Friday, June 5, 2009
Yes, We're STILL In a Depression
Given the soaring stock market, are we still in a serious slump?
Yes:
- Thursday, economics professors Barry Eichengreen and Kevin H. O'Rourke determined that today's crisis is at least as bad as the Great Depression, world industrial production continues to track closely the 1930s fall - with no clear signs of ‘green shoots’- and world stock markets and world trade are still following paths far below the ones they followed in the Great Depression.
- On May 11th, U.S. News & World Report pointed out that bank loan loss rates will be much higher than during the Great Depression
- On May 7th, Investment advisor, risk expert and "Black Swan" author Nassim Nicholas Taleb said "The current global crisis is “vastly worse” than the 1930s because financial systems and economies worldwide have become more interdependent."
Sorry, folks, we're not out of the woods yet.
If you didn't know we're in a depression, see this.
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Posts
According to Moody's, we are in a "severe global economic recession" and they estimate that "US rated banks will incur approximately $470 billion of loan and security losses and write-downs in 2009 and 2010."
ReplyDeleteTaking into consideration a further worsening of the economy in 2010, they believe up to 35% of US banking families will be downgraded and many would be insolvent.
"Sluggish economic recovery begins in 2010 but it is gradual and painful, leaving lasting scars. The state of the world is bleak but not catastrophic." There's your green shoots.
When you investigate the problem areas that remain to fall , probably this fall, you are left with the question "How long will it take to recover". The answer can be depressing as hell, it looks like at least a 10 year deal and that will return us to a different standard of living.
ReplyDeleteWatching the Sunday talking heads wanking on the GM deal and the plight of the poor bond holders (most of which were Hedge Funds) and the fact that the Government will make them make low profit small cars when they should be building high profit trucks and suv's. If this is the kind of thinking that exists in the business world we don't have a chance of redcovery.