To Employees of the U.S. Media:
We have NOT arrived at the doorstep of the Great Depression--the statistics do not compare.
Yes, the world-wide nature of the current, serious recession is the same, but for different
reasons; yes, banks are involved, but again, the causative factors differ greatly.
(1) As of April, 2009, unemployment in the U.S. has not even reached 10%, whereas in the
1930's, ONE out of FOUR were unemployed.
(2) FDR closed more banks, and for longer, than we see now; again, the causes were different.
(3) The U.S. is not experiencing a Dust Bowl, which seriously complicated our economy
in that long past era.
The last recession that meaningfully compares to 2008-2009 was 1979-1982, when national jobless rates rose to 10% on average, with places like Peoria, Illinois quoting 18%.
But certain panic-peddling pundits all around the media have badly frightened the public with erroneous warnings. I believe this phenomenon has actually contributed to unemployment! For
months we were told we were about to return to those desperate days in the '30's. TV commentators described panic and more doom ahead, while simultaneously quoting misleading
"facts and figures".
Lately, however, more accurate and encouraging reports have gradually surfaced: instead of
this being "the worst economy in 80 years", the quote is now,"... in 26 years", which is the correct comparison. Every day I see a few more revised reports, which should gradually
reduce the nation's fright level. Debt, credit issues and unemployment are all real, deep
problems, of course; suffering is all too real....so why exacerbate them? Just to get another TV
appearance invitation?
I can only hope journalists and other "experts" will keep doing their research.
When they don't, I'll be here.
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Hi Amber, Welcome to the blog-o-world. Can't wait to read what you have to say next. By the way, would you like Lake Claremont Press to re-post the comment you left on our site so that it (and this blog address) is more visible?
ReplyDeleteSharon
I think it is you who needs to do some research. It took three years for the unemployment to reach the heights that it did during the great depression, but in 1930, the unemployment rate was similar to what it is today. The bank collapses didn't happen until 1932, three years after the first crash in the Stock Market.
ReplyDeleteIn the 82 recession, the Fed had raised the interest rate to cause a recession in order to break the inflationary cycle from the 70's. The interest rate was around 10%. Right now the Fed funds rate is zero. That is the huge difference between this recession and anything we have experienced since the end of WWII. The CRISIS is the biggest crisis since the Great Depression (and may even be as big of a crisis as the great depression) but we may be saved from entering another great depression only because economists have studied the original for 80 years and have just a little bit better understanding about how to avoid it. Read:
To compare this recession to other recessions, where we currently have no end in sight to this recession: http://www.ritholtz.com/blog/2009/04/record-setting-recession/
for some historical perspective about what is going on in this recession in direct relation to the Great Depression (Read Krugman's blog post linked in this article as well to see how in the USA, the current downturn in Manufacturing is not quite as bad as it was during the Great Depression (probably just because we don't manufacture stuff in the US anymore)).
http://www.voxeu.org/index.php?q=node/3421
Hello, Frank, Thanks for writing in.
ReplyDeleteOf course I, along with everyone else, should
do their level best to learn whatever are the facts necessary to arriving at correct conclusions. Your thoughtful comments, nevertheless, don't change my mind....both Simon Johnson of MIT, and Michael Perino of St. John's Law School, felt it necessary to
soften such comparisons on last Friday night's PBS program, "Bill Moyer's Journal".
As to the "original", i.e., 1929 into the '30s,
whatever happened to the U.S. crash of 1873, and others before and since as well? I'll have to look THESE up too....
As to manufacturing, we still do actually make
things here, of course, just not anything like in past eras.
I'm not so sure all the power players DO heed whatever past lessons should have been learned, because I was recently shocked to find out that Glass-Steagall, the two regulatory acts, 1932 and 1933, which FDR signed into law, were largely undone during the Clinton administration--by Clinton, Phil Gramm, et al. Since the late '90s the same bank can house commercial, retail and investment functions, or commercial and insurance; we see how well that worked in the '30s, how well it's worked during 2008-2009. (What were they thinking? That "it" could never happen again? We HAVE had several downturns called Panics and Depressions by economists and historians; if we don't heed philosopher George Santayana, such "doom" will be repeated.)
So you and I aren't that far apart in our views. Lately, though, I've seen too many pundits implying we are inexorably headed
that way....when there ARE steps to mitigate further disaster.
Bring back the Pecora Hearings,
bring back Glass-Steagall!
Best Regards,
Best Wishes,
A.