Worse Than The Great Depression

[Modern School]

According to CBS News, about 6.2 million Americans (45% of all the unemployed workers in the country) have been jobless for more than six months, a higher percentage than during the Great Depression. Yet the recession has been officially over for months. Corporate profits have reached record levels. The wealthy are wealthier than ever. And apparently they are the only one who really think the recession is over.

Not long after the latest unemployment figures were released (9.1% nationally), Obama’s top Economic Adviser, Austan Goolsbee, resigned (probably to get a less stressful and more lucrative job on Wall Street). There is no chance that Obama will use government spending to create jobs and certainly no chance that government policy will change to aid those who are struggling to stay in their homes, feed themselves or get medical care.

Obama said today that he is not worried about a “double dip” recession (probably because it would have no effect on his personal wealth and maybe because the first recession actually ended). Yet the policies being pushed by Congress are almost certain to exacerbate the current crisis. Axing Medicare, lowering taxes, continuing wars in at least four countries, decreasing government spending, ignoring those who are drowning in mortgage debt, allowing Wall Street to continue its shenanigans, are all certain to strain the economy further.

Meanwhile, wages have stagnated over the last 10 years more than any 10-year period since the great depression.

Modern School
http://modeducation.blogspot.com/

[Scuba]

1. And Repukes want to continue the policies of the last 10 years? Insane....

...unless of course you want to destroy America. Then it makes perfect sense.



They really fear Democracy.

[maxsolomon]

2. Uncalled for:

"Obama said today that he is not worried about a “double dip” recession (probably because it would have no effect on his personal wealth".

I don't believe such selfishness motivates our Democratic President. He's cheerleading the economy, a time-tested (and tiresome) duty of the presidency since Gerald Ford & Jimmy Carter tried to tell us a small glimpse of the truth and got their asses handed to them for their trouble.

[3waygeek]

4. He's not worried about the double dip...

because the first dip is still in effect.

[George Wythe]

3. $534,000 of debt per household to go with it...

http://www.usatoday.com/news/washington/2011-06-06-us-owes-62-trillion-in-debt_n.htm?loc=interstitialskip

[Starboard Tack]

5. Very cynical post

How can you begin to equate the current recession with the Great Depression, let alone suggest it is worse? 9.1% is hardly worse than 22% during the mid '30's and 15+% for more than 10 years. And you suggest that Obama is not worried because of personal wealth.
Do you really expect wages to increase during a period of recession, which was preceded by a period of very low inflation?
Obama has no cause to complain, though. He opted in to this mess, but he did not create it. We all created it, because we let it happen and now we expect him to fix it in 5 minutes, or 3 years. The best we can hope for is he makes it no worse and that we, the people fix the problem.

[maxsolomon]

9. I didn't create it or "let" it happen

i don't own a home, i don't have a lot of debt. i am frugal, i repair rather than dispose, and i spend local.

i also think the recession is permanent and many jobs will never come back, especially those making unnecessary consumer goods (sorry china). real estate will continue to fall from the bubble peak back to the historical value trajectory.

"the people" can fix the problem by letting go of the american dream. and returning taxation to pre-bush levels.

[Starboard Tack]

10. When I say "we" I don't mean to attack any individual, but the collective "we"

did allow this to happen. Like you, I try to be responsible. Low carbon footprint, minimal consumerism, zero debt. We, as a society, have accumulated this astronomical debt, because we either participated in the madness of out-of-control consumerism, or we didn't stand up enough in opposing it.
I don't think the recession is permanent. If it were, then it would no longer be a recession. I do think the economy will stabilize eventually at more realistic levels, but not before much greater hardship and belt tightening than we've experienced so far.

[maxsolomon]

11. I take issue with your assertion of collective guilt.

OBL asserted collective guilt as a justification for 9/11 because Americans have not stopped our government's Middle East policies.

The collective American "we" has never stood up to oppose much that the Government or Capital does (except for the unpopular Vietnam War), let alone an abstract concept like consumerism.

But I agree, a "recession" is not the right term for where we're headed. "Reduced Economic Activity"?

[Starboard Tack]

13. I make no assertion of collective guilt.

But we are each responsible, as individuals, to set an example. That's how we stand up, one at a time, without bluster and bullshit. "Reduced Economic Activity" is a good thing if it means economic activity born out of necessity rather than for it's own sake, which has been the norm for so long. One positive development, I think, is that we are consuming more intangible items like digital apps and services.

[maxsolomon]

19. "We all created it, because we let it happen"

how should i read that? how is that different than asserting collective, let's say, RESPONSIBILITY?

[Starboard Tack]

20. Guilt and responsibility are not synonimous

[Crazy Dave]

17. You are correct

This is the new normal and I can just can't wait to hear what Obama's stump speeches will be like next year.
"Re-elect me because the other guy (or Palin) will make things worse!", "Do you want 10% unemployment or 15% unemployment? Vote for me and not your fears!", yadda yadda.

[sendero]

16. Please don't compare .

... the ridiculout U1 number with the depression era number. Back then the government didn't play with the numbers to get the desired result. U6 is the real unemployment number and it hovers around 17%.

[Starboard Tack]

21. How many women were included in the 1930's numbers?

Unemployment is nor the problem, just one of the symptoms of a society that has eaten itself into obesity and spent itself into bankruptcy.
The party is over!

[happyslug]

29. The also counted unemployed over age 14, since 1947 it has been over age 17

My father worked as a teenager in the 1930s, he never went to high school, started to work at age 14. That was common at that time period. Given that most people of low income did NOT have phones till after WWII (This was one of the factors in the Poll showing FDR losing the 1936 presidential race, when he run it in a landslide), the modern method of calling people on the phone was not used (It had been used in the polling for the 1936 Presidential race), instead it was done by the Census in 1930 and 1940 and a post card survey in 1936. All other unemployment rates were done locally, i.e. by the City or the State for their own use, using their own data. Thus the Reports as to the extent of unemployment during the Great Depression is based on data so different from how today's unemployment is determined, that approximation is the best we can do today.

[pinqy]

24. 5 errors in three sentances...

1. The U-1 is the number of people unemployed 15 weeks or longer as a percent of the Labor Force. The official Unemployment rate is the U-3.

2. The government didn't regularly collect unemployment data in the 20's or 30's...only in the census and a 1936 postcard survey. The definition used when the numbers were calculated in 1948 is essentially the same as the current definition.

3. The government doesn't currently play with the numbers for any desired result...they are what they are.

4. The U-6 is not a measure of unemployment in that it includes some part-time workers. Part time workers are clearly employed. It also includes people not trying to get a job, which makes calling them "unemployed" problematical.

5. The U-6 is for May is 15.8% and dropped from 15.9 in April. (The U-3 increased from 9.0 to 9.1.)

[happyslug]

28. You are comparing U-6 Unemployment with U-3 Unemployment

The 22% used for the Great Depression is the U-6 rate, the 9.1% used to day is the U-3 rate.

Here is the various unemployment rates and their definitions:

U1: Percentage of labour force unemployed 15 weeks or longer.
U2: Percentage of labour force who lost jobs or completed temporary work.
U3: Official unemployment rate per the ILO definition occurs when people are without jobs and they have actively looked for work within the past four weeks.<2>
U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
U5: U4 + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently.
U6: U5 + Part time workers who want to work full time, but cannot due to economic reasons (underemployment).

http://en.wikipedia.org/wiki/Unemployment#United_States_Bureau_of_Labor_Statistics

Paper claiming the U-6 rate of 2009 is no where near the U6 rate of the mid 1930s, but was equal to the U-6 rate of 1930. The paper also points out that the various definitions of unemployment (U-1 through U-6) were NOT defined till 1947, so it is only by adjusting the rates used in the 1930s to be close to the above definitions that the above statement is true, if the adjustments were inaccurate (And that is a good possibility) then the rates may be worse:

http://www.economicpopulist.org/content/u3-and-u6-unemployment-during-great-depression

In May 2010 the U-3 Rate was 9.3, but the U-6 rate was 16.1

http://www.bls.gov/news.release/empsit.t15.htm

On top of this since the 1970s, all of the unemployment rates have been "played with" to produce lower numbers, if you use the methods of the 1970s instead of the Methods used today, you get higher rates for both rates.

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

http://www.shadowstats.com/alternate_data/unemployment-charts

68 year high for unemployment in 2009"
http://www.dollarsandsense.org/archives/2009/0709miller.html

[pinqy]

30. Did you even read your cites?

The 22% used for the Great Depression is the U-6 rate, the 9.1% used to day is the U-3 rate.

Is absolutely untrue, and the economicpopulist article you cite contradicts your claim.

The paper also points out that the various definitions of unemployment (U-1 through U-6) were NOT defined till 1947

No it doesn't. The current U1 to U6 weren't defined until 1994. There was no equivalent to the U6 prior to 1994, while the U3 is basically unchanged since the 1940's

On top of this since the 1970s, all of the unemployment rates have been "played with" to produce lower numbers, if you use the methods of the 1970s instead of the Methods used today, you get higher rates for both rates.

The definition for unemployed hasn't changed since 1967 except for one minor change in 1994 where people waiting to start work must now have been looking in the last 4 weeks to be considered unemployed.

[happyslug]

32. Lets get technical, U6 is the closest rate used to today to compared to the rates used in the 1930s

U1 through U6 was REDEFINED in 1994, after the Department of Labor decided to drop U7 and do to the Bush and Clinton's administration decision to redefine U1 through U6 to lower all of number of people who were unemployed.

As to your statement that U-3 "has not been changed since the 1940s" means that 1947 in the 1940s??? Sorry that do to have read other sources, I gave the exact year not a decade.

As to the U6 rate for the Great Depression, while technically the closest post WWII definition of what was used in the Great Depression was U7. For example here is the 1982 definitions of U1 through U7, U7 was dropped in 1994, thus today's U6 is the closest equivalent to the numbers used in the Great Depression, prior to 1994, that honor went to U7 unemployment rate.:

U-1 Persons unemployed 15 weeks or longer as a percent of the civilian labor force.
U-2 Job losers as a percent of the civilian labor force.
U-3 Unemployed persons 25 years and over as a percent of the civilian labor force 25 years and over.
U-4 Unemployed full-time job seekers as a percent of the full-time labor force.
U-5 Total unemployed as a percent of the civilian labor force (official measure) .
U-6 Total full-time job seekers plus half part-time job-seekers plus half total on part time for economic reasons, as a percent of the civilian labor force less half of the part-time labor force .
U-7 Total full-time job seekers plus half part-time job-seekers plus half total on part time for economic reasons plus discouraged workers, as a percent of the civilian labor force plus discouraged workers less half of the part-time labor force.

http://www.nowandfutures.com/d2/U1-7_definitions1982.txt

Notice U-3 was NOT the official unemployment rate prior to 1994, instead it was U-5 and notice the difference in definition:

1947-1994 U-5:
U5 Total unemployed as a percent of the civilian labor force (official measure)

post 1994 definitions:
U3: Official unemployment rate per the ILO definition occurs when people are without jobs and they have actively looked for work within the past four weeks

Notice four weeks is the cut off for today's U3 unemployment, but was NOT a requirement in pre 1994 U5. This is one of the methods adopted to get the numbers down, even while to number of people unemployed stays the same.

[pinqy]

33. Let's go through the history because you're misreading

From the 1930 and 1940 Censuses:

1930: "Is he able to work? Is he looking for a job? For how many weeks has he been without a job? Reason for being out of a job."

NOTE: Job search is a requirement, and NO questions about part time for economic reasons (a big component of the U-7/U-6)
1940 questions are similar.

What would become the household survey started in 1941, data for the Depression was calculated in 1947. With minor changes, the definition of unemployed remained the same until 1967 and that was

Employed persons comprise (a) all those who during the survey week did any work at all as paid employees, in their own business profession, or on farm, or who worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family, and (b) all those who were not working or looking for work but who had jobs or businesses from which they were temporarily absent because of illness, bad weather, vacation, labor-management dispute, or personal reasons, whether or not they were paid by their employers for the time off...

Unemployed persons comprise all persons who did not work at all during the survey week and were looking for work, regardless of whether or not they were eligible for unemployment insurance. Also included as unemployed are those who did not work at all and (a) were waiting to be called back to a job from which they had been laid off; or (b) were waiting to report to a new wage or salary job within 30 days (and were not in school during the survey week); or (c) would have been looking for work except that they were temporarily ill or believed no work was available in their line of work or in the community.

The civilian labor force comprises the total of all civilians classified as employed or unemployed in accordance with the criteria described above. The “total labor force” also includes members of the Armed Forces stationed either in the United States or abroad.

The unemployment rate represents the number unemployed as a percent of the civilian labor force.

Archived Earnings and Employment (pick any pre 1967 issue, look in technical notes)

In 1967 the definitions changed to include a time requirement for search and eliminate what would later be known as discouraged;

Employed persons are (a) all civilians who, during the survey week, did any work at all as paid employees, in their own business profession, or on their own farm, or who worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family; and (b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of illness, bad weather, vacation, labor-management dispute, or personal reasons, whether they were paid for the time off or were seeking other jobs....

Unemployed persons are all civilians who had no employment during the survey week, were available for work, except for temporary illness, and had made specific efforts to find employment some time during the prior 4 weeks. Persons who were waiting to be recalled to a job from which they had been laid off or were waiting to report to a new job within 30 days need not be looking for work to be classified as unemployed.

The civilian labor force comprises all civilians classified as employed or unemployed in accordance with the criteria described above.

The civilian worker unemployment rate represents the number unemployed as a percent of the civilian labor force.

(Employment and Earnings, pick a post 1967 issue)

Gee, how about that? 4 week time search, and pretty much the same as the current U-3 and nothing like the U-6. You were not telling the truth about no job search requirement.

In 1976 the alternate measures U-1 to U-7 were introduced. That's 1976, NOT 1947 as you falsely claimed. Cite: http://www.bls.gov/opub/mlr/1995/10/art3full.pdf">Monthly Labor Review Oct 1995

And the current definition is

Employed persons. All persons who, during the reference week, (a) did any work at all (at least 1 hour) as paid employees, worked in their own business, profession, or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family, and (b) all those who were not working but who had jobs or businesses from which they were temporarily absent because of vacation, illness, bad weather, childcare problems, maternity or paternity leave, labor-management dispute, job training, or other family or personal reasons, whether or not they were paid for the time off or were seeking other jobs.
Each employed person is counted only once, even if he or she holds more than one job. For purposes of occupation and industry classification, multiple jobholders are counted in the job at which they worked the greatest number of hours during the reference week.

Included in the total are employed citizens of foreign countries who are temporarily in the United States but not living on the premises of an embassy. Excluded are persons whose only activity consisted of work around their own house (painting, repairing, or own home housework) or volunteer work for religious, charitable, and other organizations.

Unemployed persons. All persons who had no employment during the reference week, were available for work, except for temporary illness, and had made specific efforts to find employment sometime during the 4-week period ending with the reference week. Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed.

Labor force. This group comprises all persons classified as employed or unemployed in accordance with the criteria described above.

Unemployment rate. The unemployment rate represents the number unemployed as a percent of the labor force.

Employment and Earnings Dec 2010


In short, pretty much everything you said was wrong.

[Demeter]

6. And it's only just started

We haven't hit anywhere NEAR bottom, yet.

[unblock]

7. regarding the recession being officially over -- for comparison, the great contraction ended in 1933

the economy grew like gangbusters after that thanks largely to fdr's federal spending, though of course unemployment remained ridiculously high.

economic terms like recession/contraction or growth/expansion merely mean what they say, whether the economy as a whole is moving in the wrong or right direction. the terms say nothing about "good" or "bad". if you've fallen into a deep ditch, there's plenty of room to be climbing up and improving your position while still being far down in a ditch.

[jtuck004]

8. 1. Walmart here devotes about 30 or so linear feet of shelf space in grocery to "survival food" -

cans of "butter flavored powder", soups, peanut butter. Floor to ceiling, and I don't think they would devote that kind of space
if people weren't looking for such things.

2. Costco sells a "survival kit" - looks like some food and other stuff. Friend who works there says they can't keep them in stock - one lady had several of them on one of those push carts. Maybe one per family member?

Obama may not be worried (in op, above), but there are plenty of uncertain people out there who see at least some disruption in supply as a possibility...

[Starboard Tack]

12. Walmart and Costco

Will both sell anything to make a buck. These 2 companies alone, have done more to destroy Main Street America, than all the other corporate consumer outlets combined.
Walmart will sell you the guns to protect yourself against the other Walmart customers, and the survival kits for when even Walmart croaks on it's own greed. But survival kits aren't going to see anyone through the recession. They're good for emergency rations and tools to help deal with natural disasters.
My wife and I are currently on a road trip and have covered 25 states so far since just before Easter. The impression we have is that there are huge swathes of the country that are suffering much more than most places. West Texas is almost apocalyptic, unbelievably depressing, while Austin continues to thrive. New Orleans gives us hope in the resilience of the people against all odds, while Mississippi, Alabama, Tennessee and Georgia appear to be caught in a never ending cycle of economic and natural disasters.
In the DC metro area, you wouldn't know we were in an economic downturn and moving up the eastern seaboard it's hard to find any place that seems to be prospering, except for New York City.

[Kat45]

14. Interesting that you say in the DC metro area, you wouldn't know we were in an economic downturn

Since that's where all the people who make the decisions for us live. No wonder they're so clueless about how bad off people are (if they even care at all).

[Starboard Tack]

15. I agree to a degree, but there are other reasons

besides the enormous amount of Federal dollars spent in the area, like foreign investment via a couple of hundred embassies and the numerous colleges in the DC area, plus a steady stream of tourist dollars.

[melody]

34. Back in the 70s, my father was spouting the same stuff and storing food

We had to clean it all out when he died.

[kmhoward]

18. Will banks eventually freeze assets?

Will banks eventually freeze assets? If so, what can the average person with modest savings do to protect their assets?

[westerebus]

22. Depends on the asset.

I keep a minimum in the local bank. I pay my bills from there and have a back up credit/debit card from that bank. My pay check goes into a credit union and I use a debit card from there for regular purchases. A separate credit card from them to use on line that has a $1000 limit. I use a third credit union for savings and have no credit or debit card with them. I do have an ATM card from them to access them after hours.

I control my own investments via internet. I make payment by check on certain investments. If things look dicey, I can go into a money market fund that's related to certain investments. I can transfer that into any of the three accounts above. None of the accounts are joined checking savings. I don't take loans from any of these institutions.

In my IRAs there are bond funds that I can use to protect myself.

I have very little debt outside of a mortgage. The mortgage is held by a different bank.

I would not invest with a bank that held my mortgage. Nor one I had credit card debt or a large loan with.

I wouldn't do direct deposit of income with them if I was using a bank's services to invest.

So I have several ways to get to my money, while keeping the accounts apart from each other were possible.

I also have a separate credit card that I can draw cash on independent of everything else.

This may be a little to much for some people, but it works for me.

As Warren Zevon would say: send lawyers, guns and money.

Me: I've got the guns and I can get to the money; remind me what do we need the lawyers for? Oh, right. Alibi's.

[grasswire]

26. you are either more fortunate or more clever than most

Too many Americans have never made enough (or have lost too much) to be as well situated for come what may. I salute you.

[westerebus]

27. The school of hard knocks is a demanding teacher.

I plead guilty to being clever enough to learn from my mistakes and fortunate in meeting some very savvy folks over the years.

[AnneD]

38. The shit hits the fan list .....

Gold and Silver .... Check

Food .... Check

Guns and ammo .... In progress

Relocation acreage and house in rural area .... In progress

Self sufficiency supplies .... In progress

Self sufficiency knowledge .... In progress

This is not the retirement plan I envisioned and worked toward since I was 16; this is plan B, survival mode.

[westerebus]

39. Plan B.

I'm of the mind that says there is no reason a quiet comfortable place in the hills can't be a retirement plan.

It depends on how much you need to be near medical care and commerce where in the hills one might find a homestead.

I'm much more a Walton's Mountain hermit in residence than a Little House on the Prairie survivalista.

[roamer65]

23. They'll eventually nationalize 401K's.

They will seize the accounts to prevent large scale withdrawals and you will receive a very paltry monthly check in compensation when you retire.

[westerebus]

25. And this is based on ?

You think that's a possibility?

[roamer65]

35. You bet.

When the markets will not buy US debt, the gov't will go somewhere else for the money.

Argentina did it in the 1999 debt crisis. They also froze bank accounts and devalued the peso by 66%.

[westerebus]

36. If it came to that.

The USD would be worth a whole lot less than it is today. So it really wouldn't matter in that sense. Getting to that point, and avoiding a revolution in this country, presupposes those who direct the government will retain the power to maintain the value of the USD and control over the debt. In other words, it's still a functional government. It may look like a democracy on the surface and it will keep up appearances until it can't. Twenty plus years of kicking that can down the road seems to work for the majority watching American Idol as they gorge themselves on high fructose corn syrup.

So the premise of IRA swaps for US Bonds is rather shaky. No one wants to see the USD collapse with the possible exception of those too ignorant to understand the consequences. Pseudo-Libertarians and neo-cons would fill that tent up rapidly. If everyone is off the grid as the result of a government's collapse due to the failure to secure the value of that nation's money supply, it will not matter anyway. IRA's would be a worthless as government bonds because the money is worthless. The effect would up-end the global markets if it were a sudden devaluation. Even if it was announced in advance the S&P would crash and take the rest of the paper markets with it ala' our great recession before the great bailout kicked in.

That's how they planned it. That's why it has worked out so well. Those with money in power kept both. Loose control of the money and they loose control over the power. How do they control the money? They control the debt.

Before they lost control of the debt, I would expect to see printing into hyperinflation. That in itself results in pretty much the same thing, loss of control. What we have is stagflation. There is little in the way of credit expansion and the major debt is in government expenditures all of which they control. Everything else is about distraction. There's an app for that too.

[golfguru]

31. I have not seen any "SOUP LINES"

So it is not worse than The Great Depression. However the future did look bright in 1930'because people not loaded with excessive debt. And neither were governments.

Excessive debt will kill you every time, just like heroin overdose. It feels great during the high and then it kills you. The US Treasury owes in the ball park of $60 TRILLION in debt with future obligations to Social Security & Medicare & Medicaid. That is more than world GDP combined, and is impossible to pay back. There is zero doubt we are in for a humdinger of an economic disaster within a decade or two.

[dixiegrrrrl]

37. Goolsbee stated he was returning to the University of Chicago.

He took extended leave from the U of Chicago, where he was the Robert P. Gwinn Professor of Economics at the Booth School of Business.

Just sayin'.