View Full Version : A Funny Sort of Depression

02-26-2009, 06:39 PM
Are we headed to something like the Great Depression?

There is clearly much to be worried about. Most of America’s private retirement 401(k) accounts have significantly decreased in value since last autumn’s crash. Home equity has plunged. The unemployment rate is above seven percent and climbing.

We had negative GDP growth last quarter. Stock prices are the lowest in ten years. Almost daily some company announces layoffs. Some big banks may be nationalized. The American auto industry will not survive as we have known it for nearly a century.

Abroad, the news is worse. European banks have lost trillions of euros in bad loans to Eastern Europe and Asia. Countries like Iceland, Ireland, and Greece are teetering on insolvency. China’s export industries may have to lay off millions of workers.

Given all that news, we are in a funny sort of depression. Our spiraling national deficit is being financed by China, Japan, and other overseas concerns at almost no interest — saving the United States trillions of dollars in debt service costs.

Nearly 93 percent of those Americans in the workforce are still employed. The difference between what the banks pay out in interest on depositors’ savings and what they charge borrowers for loans is one of the most profitable in recent memory.

The sudden crash in energy prices may be hurting Iran, the Gulf monarchies, Russia, and Venezuela. Yet Americans, who import 60 percent of their transportation fuel, along with natural gas, have been given about a half-trillion-dollar annual reprieve. The reduced price of energy could translate into more than $1,500 in annual savings for the average driver, and hundreds of dollars off the heating and cooling bills for the homeowner.

For the vast majority of Americans with jobs, the fall in prices for almost everything from food to cars has, in real dollars, meant an actual increase in purchasing power. The loss in value of home equity is serious for those who need to relocate for work or want to downsize and move to an apartment or a retirement community. But when averaged over the last decade, real estate still shows a substantial annual increase in value.

Moreover, the vast majority of American homeowners — well over 90 percent — meet their mortgage payments. They have no plans to flip their homes for profit. For them, the fact that they have lost paper equity, or even owe more than their homes are currently appraised at, is scary — but not equivalent to a depression. Most are confident that after a few years their houses will appreciate again. As for now, working young couples have a chance to buy a house that would have been impossible just two years ago.

The same holds true for many retirement accounts whose decline is terrible for those retirees who count on drawing out each month what they put away or must cash out their depleted accounts at vastly reduced value.

But the majority of working Americans are not yet pulling out their sinking retirement funds. Most are still putting away pre-tax money each month, apparently confident that within a few years their portfolios will return to their former value. Some are even consoled that they are now buying mutual funds at rock-bottom prices rather than investing in sky-high investments at the peak of a bull market.

Times are bad for those out of work or those who bought expensive homes with paltry down payments. Yet for those hurting, there is a vast array of government help. Both private companies and public agencies offer all sorts of ways to either walk away from mortgage obligations or have them renegotiated. The same is true for credit-card debt.

Unemployment insurance, welfare, food stamps, and even more new social programs on the way have redefined poverty from what our grandparents told us of the Great Depression.

I live in southeastern Fresno County, one of the poorest regions of a now nearly bankrupt California. Many people are hurting. Yet to go to the local Wal-Mart is to see late-model cars in the parking lots and plenty of cell phones, iPods, and BlackBerrys among the shoppers. Carts are stuffed with consumer goods, lots of food, and Easter confections.

So are we in a depression that justifies a vast redefinition of government and a massive takeover of the private sector? Not quite. What we are a witnessing instead is a sharp downturn from the most affluent era in the history of civilization. For the last two decades, we borrowed and spent as if there were no tomorrow. Now we are living in that tomorrow of cutting back and making do.

In relative terms, it is no longer 2005, but that does not mean it is 1932 either.

— Victor Davis Hanson is a senior fellow at the Hoover Institution and a recipient of the 2007 National Humanities Medal.

The Berean
02-26-2009, 08:07 PM
"Negative Growth"??

Sound better that shrinking, I guess.

Like "decreased oxygen access" sound better than drowning.

02-26-2009, 08:46 PM
Good one. We would call it downwards grow, or downhill increase.

02-26-2009, 08:47 PM
Good one. We would call it downwards grow, or downhill increase.

Inward expansion?

02-26-2009, 09:09 PM
Translation: "We HATE context!!"

02-26-2009, 09:10 PM

02-26-2009, 09:11 PM
Europe, yes.

02-26-2009, 09:14 PM
The title is an oxymoron.

Jack Butler
02-26-2009, 10:05 PM
Funny peculiar or funny ha ha?

02-27-2009, 08:26 AM
The title is an oxymoron.

Oxymoronic titles to grab attention??


Jack Butler
02-27-2009, 08:50 AM
Funny peculiar or funny ha ha?

02-27-2009, 09:37 AM
Those experiencing job loss, foreclosure, and/or repossession might take exception with your choice of words. I would suppose if you are not bothered or at least barely grazed by the recession/depression then it could seem 'funny'.

02-27-2009, 09:41 AM
Take it up with Victor Davis Hanson, boys, it's his title to his article.

Oh, wait, I shouldn't assume you even read it past the second line.

Yet you still felt compelled to comment.


02-27-2009, 09:47 AM
You see! This is precisely why I have avoided anything you participate in because you always bring it down to a personal attack. You feel the need to diminish others to elevate your own status, truly sad.

02-27-2009, 09:48 AM
You see! This is precisely why I have avoided anything you participate in because you always bring it down to a personal attack. You feel the need to diminish others to elevate your own status, truly sad.

Right, as if you simply commenting on the title of the article, while commenting on nothing in the article whatsoever, added so much to the discussion ;)

02-27-2009, 09:56 AM
I rest my case.

02-27-2009, 10:06 AM
Me too :)

02-27-2009, 08:06 PM
Translation: "We HATE context!!"

love watching that grape fruit league!!!!

02-27-2009, 08:14 PM
very nice to watch

02-27-2009, 08:33 PM
grape fruit league!!!!

Must be a messy sort of game

02-27-2009, 08:55 PM
this video of history of housing prices was on the money


02-28-2009, 02:13 PM
For the last two decades, we borrowed and spent as if there were no tomorrow. Now we are living in that tomorrow of cutting back and making do.
Really? Isn't the government doing everything it can to get the easy credit flowing again? No point even mentioning how much the government is borrowing and spending for every American.

02-28-2009, 07:05 PM
It's called printing money, and they are having the presses on full blast lately. The Chinese are waiting.

03-02-2009, 10:25 AM
"The widely held belief that China will soon surpass Japan to become the second-largest economy in the world ignores the fact that the Chinese economy is a spinning top that can come crashing down if exports slow or if foreign investment dries up. Both are happening now. According to Chinese government data, the number of new companies set up by U.S. investors fell by 32 percent in the first 11 months of 2008. In November 2008, foreign direct investment was down 36 percent, to a mere $5.3 billion, from the previous November.

The export picture is equally gloomy, down nearly 18 percent in January from the previous January, after successive single-digit declines in November and December 2008. As long as the United States and Europe remain mired in economic stagnation and recession, the prospects for export-led growth in China will be dampened.

The economic slowdown will put stress on Chinese society and on the political system. The official view is that 8 percent growth is the minimum needed to ensure social stability. According to a researcher at the Central Party School, as reported in December in the official China Economic Times, every 1-percentage-point drop in economic growth below that level means 8 million lost jobs."


03-02-2009, 04:47 PM
You are forgetting that "made in China" can easily keep the Chinese closed economy going.
That is where they were smart, and we were not so smart.