"Great Recession" & "Great Crash"

Dec 02, 2008 00:21

Two names catching on for our current economic dilemma...
And how very appropriate.

When you think about it, the current recession is, at least not yet and hopefully never, nowhere near as "bad," both in terms of depth and protraction, as the Great Depression of the 1930's. But when comparing this downturn with those other downturns of the Post WWII-era, it becomes clear:

This downturn is probably now about as bad, if not becoming worse, than the "mini-depression" of the early 80s (The two back-to-back severe recessions that could really be taken together as one mega double-dip recession.) And, unlike the "mini-depression" of the early 1980s, where deflation and deleveraging were the last things on anyone's mind, the current downturn has its roots very much in a post-bubble unplanned asset, banking and credit crisis. Furthermore, this downturn marks the first time in the post war period that the three major global economic powerhouses (U.S., Japan & the Eurozone) have been in recession at the same time (yet another similarity to the 1930s). Bloomberg:`Great Recession'
May Just Be Starting as Job Losses Mount, Credit Shrinks

Dec. 2 (Bloomberg) -- The U.S. economy, now officially in recession, may be in the midst of the longest slump in the post- World War II era as job losses mount and credit dries up...

The NBER designation means the U.S. was the first country to have slipped into a contraction. While definitions differ, the economies of both the euro area and Japan fell into a slump in the second quarter of this year, making it the first simultaneous recession in the three regions in the postwar era.

The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The Great Depression lasted 43 months, from August 1929 to March 1933.

“This may be referred to as the Great Recession,” because of its length, said Norbert Ore, chairman of the Institute for Supply Management’s factory survey. “It looked like we were headed for a shallow recession earlier in the year because of higher energy prices. With the meltdown in the financial sector, it has become something more serious.”...

Robert Reich: The Great Crash of 2008
If this isn't a Great Crash I don't know how to define one. Stocks were down another 7 percent today. Since the peak of last year, major stock indexes have dropped 47 percent. We're in range of the Great Crash of 1929.

Why is the Great Crash of 2008 happening? First, because investors are beginning to understand the enormity of the bubble economy that began to form in the late 1990s when all contraints were lifted on borrowing in order to buy everything that was assumed to be increasing in value -- starting with houses and including securities and shares of stock themselves. So-called "margin requirements," first instituted in the wake of the Great Crash of 1929, were all but abandoned, as big banks and hedge funds found ways around them.

Even more important, investors are starting to fathom the emptiness of American consumers' wallets. Retail sales last Friday and Saturday -- the first days of the Christmas buying season -- were disappointing. Had retailers not discounted to the point of taking losses, sales would have been abysmal. In other words, consumers have gone on strike...

the great recession, recessions, the great crash of 2007-2009, depression circa 2009

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