Are we in a recession or is this a Depression?

[RedEarth]

We are in depression

Posted by Edward Harrison on Tuesday, 17 February 2009

The results of my poll(at the link below) are back and according to readers we are clearly in Depression. A plurality of you voted for depression with a small ‘d,’ edging out those who see Depression with a Big ’D.’

In my view, this downturn is clearly not a recession, but something more significant. What we are experiencing is different from garden variety recessions because of the ‘D-process’ as explained by Ray Dalio in a recent post.

In a recession, companies figure out that they have over-produced i.e. overestimated demand as the economy begins to slow. They cut back production, lay off workers and de-stock inventories to readjust. As a result, recession takes hold. Eventually though, everything falls back into balance and you are off to the races again.

Depression is a whole different ball of wax. Here, Ray Dalio’s D-process is a self-reinforcing dowward cycle that takes place as a result of the confluence of deleveraging and debt deflation, leading to depression. I euphemistically call this the Three D’s. And it is the self-reinforcing nature of the Three D’s that makes these down cycles especially problematic. You can view this from the lens of the creditor or the debtor and the self-reinforcement is identical.

............more........

http://www.creditwritedowns.com/2009/02/we-are-in-depression.html

[elleng]

1. So everyone should be sure to have their prescriptions for effexor filled!!!!

.

[RaleighNCDUer]

2. Let me see - am I feeling recessed or depressed?

Yah, I think it's a depression.

[doc03]

3. It depends if your neighbor lost his job it's

a Recession if you lost your job it's a Depression.

[PassingFair]

8. New saying around here:

It's a recession if your neighbor loses his job.

It's a depression if you lose your job.

Its a DISASTER if your WIFE loses HER job.

LOTS of pain here in Michigan, for YEARS now.

[The Brethren]

11. True.

Know what you're paying for. The Stimulus Plan ("American Recovery and Reinvestment Act of 2009"): Orig. House version -- http://appropriations.house.gov/pdf/RecoveryBill01-15-09.pdf , House spreadsheet -- http://spreadsheets.google.com/ccc?key=pV-c6t5fOVmNorqMpHvnCMw ; Senate version -- http://appropriations.senate.gov/News/2009_02_02_The_American_Recovery_and_Reinvestment_Act_of_2009.pdf ; and Senate compromise -- http://www.govtrack.us/congress/billtext.xpd?bill=h111-1 , Text and $$$ details of Senate compromise -- http://appropriations.senate.gov/News/2009_02_08_UPDATED_Appropriations_Provisions_of_American_Recovery_and_Reinvestment_Act.pdf?CFID=4043629&CFTOKEN=40573040 . In addition to -- http://readthestimulus.org/amdth1.pdf , along with -- http://www.readthestimulus.org/ . Final version, Feb. 13th, 1500 pgs. worth -- http://www.whitehouse.gov/the_press_office/arra_public_review/ , more details on the final version -- http://www.taxpayer.net/resources.php?category=&type=Project&proj_id=1913&action=Headlines%20By%20TCS , including spending -- http://cbs4denver.com/national/Web.government.accountability.2.937188.html

[Warpy]

4. So far it's just a deep recession

but if Congress doesn't realize it works for us and not for the executive class, it will soon become a depression.

[Democrats_win]

5. Depression began in September 2008. It may be a short depression, but it's a depression.

[Mr. Hyde]

6. It isn't a depression until the rich people are jumping out of windows.

That's my definition at least.

[GoesTo11]

7. Depression.

Look at housing starts. 30,000 starts in January compared with 150,000 or so in typical months for the last 40 years. Look at the banks - they are all completely busted - that's not just a dot-com bubble. Look at government budgets - not just slowed revenue, but deep holes with no apparent way out.

This is something different than recessions. It's big.

Thanks Bush.

[PassingFair]

9. I think we're only at the tip of it.

:cry:

Our banks appear to be insolvent.

[leftofthedial]

10. neither one

this is the capitalist shit hitting the fan.

it's over.

a new paradigm must emerge.

[Kurt_and_Hunter]

12. So far the deflation isn't broad and/or deep enough to be a depression, but...

So far the deflation isn't broad or deep enough to be a depression, but if you added a house and a share of Citicorp to the CPI consumer basket...