Are We Heading into a Depression?

conjamuk

It’s far from certain, it’s even a fairly remote possibility but the possibility of an economic depression is being discussed more and more these days. As is to be expected, the discussion tends to be centered around how much of what we’re used to having could be destroyed.

daveirl

This post has been deleted.

cavedave

There are some very interesting graphs comparing this recession tot eh depression of the 1930's here
For example comparison of world industrial output is below.

Flamed Diving

cavedave wrote: »

There are some very interesting graphs comparing this recession tot eh depression of the 1930's here
For example comparison of world industrial output is below.

Well the strategy that CB's and government's are following this time around is completely different, so I see no reason why it should be a carbon-copy. What units are on the X-axis?

Time Magazine

Flamed Diving wrote: »

Well the strategy that CB's and government's are following this time around is completely different, so I see no reason why it should be a carbon-copy. What units are on the X-axis?

The full link is here. I think the X-axis is months since peak of stock markets.

Would point out that the fall in output they list is industrial output. I'm not an expert on economic history, but I suspect the share of GDP attributable to services has increased substantially since 1930. Consequently falls in industrial output may only be a weak proxy for fall in GDP.

leitrim lad

well if this was just a recession it would be starting to pick up now, because the real recession started in the second quarter of 2007, 2 years ago, even tough it wasnt declared until last year,
however this 90bn agency might ,set a slow foundation to recovery, but its going to take around 7 - 10 years for global production to peak again and even at that alot of things wont come back as good as they were, i can see inflation and interest rates going up again and if this happens ,definetly then we would be in a depression as that would cripple everyone again

Time Magazine

leitrim lad wrote: »

but its going to take around 7 - 10 years for global production to peak again and even at that alot of things wont come back as good as they were

Locally or globally? Anything to back that up?

cavedave

Flamed Diving
Well the strategy that CB's and government's are following this time around is completely different, so I see no reason why it should be a carbon-copy.

I doubt they would be a carbon copy. too much has changed in the world since the 1930's. If they were carbon copies in spite of different CB's and government strategies, industrial outputs amount of globalisation, technology, speed of communication education rates amongst people, population etc what would that mean?

leitrim lad

both locally and globally, things like land prices, house prices, and house building (globally), and the ease to buy money, this will take a decade to return and some of it may never return,
energy is the next boom, reneuable energy, and medecine

Flamed Diving

cavedave wrote: »

I doubt they would be a carbon copy. too much has changed in the world since the 1930's. If they were carbon copies in spite of different CB's and government strategies, industrial outputs amount of globalisation, technology, speed of communication education rates amongst people, population etc what would that mean?

It would mean that these depressions are inevitable and out of our control?

cavedave

well two data points might not be enough to say that. It does make me want to see some data on the other financial crisis in history though. If they seem to follow the same path you could be onto something

Flamed Diving

cavedave wrote: »

well two data points might not be enough to say that. It does make me want to see some data on the other financial crisis in history though. If they seem to follow the same path you could be onto something

Oh, I don't think so. Most crises are a product of bad management and/or bad rule-making.

The depression was essentially worsened by The Fed contracting the money supply by a third, for example. The string of banking crise from the late-80's until the present meltdown have been a result of deregulation beginning with the repeal of the Glass-Steagal Act in 1980 (this all began even earlier in Europe, IIRC). The fiscal crises of the 70's were a result of an over/mis-application of Kenyesian theory.

I know the above is an over-simplification, but there are very obvious cause and effects for the big crashes of the 20th century.

silverharp

I'll take the view that the market goes where it wants to go and that policy makers cant change the trend. How can Bernanke and co get around the fact that there is 30trillion of debt in the US not backed by assets (to bring total debt to GDP back to 150%)? if policy makers can make a positive difference you wont see a repeat of my chart below

Time Magazine

leitrim lad wrote: »

both locally and globally, things like land prices, house prices, and house building (globally), and the ease to buy money, this will take a decade to return and some of it may never return,
energy is the next boom, reneuable energy, and medecine

Okay, but have you anything to back that up?

leitrim lad

eddie hobbs