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If this is a 1930's model, it is running just about on course. Go back and look at the numbers for a 1930's model.
No, this recession has already deviated in important ways from the 1930's. A year ago or so things were much more comparable.
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Originally Posted by Philip T
So from where is the mythic "recovery" going to come from? In real numbers and hard info, if we please?
Easy, once you remove the drags on the economy there will be a recovery. Now if you actually looked at the data you'd see that the numbers are stabilizing and in some cases recovering.
I still don't get people's obsession with comparing this recession to others in this nation's history. Things were so much different in 1930, they were much different in 1958 too. The recession in Japan in the 1990's offers the best comparison, our economy today is more similar to Japan's in the 1990's than ours in the 1930's, etc.
No, this recession has already deviated in important ways from the 1930's. A year ago or so things were much more comparable.
Any specifics? What hits me as the key comparison is the drop, pause, drop, pause of the stair steps downward. Nothing real is indicating a path upward.
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Easy, once you remove the drags on the economy there will be a recovery. Now if you actually looked at the data you'd see that the numbers are stabilizing and in some cases recovering.
Drags? such as: Housing Glut (still there), Commercial Property Glut (still there), Enormous Consumer Debt (still there), Gov. Debt (still there), Trade imbalance (still there), on and on -- which do you see removing itself?
But I would say that you are correct in that if *poof* all that disappeared, we would have a clear path to drive ourselves right up to and over this cliff again.
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I still don't get people's obsession with comparing this recession to others in this nation's history. Things were so much different in 1930, they were much different in 1958 too. The recession in Japan in the 1990's offers the best comparison, our economy today is more similar to Japan's in the 1990's than ours in the 1930's, etc.
Just modeling. Same as Hurricane Paths, or how hot it will get in the middle of next summer. The past often indicates what may be reasonably expected in the future, if the models align in a similar manner.
But comparing to Japan -- is that valid? Folks there stayed on and continued to pay their inflated mortgages. I do not think we are seeing that here, are we?
No, this recession has already deviated in important ways from the 1930's. A year ago or so things were much more comparable.
Easy, once you remove the drags on the economy there will be a recovery. Now if you actually looked at the data you'd see that the numbers are stabilizing and in some cases recovering.
I still don't get people's obsession with comparing this recession to others in this nation's history. Things were so much different in 1930, they were much different in 1958 too. The recession in Japan in the 1990's offers the best comparison, our economy today is more similar to Japan's in the 1990's than ours in the 1930's, etc.
The Japan 1990's recession is probably the closest to an "exact" comparison, but it only mostly affected that country. I (and Time Magazine for that matter) was mostly using the 1958 one to show that you can have a quick recovery even from a quarter or two of double-digit GDP decline so that having that doesn't automatically mean "Great D II". Thanks for noting this.
The Japan 1990's recession is probably the closest to an "exact" comparison, but it only mostly affected that country. I (and Time Magazine for that matter) was mostly using the 1958 one to show that you can have a quick recovery even from a quarter or two of double-digit GDP decline so that having that doesn't automatically mean "Great D II". Thanks for noting this.
Japan is no comaprison whatsoever. And 1958 wasn't a recession caused by a collaspe of the financial system therefore it's no comparison either. Thats why people use the GD as a reference. Btw, Time magazine is worthless trash written by idiots.
History is repeating itself in an odd and ironic way, actually. Because the first Great Depression actually started over in Europe. This time, it is starting over here.
And the sad part is, our consumerist nation supports many other countries (because really... what do we export now?). So if the Great Depression comes a second time... it will hit globally.
Any specifics? What hits me as the key comparison is the drop, pause, drop, pause of the stair steps downward. Nothing real is indicating a path upward.
Its clear you have not spent much time looking at US (or global) financial/economy history because this is the typical pattern of events. The reason for it is, I believe, well rooted in human group psychology. In short agents in the economy continuously detach themselves from reality and this occurs both on the positive and negative end. This creates a pattern of crash, stagnant/bear rally, crash, etc until things bottom.
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Originally Posted by Philip T
Drags? such as: Housing Glut (still there), Commercial Property Glut (still there), Enormous Consumer Debt (still there), Gov. Debt (still there), Trade imbalance (still there), on and on
Look at the data. The cliff diving in residential investment, consumption, trade imbalance (this has actually improve greatly) have all started to stabilize and should not drag the economy anymore. Now, they will also not drag the economy into a robust recovery, they will be weak for some time. Commercial is still a drag.
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Originally Posted by Philip T
But comparing to Japan -- is that valid? Folks there stayed on and continued to pay their inflated mortgages. I do not think we are seeing that here, are we?
Trying to compare this recession to others is largely useless, every recession is unique. I just think what occurred in Japan offers the best comparison, as they had a similar sort of credit bubble in a modern fiat money system and acted in similar ways. But there are of course important differences. But nearly everything is different from today vs the 1930's!
Maybe not Depression Levels but far worse than late 70s/early 80s. Some very broad structural problems and unemployment if measured as it was before adjustments by government in early 1990s would be about 14%, not 9.8%
Its clear you have not spent much time looking at US (or global) financial/economy history because this is the typical pattern of events. The reason for it is, I believe, well rooted in human group psychology. In short agents in the economy continuously detach themselves from reality and this occurs both on the positive and negative end. This creates a pattern of crash, stagnant/bear rally, crash, etc until things bottom.
That is probably true enough regarding my personal knowledge of economic history. As you know from our prior conversations IR an enginerd type and our models tend to hit pretty near spot-on or else we revise and upgrade them.
But let's take your end first -- what makes you think things have "bottomed?" Unemployment is still climbing. Housing prices still down. Most energy consumption is still down and heading deeper. Other than stats which are subject to manipulation what "real world" items do you see actually headed up? (I mean "up" -- not talking reduced fall rate)
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Look at the data. The cliff diving in residential investment, consumption, trade imbalance (this has actually improve greatly) have all started to stabilize and should not drag the economy anymore. Now, they will also not drag the economy into a robust recovery, they will be weak for some time. Commercial is still a drag.
What has stabilized? The present best numbers of real world items are running at a reduced fall rate. The boat is still sinking. That is not "stable" nor "stabilizing." Sort of like saying the Titanic stabilized at -2300 feet.
While automobiles perked up a little during Cash For Clunkers, this month they are even falling faster than before. And take housing for example -- what happens when the rebates expire on 1 Dec 2009?
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Trying to compare this recession to others is largely useless, every recession is unique. I just think what occurred in Japan offers the best comparison, as they had a similar sort of credit bubble in a modern fiat money system and acted in similar ways. But there are of course important differences. But nearly everything is different from today vs the 1930's!
It is only "useless" if one is trying to recreate a 1 to 1 identity. Of course it is not that. It is very useful in Worse Case Scenario Planning. Did you cover that at all in any Business classes? Very useful information if you are not familiar.
Maybe not Depression Levels but far worse than late 70s/early 80s. Some very broad structural problems and unemployment if measured as it was before adjustments by government in early 1990s would be about 14%, not 9.8%
First year (and we are *only* first year into this) that is pretty much what the Depression numbers were running.
Things kept sinking until 1933 (2012/2013) if similar.
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