And how are you prepared? Can you prepare?
Paul Krugman writes in the Sunday New York Times op-ed:
Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
Historically, what precedes a depression? Massive inflation. What instigates inflation? Printing money to cover massive debt. Again, from foreign (UK Telegraph) media:
Andrew Roberts, credit chief at RBS (Royal Bank of Scotland), is advising clients to read the Bernanke text (“Deflation: Making Sure It Doesn’t Happen Here“) very closely because the Fed is soon going to have to the pull the lever on “monster” quantitative easing (QE)”.
(Ben Bernanke said in that speech:) “The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost.”
“We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable,” he said in a note to investors.
Mr Obama recently said — on controlling the debt: “Somehow people say, why are you doing that, I’m not sure that’s good politics. I’m doing it because I said I was going to do it and I think it’s the right thing to do. People should learn that lesson about me because next year when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step-up because I’m calling their bluff. We’ll see how much of that, how much of the political arguments that they’re making right now are real and how much of it was just politics.” Video here from Real Clear Politics.
A Reuters article has written:
Amid the worst recession since the Great Depression, the U.S. budget deficit hit $1.4 trillion last year. It is projected to come in at about $1.6 trillion this year.
Obama has said the deficits are a legacy of the Bush administration, but Republicans have tried to cast Obama as a big spender and have attacked last year’s $862 economic stimulus package.
Again, NPD from Mr Obama. Again, everyone is at fault but him. Does anyone here think Mr Obama has done nothing to geometrically multiply our debt — and not quite even into half of his term?
For once, to have further pushed us down the road to a more rapid recovery, all Mr Obama would have to have done is, essentially, nothing. He should have kept America’s billions in the treasury, allowed GM and Chrysler and AIG and others to simply fail. The bottom would have hit, the crunch would have hurt, and we’d be talking about pulling ourselves out of the hole.
As it is, Mr Obama literally spent, instead, trillions of dollars — and our job losses, foreclosures, business shutterings and debt skyrocketed anyway.
Further: what “relief” have YOU received from Mr Obama’s “stimulus”?
That’s right: nothing.
Yet some forecast there is nought but an outright Depression ahead.
And how are you prepared? Can you prepare?
BZ
