patrick.net

Fair enough -- but the article does make the point that "We usually think of a 'recession' as a period when there have been straight quarters of economic decline. A “depression” is something worse. It’s a 10 percent drop in the gross national product or a decline that lasts at least three years, according to The Economist.

"But forget academic definitions. When a large percentage of the population is hurting it’s a depression."

PersainCAT says

I hate to poke a bear because i get the feeling your post is trollish, but none of your points suggest we have a depression in america.

we could have ONE guy who matches those, but have 0.5% unemployment. i would NOT call that a depression.

your arguments would need to define how many people fit each of those categories to define a depression; using "you're", "you've" does not define a depression as one person cannot be in a depression by definition.

I think what suggests we DO have a depression in America is the fact that more than half the people in America fit into at least one of those categories.

I have fit into all of them in the past few years. I am lucky to have a job and I am not currently underpaid at all, but I am unhappy in my job, cannot find a different one, and live in fear of losing it at any point. My house (which I used to have more than 50% equity in) is now underwater, I was laid off in 2008, I live in fear of losing my job and health insurance with it, and no matter how much I save it's never going to be enough to live on with interest rates at zero for who knows how long.

Most people I know in the 25-45 year old range are depressed and scared and feel hopeless.

A link has been added. Thanks

Tude --

Agreed. I see your point.

It is a depression - in my opinion - layoffs are not uncommon in the people I meet with everyday (though most of them get new jobs in time) and most bitch about the 1% interest rate they get on their savings. Some even buy individual health insurance for their kids while foregoing coverage for themselves whilst unemployed. Some have moved to the lands of milk and honey - aka China and India - where they can get 10% interest from banks and a million $$ in the bank (100K dividend per year) is probably enough to live on for the rest of their lives for themselves and their families.
Depression is here and in my opinion to stay for a while until our country finds better ways to make the economy resurgent.

It wont be a depression until there's more people calling to oust all incumbents in Washington than there are party hardliners on either side.

We're still at the point where 47% of the population thinks the worlds answers are in either the Democrat party or the Republican party, never mind they are the same assholes in a bipartisan effort, that has been driving America into the ground for decades.

10% unemployment, give or take a percent just isn't enough numbers, to call a depression. Especially not when the the amount of people in America that want a cell phone, but don't due to lack of funds, is smaller than the unemployment rate.

I bet the "media" deprived rate is smaller than the Unemployment rate, across the board. Beit broadband, cell phone service, or Cable television.

It's just a drop in living standards, from a debt standpoint I'd say we are heading for depression though.

PersainCAT says

becasue not having health care, not earning interest on savings BOTH occur during very strong times of economic growth.

WTF is this crap? No one associates these things economic conditions like "recession" or "depression" which have extremely loose definitions even in an academic sense are quite frankly prone to manipulation by the politicians, particularly during election time.

Which these days seems to start a year or more from the actual election date itself.

Fact is we've got stagnant wages with high unemployment even by the government's own fudged numbers and even worse undermployment over 2 years into a supposed recovery in terms of GDP. GDP has been adjusted downwards twice this year IIRC, surprise surprise they were too rosy numbers. So its quite likely we're already in another recession in terms of GDP but won't know it officially until probably March or April at the earliest next year.

The housing market is still in the gutter and could get even worse if we get another spike in unemployement/underemployment. Care sales are still at recessionary levels too, I think they're back where they were in the late 90's, but population has grown quite a bit since then so the numbers are even worse than a chart might indicate at a glance.

Unofficially the recession never ended if you're non rich.

APOCALYPSEFUCK is Tony Manero says

The moment the chinese foreclose on the notes,

You're probably not serious but I know people who really do believe this so just in case...

They can't do that, the "notes" have a built in payment plan so to speak. What they can do is dump all our debt on the market for below our current sell (interest rate for a given yr bond) price. This is the "nuclear option" though and AFAIK would be considered an act of war since it'd trash our economy and most likely theirs too.

What is more likely is they'll slowly reduce the amount of our debt (bonds) that they buy while pushing their currency as a asian reserve currency. That will undermine the dollar as a global reserve currency which will make our QE (printing) start to have nasty side effects but prevent a global economic blow up. Ideally they'd do this over a period of a decade or more but its possible this is all being forced to happen faster than anyone wants. If too many mistakes are made (ie. blow up in EU and China at the same time or close together, or US goes into a steep GDP decline) too fast things can still blow up though.

AFAIK foreign nations started buying less of our debt in 2010 as a whole, I think the only region of the world that is buying more than it was before are the south american countries. If this trend continues its bad news since QE will have less effect than it already does now and the chance of an inflationary recession, which isn't supposed to be possible in the US BTW according to mainstream economic thinking, will become likely without drastic measures.

>>>What is more likely is they'll slowly reduce the amount of our debt (bonds) that they buy while pushing their currency as a asian reserve currency. That will undermine the dollar as a global reserve currency which will make our QE (printing) start to have nasty side effects but prevent a global economic blow up.

The problem is that the Chinese hold so much US debt that any decline in value means their holdings become discounted.

This is like the old idea: I don't sleep well when I owe $10,000. When I owe $1 million the banker doesn't sleep so well.

OurBroker says

The problem is that the Chinese hold so much US debt that any decline in value means their holdings become discounted.

If they pull off establishing their currency as the asian reserve currency its worth it since they'll have tremendous buying power and political power in asia and around the world.

If they, or we or the EU, screw up then yea it all goes to shit. If you've read my posts on this stuff before you may know that I'm not optimistic they'll pull it off without blowing up the world economies' since all the world leaders and governments appear to be corrupt chumps for one reason or another.

I'm not convinced that the Chinese economy is especially secure. A huge percentage of the population appears not to benefit from recent economic growth and it's hard to know if a lot of construction also means a lot of vacancies.

Friends brought back a very impressive CD of a huge city. You can see a boulevard and for several miles there are large apartment buildings on either side. There are also almost no cars or people. It looks like a gigantic ghost town.

I don't see that India, Japan, Australia, New Zealand or Indonesia would support the use of Chinese money as a reserve currency.

OurBroker says

I'm not convinced that the Chinese economy is especially secure.

I'm not either. Like I said, I'm not optimistic, generally I'm considered a doomer here FWIW. I don't advocate this stuff, I'm just giving what seems to be the consensus view of what will likely happen in the future.

The stuff you bring up is to me a big red warning flag about China's economy too.

But then you have to look at how foreign countries, when taken as a group, have been buying less of our debt for nearly 2 years now. They may not be very confident of us or China but for one reason or another they may see China as the less bad option, ie: there is more growth potential there even if the government lies its ass off and is more corrupt.

Richard Posner just wrote a column for the New Republic where he argues we are in a depression.

I think he is right. We have yet to understand the magnitude of the crisis that has grown in the last 40 years.

Wages are migrating towards a global equilibrium as the information economy eliminates the limits of borders and dependency on natural resources. The effects of this are quite good for the beneficiaries of this industry, but for those in industries that are losing big they are clearly suffering.

I don't worry at all about the trade deficit with China and the United States. The effects of the deficit are that the Chinese are flush with US dollars that they have no other place to put other than US Treasuries. There is no other currency that is even close to assuming the role of the trade currency.

Global markets will never trust a trade currency that doesn't float. China is a half century away from maturing to that stage. They are still tinkering in social policy through the destruction of thousands of unique cultures in an attempt to build a new nationalist unity.

i don't see people standing in bread lines, so no depression here.

Contact your local food banks and ask what's going on. You might be very surprised.

I'm not sure we're in a depression. Its more that after the housing bubble covered over the real issues with the economy Americans woke up to the new reality that the global economy is real and we're no longer absolutely dominant at everything and now have to compete- often with countries with workforces who will do the same work cheaper. We're in an era where things that were taken for granted- like overall decent public schools, public services and infrastructure are all suffering. Its an era where the middle class is not doing very well, retirement pensions are a thing of the past and job security is a joke.

You add all these things up and maybe some people would call it a depression. I'd call it perhaps the new reality.

FortWayne says

i don't see people standing in bread lines, so no depression here.

Quality Auto Repair Since 1979

Food Stamp Program = Bread Line

You might want to reconsider your conclusion, unless of course you live in the SF Bay Area aka Planet Mars. Lots of people there still planning on their initial Tesla purchase!! Right on man!!

Ourbroker's is a shill to get you to click on his site that has a ton of pay per clicks on the sight and has a scrip that reloads the page on "history back".

The problem with academic definitions is that they're static while the world is evolving. Why should a "recession" be two bad quarters and not three?

Golly, a shill? How novel. And ads on a site. My gosh, how abusive. And that link I suggested which is now on the front of Patrick's site, a link to an article discussing how some of the rich in France want to pay more taxes. It's link to the Wall Street Journal, not to me. Yes, it's a plot. It's all a plot. Tell others in the bunker....

Only a douche bag would script page reload, when people are trying to press the back button to go back to the referrer page.

Its Folks like you that I refuse to work for websites that request the information users typed into forms regardless whether they hit submit or not. And Page Reload on exit or back is the only way to do so. And to collect information people declined to give, or to keep people on the page against their wishes are the only reason to do so.

Now I'm not a shill but a bad coder. We're progressed.

You're welcome to visit my site with cookies turned off. You're also welcome not to visit. I don't care.

If there's a form glitch it's likely because of a plug-in issue. You're the first and only person to complain.

There are more than 800 pages on my site, I don't have a staff and I do the best I can.

Tenouncetrout says

And Page Reload on exit or back is the only way to do so.

Neh, with AJAX, that information can be pulled as it's typed.

wtfcapinv says

Wages are migrating towards a global equilibrium as the information economy eliminates the limits of borders and dependency on natural resources.

Not exactly.

What is happening is that wages are being driven downwards everywhere. When wages get too high in a given country industries then find cheaper places to outsource to.

Once Mexico was the outsource destination that was favored, then it became India, then it was China. Right now they're outsourcing to SE Asia (ie. Vietnam, Thailand, Singapore, etc.) but they're already looking to outsource now to African countries.

We're looking at a future where wages are continuously driven down likely for decades. Labor is being devalued by this and technological advances. In theory wealth could be distributed more equitably such that this wouldn't be a big deal, it'd even make the world a better place. But the people we have in charge are basically Gordon Gecko-esque socially functional sociopaths who just want to gobble up all that wealth and keep it for themselves.

This is why social mobility is vanishing, the middle class in Western countries continues to shrink, and the wealth of the world is ever more concentrated in the hands of a few at the top. In the countries where jobs and industry were outsourced too the middle class tends to be even smaller and the wealth is even more concentrated in the hands of fewer people. Labor is usually outright abused and mistreated by the industries and the governments usually end up fairly corrupt.

The FIRE economy that we have has been pretty destructive in human terms and I see no end to it anytime soon.

As an example, China has steel workers who are paid 75 cents an hour -- for a 16 hour day, six or seven days a week.

See: http://www.ourbroker.com/news/how-jobs-at-75-cents-an-hour-are-killing-us-real-estate-062911/

No US worker, or US company, can compete with such labor economics. This is why the Bethlehem Steel Plant is now an arts center.

when all welfare is cut 30% and all EBT/cash in hand welfare systems are canceled in favor of credits for necessary items ..... when all invaders and all of the kids they dropped durring the last 20 year long invasion are back in their homelands...... when all "subsideies" are ended .... THEN, we are in a depression. Right now, we are just getting warmed up.

ApocFuc is right.

PersainCAT says

read the article linked up top. both of those things are used as "evidence" that we are in a depression the article starts with

Nope. The examples it gives are of ways in which people in general are suffering which point to a defacto depression. You pointed out 2 different ways people are suffering in general and then claimed that is an example of strong economic conditions.
PersainCAT says

Theres a reason academic arguments exists, they are the best measure that exists and completely ignor the acedotal evidence of regional variation (for example look at Michigan u cant argue its not in a depression, but the country as a whole isnt). i wont state that i agree with the academic definitions 100% but by their definition we arent in a depression.

There is no agreed upon exact academic definition to the economic term "depression". The only thing that economists agree on is that they tend to be long term (over 18 months, which would be a U shaped recession) and are generally associated with high unemployment, banking failures, and a shortage of credit.

Here is the wiki: http://en.wikipedia.org/wiki/Depression_%28economics%29

and if you don't like the wiki here is another one: http://useconomy.about.com/od/grossdomesticproduct/f/Depression.htm

and here is another: http://dictionary.reference.com/browse/economic+depression

His points are totally valid and if it wasn't for the politics being played right now I think you'd see a depression declared. What will likely happen is the politicians will say that we're in a depression long after it becomes obvious to everyone that we are in the middle of it. We're starting to see more and more people talk about this sort of thing publically IMO. It used to be only on a few niche blogs so maybe it'll become obvious to most everyone soon and that forces the politicians to admit it.

Personally given the way they've started to go on about "JOBS JOBS JOBS" lately suggests to me they know things are worse than they're saying and they have to make things look good for election time. But you can't fix a depression the same way you fix a recession, until they admit that they're just going to keep doing the wrong things over and over and try to put bandaids over bullet wounds.