March 17th 2009
Depressing, But Not A Depression
Our Tuesday morning men’s group just wrapped up and while we all have a lot to be thankful for, it was all in all a pretty gloomy bunch of guys. Every one was looking at business slowing down and had some level of worry about the short-term future. But the group definitely wasn’t as gloomy as the president though, who as you recall regularly beats the fear drum with stuff like this:
“We are in the worst financial crisis since the Great Depression, and a lot of you I think are worried about your jobs, your pensions, your retirement accounts.” (Reuters)
But is he right? Is it the worst financial crisis since the Great Depression? In terms of job losses it is … but let’s not get too hysterical, shall we?
Pink equals the great depression, light blue is now … why Time stopped in December ‘07 is a bit beyond me, but here’s how the writer, Justin Fox, summed it up:
Still, it’s clear that the employment downturn we’ve been dealing with, while probably the worst since the Great Depression, is much, much closer in severity to the recessions of the mid 1970s and early 1980s than to the utter disaster of the 1930s. That’s no guarantee that it won’t get worse, of course. But it is useful to know.
So, since we’re in a downturn like the 1970s or 1980s, why is Obama dealing with it like it’s the 1930s? Because we need it - or because he needs it as a cover for his Big Deal plans for a more left-oriented America?
hat-tip: The Glittering Eye
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Posted in Economic Policy, Obama | 3 Comments » | 
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March 17th, 2009 at 8:11 am
There’s a bit of a trompe l’oeil involved in the term “financial crisis”. We are in the most serious financial crisis since the Great Depression but we’re not in the greatest economic crisis since the Great Depression, at least not yet. The financial crisis is measured by things like bank insolvency, stock market decline, and so on. Economic crisis is measured by more everyday sorts of things like how many people lose their jobs, the number of personal and corporate bankruptcies (other than among banks and financial services companies), decline in real GDP, and so on.
Even if this were the greatest economic crisis since the Great Depression it’s not different in kind from other post-war recessions. Only the hysteria is different.
For that to be the case we’d need to have a loss of jobs in double-digit percentages going on for years and substantial loss in GDP rather than 2% we’ve seen so far.
March 17th, 2009 at 5:52 pm
A very useful differentiation of terms … plus you spelled that tricky trompe l’oeil right, so now I know where to go to cut and paste it if I ever use it.
March 17th, 2009 at 7:37 pm
Fixed
http://i3.photobucket.com/albums/y55/silverbeam/Miscellaneous/corrected.jpg