Is The US Starting To Lurch Towards Depression?
One of our most popular posts of 2008 (
Fund my Mutual Fund's Most Popular Posts of 2008) was a take on what a modern day Depression would look like (
Nov 18, 2008: What Would a 2009 Depression Look Like?) As I re-read many of those line items in that story, it is starting to feel quite eerie.
Via
Bloomberg
- The U.S. economy’s vital signs may not confirm a diagnosis of depression. The symptoms increasingly point to one. As in the Great Depression, world trade is collapsing, wealth is evaporating and the banking system is broken. Deflation is a growing threat as companies slash production, pay and prices. And leaders worldwide are having difficulty making headway in halting the self-perpetuating decline. “We are tracking 1929-1930,” says Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley.
- The result: This contraction may leave a lasting imprint on the economy and society, just as the Depression did. In the wake of the devastation of the 1930s, Americans swore off stocks, husbanded their own resources and looked to the government for help. Now, another generation might draw some of the same lessons from the deepest economic collapse of their lifetime.
- No economist forecasts a return to the breadlines and shantytowns of that era. “Though the current recession is unquestionably severe, it pales in comparison with what our parents and grandparents experienced in the 1930s,” White House chief economist Christina Romer said in a speech today in Washington. Still, the economy is getting closer to some of the metrics academics cite as constituting a depression, if not a “great” one.
The above story is the opinion of the author only and it does not reflect
iStockAnalyst opinion. Further, the author is not personally advising you
regarding the suitability of the story for your investment needs. In no event
iStockAnalyst will be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage
whatsoever arising from or arising out of, or in connection with the use of this
information. Please consult your investment advisor before making any investment
decision.
