The Great Depression Part 2?

[4kidlets4me]

I was researching The Great Depression trying to understand the current recession. I am most interested in finding out if they knew they were in a Depression vs a Recession while it was happening. It doesn't sound like it more like they thought it was just a bad recession. However according to Wikipedia what caused the Depression sounds alot like what is happening now. Too much debt, consumers not spending because they were laid off, therefore more layoffs because products are not moving etc.

Roosevelt's New Deal sounds a lot like Obama's Stimulus:

"From his inauguration onward, Roosevelt argued that restructuring of the economy would be needed to prevent another depression or avoid prolonging the current one. New Deal programs sought to stimulate demand and provide work and relief for the impoverished through increased government spending and institute financial reforms."

So what do you think? Just a bad recession? Or more like the Depression?

What's that saying? Those who forget history are doomed to repeat it??

[p1gg1e]

Originally Posted by 4kidlets4me

I was researching The Great Depression trying to understand the current recession. I am most interested in finding out if they knew they were in a Depression vs a Recession while it was happening. It doesn't sound like it more like they thought it was just a bad recession. However according to Wikipedia what caused the Depression sounds alot like what is happening now. Too much debt, consumers not spending because they were laid off, therefore more layoffs because products are not moving etc.

Roosevelt's New Deal sounds a lot like Obama's Stimulus:

"From his inauguration onward, Roosevelt argued that restructuring of the economy would be needed to prevent another depression or avoid prolonging the current one. New Deal programs sought to stimulate demand and provide work and relief for the impoverished through increased government spending and institute financial reforms."

So what do you think? Just a bad recession? Or more like the Depression?

What's that saying? Those who forget history are doomed to repeat it??

But Obama is the new Lincoln! FDR was a hero haven't you heard?

[lolar2]

I read in a newspaper opinion column that it's looking not so much like the Great Depression; more like a longer but not-so-severe Depression that took place during the 19th century. You can have a Depression that is worse than a normal recession but still not as severe as the Great Depression. I wish I could remember who wrote the column; if anyone knows, help me out!

[4kidlets4me]

But Obama is the new Lincoln! FDR was a hero haven't you heard?


I have heard that although I'm not sure why he is compared to Lincoln?

[lolar2]

[QUOTE=4kidlets4me;13209547

I have heard that although I'm not sure why he is compared to Lincoln?[/QUOTE]

It isn't for policy reasons. There wouldn't be any, of course, since little from back then is relevant to today's world. It's because Lincoln also was an Illinois State Senator, rose to the presidency relatively quickly, and was a very good public speaker.

[Violet2]

Originally Posted by lolar2

I read in a newspaper opinion column that it's looking not so much like the Great Depression; more like a longer but not-so-severe Depression that took place during the 19th century. You can have a Depression that is worse than a normal recession but still not as severe as the Great Depression. I wish I could remember who wrote the column; if anyone knows, help me out!

Well according to this article the 19th century depression lasted 20+ years! I don't care if it is mild, 20 years of sucky economy would blow!


The historian Scott Reynolds Nelson has noted that in some respects, today’s crisis most closely resembles the “Long Depression,” which stretched, by one definition, from 1873 to 1896. It began as a banking crisis brought on by insolvent mortgages and complex financial instruments, and quickly spread to the real economy, leading to mass unemployment that reached 25 percent in New York.

But per the OP yeah this is the Great Depression version 2.0.

V

[velochic]

Depression 2.0

Yes, there are striking similarities. About 20 years ago, I started making a concerted effort to live "back to basics" and I started reading a lot about how life was during the Great Depression. My father was a young boy during the Great Depression, living on a farm, and my grandma taught him how to live frugally and purposefully... he managed to pass that on to me when I finally grew up and would listen. Most of what I have read over those years has not been economic analysis, but rather first-hand accounts of how regular people got along. Some of my favorite cookbooks are from the Great Depression. I think reading about how life was managed back then taught me a lot about how simple living can be very stress-free. As for history repeating itself... well, it is, I think.

Hank Paulson is an expert on Great Depression economics, which is why he and Ben Bernake somehow thought that they could prevent it from happening again. According to Paul Krugman, the Nobel Prize winner, NYTimes op-ed columnist, and Princeton economics professor, they are now realizing that the markets and the economy has a life of its own and cannot be controlled and manipulated to prevent Depression 2.0 from happening. He calls for swift action to the tune of TRILLIONS of dollars in order to stave the hemorrhaging that is happening right now and there is no way the world has enough confidence in the US to loan us that kind of money. He says he's not sure we CAN avoid another Depression. The Great Depression was the name for the 1890's Depression before the Depression of the 1930s occurred. History did repeat itself as it is doing now.

As for if they "knew" it was a Depression... certainly not in the early years. There is no "official" benchmark to determine a depression like there is recession. I believe Alan Greenspan once said a depression was double-digit inflation and negative growth for a year (or something similar). We're definitely headed to meet that benchmark in 2009. Still, if it's going to get the moniker "Depression 2.0" or whatever, it will probably be done so in hindsight.

Whatever you call it, we're in for several years of hard times and I don't think life will ever be the same in our lifetime. People who have lived with racking up credit card debt and consuming, consuming, consuming, are going to have to learn to "Use it up, wear it out, make it do, or do without."

[Denvergirlie]

Originally Posted by lolar2

It isn't for policy reasons. There wouldn't be any, of course, since little from back then is relevant to today's world. It's because Lincoln also was an Illinois State Senator, rose to the presidency relatively quickly, and was a very good public speaker.

Lincoln was first elected to the IL legislature in 1834 at age 24, relected in 1836, 1838 and 1940. In 1842 he does not seek re-election, but runs for US Senate in 1843, but fails in that bid. In 1846 he runs for US Representative and wins. In 1846 he leaves politcs to practice law. Runs (lobbies - appointment) for US Senate again in 1855 and 1859, but loses both times again.
In 1860 he wins US president with 40% of the vote (4 candidates ran)

I do not see any simularities between Lincoln's and Obama's climb to this office.
I certainly don't hope that it's Obama and Lincoln's policies that are being compared as Lincoln was just awful.


As for Lincoln, he was one of our worst presidents. At best he was a dictator.
He imprisoned citizens, members of the press, and even duly elected legislators and federal judges for nothing more than expressing concern over Lincoln’s interpretation of the Constitution.
Newspapers were shut down or threatened into compliance.
Armed military personnel were placed at ballot boxes to coerce the public into favorable voting decisions. And this was all in the union states.
In the South, things were much worse.

Union army soldiers entered towns that had not a single soldier from the Confederacy, but pleny of women, children, and the elderly. These soldiers burned down almost all civilian dwellings, stole everything of any perceived wealth, slaughtered livestock and took grain for soldier consumption (when they were no longer hungry or in need of provisions, they simply killed the rest of the livestock and left the carcasses on the side of the road, and scattered the grains to the wind), murdered innocent civilians, raped women and left those that remained alive without shelter, clothing or a scrap of food at the onset of winter.

(Some above text was copied, pasted and editted from another website and I am simply not that succinct. My text would take up pages and pages of outlining his failings as a president. However, it is in no way a complete and full picture of Lincoln's crimes against American citizens)

Why people commonly hold him up as one of our best presidents is utterly bewildering.


Back to the OP --- FDR New Deal didn't work then, I highly doubt it going to work now. It took WWII to get America out of the Depression.

Today's unemployment numbers are greatly skewed, they do not take info account those who have exhasuted benefits, have taken part time jobs because they simply can't find a full time job, nor does it account for those who have started their own businesses because they can not find full time employement.
Not too mention that the population at time did not have the levels of personal debt families now have.
Additionally, the level of debt the US gov't has is also greatly unreported. It doesn't count for the interest the gov't pays our creditors, nor does it account for the actual value of social payments the US has committed itself to in the form of Social Security and Medicare/ Medicaid.


I try and have some hope, stay positive but it's awfully hard when reality busts back in the door.

[Violet2]

Actually Denvergirlie, they are saying now that Lincoln was our best president.



It was his bday recently and the media has been going nuts with it and trying to spin it that Obama is the new Lincoln.

V

[Denvergirlie]

Originally Posted by velochic

Depression 2.0

Whatever you call it, we're in for several years of hard times and I don't think life will ever be the same in our lifetime. People who have lived with racking up credit card debt and consuming, consuming, consuming, are going to have to learn to "Use it up, wear it out, make it do, or do without."

I would agree, I watched a little blip this morning about how consuming is done for as it was in the past. A new era has arrived and Americans’ standard of living is undergoing a permanent change.

http://finance.yahoo.com/tech-ticker...SPC,%5EDJI,RTH

[Denvergirlie]

Originally Posted by Violet2

Actually Denvergirlie, they are saying now that Lincoln was our best president.



It was his bday recently and the media has been going nuts with it and trying to spin it that Obama is the new Lincoln.

V

I know, incomprehensible isn't it.
Spin doctor's at work.

When I heard that Obama was going to swear in on Lincoln's bible, I almost had a heart attack right then and there.

[Aeress]

I ignore most of the Obama is like banter, not worth listening to.

What I wanted to comment on is- stimulus not going to work.

For me, while I see the history and agree that in many ways the New Deal did not work, I can't see how we can say that the stimulus will not work. I am waiting to see what happens and withholding judgement until mid May/June, when monies have started moving.

I also can't go down the road that it took a war to get our economy back on track, becuase that is a very scary thought.

Granted I am not an economist in any way, so maybe I am being unrealisitic.

[krankedyann]

I believe it will be worse than the Great Depression because this one is world-wide. See the Baltic Dry Goods Index since October? See what's already happened in Iceland and is predicted to soon hit Scotland, the Western Block and Mexico? See the Forex (currency futures) blood bath Monday night into Tuesday in Asia, Japan, Poland and Russia? See gold jump that night? Big, huge, honkin, waving red flags. The ride from here will be downhill for a while.

FDR's policies actually lengthened the Depression and made it worse. Obama's looking to gear up for the same thing. Even JFK said the way to stimulate the economy was to cut taxes, not raise them. Raising taxes in an economic downturn is a decidedly recent idea. Now we have states going bankrupt in the middle of it all, too, because they have no clue how to manage money and cut back spending when tax revenues fall. So instead they just up taxes, making for more burden on the people, resulting in even more lost jobs..... it's a viscious cycle.

Unemployment is much higher than official numbers. Private companies aren't the only ones cooking the books at this point- the government has taken a fair share of that game, too.

[krankedyann]

Originally Posted by brendon

For me, while I see the history and agree that in many ways the New Deal did not work, I can't see how we can say that the stimulus will not work. I am waiting to see what happens and withholding judgement until mid May/June, when monies have started moving.

It's a simple matter of math.

#1- The stimulus will create approx 4 million jobs over a period of years. At a cost of approximately $260,000 per job created.

#2- The US is loosing 1-2 million jobs a month and that is predicted to continue for quite a while.

So the stimulus is going to cost each tax payer how much to only create a small portion of the jobs that are being lost?

The vast bulk of that bill was pork, not stimulus.

[Mama~Love]

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[p1gg1e]

I just wanted to add I was being sarcastic in my first post. I agree Lincoln was a dictator like president. He did though get rid of the Central bank that the Obama administration is starting to talk about bring back.

I find it disturbing that we don't own our country anymore. We have borrowed from other country so much...I'm just waiting for them to call the loans in

This may be a good time to get water collection systems ( with a berkey water filter) or well buckets just incase you can't afford electric or water ( or they are interupted). Sounds silly but its more then just making due and not buying new. Hard times on such a dependent soc. we will need ways to provide for our selves for the most basic things in some cases. Social services can only go so far if massive amounts of people are without jobs and housing they will run out of money.

Ok done with the doom and gloom.

[krankedyann]

Originally Posted by p1gg1e

Social services can only go so far if massive amounts of people are without jobs and housing they will run out of money.

I agree. I recently read in a newspaper article that in some states it's taking up to three months to get your first unemployment check, they're so swamped.

[velochic]

Originally Posted by krankedyann

I believe it will be worse than the Great Depression because this one is world-wide.

Actually, the Great Depression of the 1930's (notice that now we are having to qualify *which* GD ) was world wide, too.

http://en.wikipedia.org/wiki/Great_Depression

I think there are a couple of important difference between then and now, though. First of all, during the 30's, 70% of the US population were farmers. Today, 1% of the population are farmers. Those that were farmers, except for the comparatively VERY SMALL portion that were affected by the Dust Bowl, were, for the most part, self-sufficient enough to not need any help. They had no money to get "boughten" goods, but they were able to put food on the table and barter to get things they really needed. That is GONE today. If people have to rely on themselves to provide their needs, they are SCREWED. Most people can't even cook a meal from scratch or bake their own bread. If they have to do more than peel off the plastic and put it in the microwave, they're lost. People are not resourceful anymore as a general rule.

I also think we live in more violent times. This is what worries me the most. We are pacifists and the thought of owning a weapon, let alone a GUN, scares the crap out of me. But I would do what it takes to keep my family safe. This is something that I worry over more than the economy... the rising crime rate.

[Amys1st]

Originally Posted by velochic

People are not resourceful anymore as a general rule.

That is our feeling. DH and I made a decision several years ago (maybe 2 decades ago like velochic) that we wanted to be resourceful and raise our children to be resourceful. If I had a nickel for everytime someone looked at my like I have 6 heads for my frugal choices, I could settle the Redepression myself.

It is very hard to observe how this forum has changed over the last several months. Where we used to send each other to quirky sights, calculators and share frugal tips, now we have people who need to learn how to be resourceful, cook from scratch, or dig out of this debt they are in before it gets worse.

As far as depression- there were no federal aid programs in 1929- no FDIC, WIC, medical insurance, anything of this type. Families were much larger and several generations under one roof. This might be the norm going forward again as several people in the older generation are loosing their savings etc. It will affect the rest of the world since our recession has hurt tourism in the carribean, buying goods made in china, etc.

more later...

[SeekingJoy]

Originally Posted by velochic

I also think we live in more violent times. This is what worries me the most. We are pacifists and the thought of owning a weapon, let alone a GUN, scares the crap out of me. But I would do what it takes to keep my family safe. This is something that I worry over more than the economy... the rising crime rate.

I wonder about this, too. We don't and won't own weapons, but I wonder if there is a point at which DH and I would change our minds. My hometown is seeing a very significant increase in violent crime. We feel secure -- for now -- but I recognize that can change relatively quickly.