete bullshit - has no correlation to the real world
This guy is a troll
Population and it's growth is the denominator by which factors of consumption are multiplied. So, a nations population, it's working population and income + income growth, it's savings, and access and utilization of credit...population size and growth is the basis for all these.
Unfortunately, growth of young populations (0-24yrds/old) is now 100% in Africa (net) and Africa has few jobs, horrible income, little savings, and little to no access to credit. No help to grow consumption or economic activity. And growth of advanced nations is almost entirely among the 65+ (net) who are primarily retiring, not willing to use credit as they move to fixed income in their underfunded retirements.
Heck, even the US Census got in the act in 2012 and reaffirmed it's huge population downgrades in 2014 for the US based on a 2nd and 3rd looks at the 2010 Census data. A 75% downgrade of 0-24yr/old population growth between 2015 and 2050 (downgraded from growth of 24m to 6m).
Regarding being a troll...I don't think so (hope not). But then again, nobody ever thinks their crazy either...they usually think everybody else is crazy.
That is an interesting take, it would explain why every developed nation is fighting for as many immigrants as it can get, even the worthless ones.
So what you are saying is population growth comes from poorer countries? Well we should be OK in the West then in a few years.
There are reproductive strategies in nature. R and K for short. You can read about them here https://en.m.wikipedia.org/wiki/R/K_selection_theory. Counter intuitively the less able adults are to take care of their children, the more children they have. That fits with all your stats above, too. Cyclical see.
So as we approach a very deep worldwide depression, demographics should improve. No need for doomsday pronouncements.
One thing that is a positive about fewer young people, is that young, inexperienced, naive people fight in wars / are soldiers. Evil men's armies will be smaller. Those fewer young people will be poorer, because there are more dependent old folks, and the pendulum will swing back to them having more children. See no doomsday.
Excellent summary. Thank you. I strongly believe a sovereign money system that is not created as debt would form a good base for a new system that would also allow free competition with private currencies like, gold, bitcoin etc. to keep the sovereign system honest. This along with some kind of future direct democracy control of how much currency is issued by a county, country or even state bank each year, it just might give back control of the economy to the locals that make it work. Over-centralised decision making has a long history of not working out for those not making the decisions.
Ham-Bone,
It is about demographics. More births in Muslim countries, fewer in Christian, Hindu, Buddist, etc. Europe has hastened its demise by importing more Muslims.
France, once a Catholic nation with churches everywhere, now has more Mosques than churches. They will soon either be instituting Sharia or having a nasty civil war. The same goes for Europe as a whole.
@ Xavi - top 10 Muslim nations as of 2012... (Muslim population and % of global Muslims)
Indo - 209 million, 13%
India 176m, 11%
Pakistan, 167m, 10.5
Bangladesh, 134m, 8.4%
Nigeria, 77m, 4.8%
Egypt, 77m, 4.8%
Iran, 74m, 4.6%
Turkey, 71m, 4.5%
Algeria, 35m, 2.2%
Morocco, 32m, 2%
Indo, India, Pakistan, Bangladesh all slowing growth...Nigeria huge population gains...Net net, I don't think the data supports the claim its Muslims pushing population growth...huge population gains are happening in sub saharran Africa which seems more of a religious (and otherwise) hodgepoge
http://econimica.blogspot.com/2015/08/slowing-engines-of-growth-examinedor.html
France, once a Catholic nation with churches everywhere, now has more Mosques than churches
great point, except it doesn't (yet)
Depression for whom?
‘For the Record’: How Congress Cashes In On The Stock MarketFor the first time, in 2014, the net worth of the average member of Congress topped a million dollars. While their generous salaries certainly play a role in accumulating that wealth, some make their real money on the stock market. Thanks to special access to new listings and insider information, many legislators can parlay their positions of power into a massive payday.
1,100 donors to a Canadian charity tied to Clinton Foundation remain secret
https://www.washingtonpost.com/politics/1100-donors-to-a-canadian-charit...
...A spokeswoman for the Canadian group said the majority of the 1,100 donors gave small, one-time gifts while attending a 2008 fundraising gala.
A spokesman for the Clinton Foundation said the agreement did not apply to the Canadian organization, which is a separate charity based in Vancouver. The spokesman compared the group to other major charities that provide funding to the Clinton Foundation but do not themselves disclose all their donors, such as Partners in Health and the Nature Conservancy...
The Clinton's don't accept dirty money.
That's why they launder it in Canada before taking it.
If one wasn't involved with the housing sector, the depression started in the early 2000s. Particularly for US citizen IT and technology workers.
Any property rights in US is a fiction. The Corporation of the US with their headquarters located in Fashington owns the entire land plus everything above and below surface. Birth/citizenship Certificate is a Slave Certificate. The US Corporation belong to few men which have sold their souls to the their Master the Lucifer himself in exchange for the ownership of the globe. If one wants to fight US Goverment Corporation understanding of fighting Satan is a first and above all.
Oh yeah! That's going to sell! That's what I'm talking about! Count me in! I wanna wedgie some Satanic ass baby! ... oh! hang on ... isn't that like, completely skitzo? ... hmm ... yaaa ... it is ... think I'm gonna have to pass on the goat-herder Sunday-school-edition 'vision-of-existence' thing.
He means that US citizens are collateral for debt obligations for the US government corporation.
If you take out all the fancy man in the sky (or the hot place) it is factually correct.
We now have a corporate government set up and running. You sign up for it, and you become a part of the corporation.
pods
No pods, it's more than clear from that sentence he's pushing the religious crusade or jihadi angle.
I just meant if you take out the reasoning (which to me means little) and look at the facts of it all, we are owned.
pods
This depression would be much worse if the BLS's unemployment rate weren't going down.
s/
If you really want to see Satan, just wait until the Anti-Christ, Hillary, gets into power