A new recession worse than the first? (loan, 2013, accounting)

[MetropolitanTN]

Does anyone have any idea if the great depression happened in stages?

Was there an intial recession followed by an even worse recession later?

Im reading an article: http://www.nytimes.com/2011/08/08/bu...ml?_r=1&ref=us
that says if another recession hits people will have to cut into the bone now.

Doesnt sound so good.

[las vegas drunk]

I know I have posted this video before, but I will do it because it will answer all your questions. This is very well done and explains the parallels of the current time to the Great Depression:


‪Recovery? Recession? No. Depression.‬‏ - YouTube

[HappyTexan]

There's more parallels than you can dream of when reading about the Great Depression.

"Tax the rich" is what you hear today.
Under Hoover and FDR they "soaked the rich" and raised taxes from 24% to 83% "on the rich".
But that didn't save America; it only lead to more job losses as the rich suddenly became poor themselves.

Arthur Laffer: The Soak-the-Rich Catch-22 - WSJ.com

Then there's other parallels..the roaring 20's compared to the 90's stock market.
Then you have the Florida land boom and bust along the lines of our housing bubble and subsequent crash.

And then you have politicians (both Hoover and FDR) who always had the corporates/bankers as top priority with any bills passed.

[Mircea]

Originally Posted by ETSUAccountingGuy

Does anyone have any idea if the great depression happened in stages?

Of course it did.

The US had a recession in 1925, came out, went back into recession in January 1928, started coming out Summer 1929, went back into recession Summer 1930 after the Republican-controlled House and Senate enacted what was then the largest tax hike in history, and also levied very destructive protective tariffs.

The Democrats swept Congress in fall of 1930, and Spring 1931 repealed the tax increases and the tariffs, and the economy started growing but never got out of recession, ie never reached its Benchmark GDP point.

The reason was FDR enacted more taxes in 1933, cutting the GDP growth in half, then took a big nose-dive again 1937 with the next round of New Deal legislation and then last Quarter '37 started pulling out and growing by 12.5% per Quarter all the way through 3rd Quarter '42 before slacking off.

That was due to WW II. Had it not been for WW II, the Great Depression would have continued for another 10 years ending sometime between 1946 and 1948.

But you can ignore all that because the circumstances aren't the same. That was a Manufacturing Economy, this is a Consumer/Service Economy.

You won't see a crash, rather you'll see a long slow slide into Hell.

From what I can tell, your economy should permanently contract 12%-15%. In other words your new Baseline/Benchmark GDP will be about $11.5 TRILLION to $12 TRILLION, and the reason is that you will permanently lose jobs forever.

As I said many a time, when all is said and done, if 13% of your households have 2 wage-earners, then throw a Holiday for Yahweh, because that will be as good as it gets.

You'll get an inflationary bump around 2021 of maybe 8%-12%, like a shot across the bow, then it will go away, and then you about a year later you'll get nuked with 35%-45% Real Inflation, but then I'm assuming they will cut $10 TRILLION (or more) over the next 10 years either by force, or by planned cuts. Otherwise it will be higher.

Originally Posted by ETSUAccountingGuy

Im reading an article: http://www.nytimes.com/2011/08/08/bu...ml?_r=1&ref=us
that says if another recession hits people will have to cut into the bone now.

Doesnt sound so good.

Like I've been saying here for the last 4 years, life as you know it is over. You'll have to learn how to do less with less.

Lot of changes coming to your society.

[DanBev]

With the electronic age,it will do away permenently with many workers,work going overseas etc.,as said life as was will not return,better days behind us.Only the well educated will earn a decent living.
Where are the jobs,mostly service.

[NJBest]

Why are you guys fearing another recession?

[RiverBird]

Originally Posted by NJBest

Why are you guys fearing another recession?

[texdav]

We are now growing the deficit at a ten per cent per year rate. At 100% of GDP. At that rate if we can even hold steady we are Greece in three years where we reach a point we can not service the debt even if we wanted to.Then you will see another great depression.Even the34 FED does not expect to raise artes for 21/2 years in mid2013 which means no real growth expected. First time we have ever heard the FED put a time table on anything. But it doesn't mean that is when growth speeds up; it's when bernanake's term ends.

[newonecoming2]

Originally Posted by HappyTexan

There's more parallels than you can dream of when reading about the Great Depression.

"Tax the rich" is what you hear today.
Under Hoover and FDR they "soaked the rich" and raised taxes from 24% to 83% "on the rich".
But that didn't save America; it only lead to more job losses as the rich suddenly became poor themselves.

Arthur Laffer: The Soak-the-Rich Catch-22 - WSJ.com

Then there's other parallels..the roaring 20's compared to the 90's stock market.
Then you have the Florida land boom and bust along the lines of our housing bubble and subsequent crash.

And then you have politicians (both Hoover and FDR) who always had the corporates/bankers as top priority with any bills passed.

What we need is more money on the bottom end. what tax the rich does is it makes the rich hid their money that can't openly loan it out so you get a contraction in available credit. Short term this is bad but you also get an increase in wages as paying someone to do something is a tax deduction.

If you have the expectation of higher cost of manufacturing latter then you get production now. We need inflation. True inflation not stagflation.

Tax the principle on debt.

[bradykp]

eh. people love talking about manufacturing. even though it's not as large a part of our economy, we are still the largest manufacturer in the world. also, as for where we buy our goods from? check out this link: How Much Do We Buy From China? : Planet Money : NPR

and don't forget, the world is a large consumer of our goods and services too.

our economy won't grow how it used to, but that doesn't mean it will shrink just because it doesn't grow at 3%+ per year.