The current Depression II ....... cyclical or systemic?

[Stinky The Clown]

I sure hope it is the former and not the latter. If it is the latter we are well and truly fucked. If the former, it is just a matter of holding our breath until we resurface. Yes, some will drown. But most will make it.

What do you think? Is the current economic down turn a normal cycle or is it the result of such deep systemic problems that only massive restructuring will change it?

[el_bryanto]

1. I think it's probably a combination of the two

The economy at any given time is probably unsustainable, but I hope that the economy will evolve, as it has in the past, to correct the current problems and become more stable.

Bryant

[Kurt_and_Hunter]

2. Wll, it aint' cyclical

[SheilaT]

3. I'd say it's a little of both.

The economy is cyclical. And there are some fundamental underlying problems with our economy that have gotten worse in the last few decades which have tended to increase the gap between rich and poor.

The Great Depression went on for so long that for years it felt permanent. Some real changes helped a lot. It's just that we've drifted back to the very conditions that triggered the Great Depression, and at this point it's hard to know what will happen in the next decade or so.

[berni_mccoy]

4. The economy has been headed this way for years. Only now has there been honesty

about the reality of it.

The average savings rate of Americans has been negative for more than 5 years before 2009.

Asia has been growing rapidly for the last 20 years and we had not felt the effects until we blew trillions on two wars.

The economic trouble we are has been coming for a long time. It's going to take work, dedication and cooperation to right this ship. The current administration has pulled a hard left and is putting us back on course, but it's going to take time.

[ShortnFiery]

5. Systemic. Those millions upon millions of jobs now relocated to China, are not coming back. eom

[AllentownJake]

6. Systematic

You can't borrow your way to prosperity...the past 40 years is what we have done.

[Odin2005]

7. Both.

Systemtic failure exacerbated by the business cycle, just like the Great Depression.

[elehhhhna]

8. Systemic. We can't afford ANOTHER so-called "jobless recovery"

but we're evidently having one. Again.

[ixion]

9. the economic system is cyclical. the current issue is systemic

because the F.I.R.E. vertical has tried to artificially avoid the former.

That is: The problem now is a systemic issue resulting from people trying to game the system to induce the appearance of continued growth, and to avoid the cyclical downturns natural to any economic system.

This has resulted in a depression bubble, of sorts. Worse than a natural depression, in my opinion.

[blindpig]

10. Both

Cycles are part and parcel of the system, capitalism. The destructiveness of the cycles becomes progressively worse. The next bubble will be worse than the last as capital becomes increasing desperate to find new ways to increase profits. The shenanigans of the finance bubble are an example that desperation.

[dixiegrrrrl]

11. Ah, that IS the question.

And the dividing point of viewpoints on DU.
One example: I recently read that PIMCO is divesting of US Treasuries and British
"gilts"...and is predicting 80% chance of Britain being downrated, meaning their bonds will lose value.
(ours should be, too, actually).
those who felt the economy is repeating a cyclical pattern saw nothing ominous in Pimco's behavior.
Those who agree with the many predictions of our economy being like Japan's "lost decade"
understood the implications of Pimco's decision.
Pimco is usually on the leading edge of the curve in investment decisions.

My point of view is we need massive re-structuring, or else....

[kentuck]

12. It has to be proven to not be cyclical...

before it will be accepted that it is systemic. Wait until next year and let's see how the unemployment picture looks. Have we not seen enough to realize that this is systemic.

[bemildred]

13. Hard to say at this point.

Nothing has been done to address our systemic problems, but there is not telling at this point whether they will manage to inflate another bubble or two.

[Taitertots]

14. It is the systemic refusal to adopt countercyclical policy

When the economy is running away we need to cool it down, not stoke the flames.

When the economy is good the government should cool it down, to prevent bubbles. When the economy is bad the government needs to step in to prevent crashes.

You pay off the debt, decrease spending, and increase taxes in the 1990's. Then in 2000's when we needed it there would be room to lower taxes and increase spending.

[ieoeja]

15. What does "Depression II" mean?

The United States experienced 7 or 8 economic depressions prior to the New Deal. We are currently not in a depression, and if we were, it would be IX, not II.

This is, of course, the simplest argument against Rightist economic "theories". We experienced a depression every 12-15 years prior to the New Deal, and none in the 70+ years since. Why? I may have theories, but we could argue theories all day. What they can't argue is the fact that the cycle of economic depressions ended when the New Deal was introduced, and the worst recessions since occurred only after the Right rolled back much of the New Deal.

[terrell9584]

16. It's a Depression

Deal with it. Almost a quarter of Americans who want to work are out of work. People graduating colleges (who used to be snapped up because they costed less and worked harder) are facing months to more than a year before they can get a job.


We're fucked. Obama had a chance to right it this year. He blew it. He may yet put a program in to right it next year but I don't think its enough to save the election. Voter perceptions usually do harden in right about at the time of the cycle were in now. They did in '06, '08 and '94. We'll soon be at the point of no return.

[ieoeja]

17. Then it would be "Depression IIX" or "Depression IX".

But, of course, you're wrong about it being an economic depression. A depression is defined as negative economic growth for several years. We had negative economic growth for about one year. We have been in a period of positive economic growth for awhile now which means it is no longer even a recession.

As to the election, if bad economies guaranteed electoral losses, then how do you explain Reagan winning by a landslide despite the worst recession since the last depression?

[Bucky]

23. IIX?

Is that an 8 or a 12. Confusing...


I don't blame you; I blame the Romans.

[ieoeja]

32. Oops! Should have been VIII.

Or we could just stick to the Arabic "8".

[terrell9584]

31. That bottomed out in mid 1983

And there were real signs of it picking back up in late '83 and early '84. You didn't immediately have full employment but you did have a dramatic drop in the actual jobless rate. 1983 was when oil crashed and that reduction in costs suddenly removed a great burden on the economy (although it devastated Louisiana)

[ieoeja]

33. And this recession bottomed out in mid 2009.

We haven't immediately gotten full employment. But we do have a dramatic drop in the actual jobless rate.

[terrell9584]

35. And if you believe that

I have a ski resort to sell you in Nassau. The government has been consistently lying about the state of the economy throughout 2009. Anyone who has taken a basic economics class knows why.

[ProfessorGAC]

18. Both

One nit to pick: This isn't a depression, it's a severe recession. There are significant technical differences.

That being said, the causes of this situation were completely predictable given the LACK of systemic change over the last 30 years. (Better yet, the unraveling of some systemic controls that were in place.)

So, the lack of consistent monitoring and regulation of things that could clearly be seen as detrimental to the long term health of the economy as a whole.

The systemic problem is rooted in a complete misunderstanding of the working of the macroeconomy by folks who have been put "in charge".

But, corrections to it do not necessarily require a complete overhaul. Just some positive moves that generate more vigilence and equity.
GAC

[Chan790]

19. Well...I wouldn't call it a depression...and it's not systemic.

Okay, it might be a regional depression. (Frankly, I think Michigan is screwed. Forever and permanently. Maybe we can sell it to Canada? I'm kidding. It's got to be worth at least $.5T though.)

We know it's not systemic, though it feels like it's never going to end. It's just what happens when the GOP takes control for any real length of time...it's a little worse than under Reagan because Dumbass Bush and Poppy Bush are a little dumber and a little more-evil than Reagan was. As soon as we start hanging Republicans and DLCers, ending free-trade agreements and imposing tariffs again...things will be hunky-dory in 6-12 months.

[ieoeja]

20. Ending free-trade and imposing tarriffs ...

... will benefit:

1. American labor by decreasing imports.
2. American business by decreasing competition from imports.


... will hurt:

1. American labor by decreasing exports due to tariffs imposed on American-made goods.
2. American labor by decreasing exports due to increasing overseas poverty.
3. American labor by increasing the price for imported materials needed for manufacturing.
4. American consumers (which includes 100% of American labor) by creating more monopolies.


Corporate America, which spent two centuries advocating for protectionist tariffs until they found a way to make free-trade work for them, is okay either way.


Ending free-trade and imposing tariffs is addressing the symptom, not the problem.

The problem is a foreign policy that does everything in our power to ensure cheap labor overseas. Free-trade does not create cheap labor overseas. It is our fight against international unions, workers rights, environmental laws, etc that does that. Even to the point of encouraging and aiding Rightist coups in those countries.

Currently, our foreign policy only benefits that 0.00000001% of American businesses than can afford to setup overseas manufacturing. While damaging the remaining US businesses and undermining the 99% of Americans who live by providing labor.

Tariffs also fuel xenophobia, increased animosity between nations, and more wars over resources. In fact, anti-trade has probably been the #1 cause of wars throughout history (if you look past the nationalistic/reglious/racist excuses). Heck, Britain's tariffs on French goods was one of the major causes of the American Revolutionary War.


And from an ethics standpoint, a wealthy country opposing free-trade is kind of like a wealthy man opposing progressive taxation. It has a hint of the same "I've got mine, fuck the poor" mentality.

[Bucky]

22. trade restrictions are what turned the Panic of 1929 into the Great Depression

What dulled the effects of this almost-depression was the bank bail out. What will prevent the next cycle is (1) break up any company that's 'too big to fail', (2) reinstate the regulations we used to have that were designed to prevent exactly the sort of train wrecks Wall Street has produced here, and (3) increase trade.

Globalization is not a policy; it's a fact. The only question is how you participate in it. On the plus side, you trade isolationists well get to burn a lot of calories while valiantly swimming against the tide.

[Chan790]

25. I actually think exactly the same in a perfect world...

1 is impossible though...once they go multi-national, we no longer have that ability; they'll just dodge us by becoming non-US companies doing business here like Shell did.

2 is ideal if you can figure out how to overcome the fact that the kleptocrats will never let you do that.

3 would be good if we had much of anything to trade...we don't make or grow much of anything domestically anymore. Japanese cars, Korean electronics, Latin-American produce, Arabian oil, Canadian lumber, European luxury goods, Mexican manufactured goods and cheap Chinese crap...that's the backbone of the American lifestyle. What do we have to export? College degrees and not much else.

I don't think trade-isolationism is the solution...I view it as a way short-term to protect the ramping up of US manufacturing until we have a strong base. Once the isolating techniques are lowered, our quality will stand on its' own provided we don't let them export the jobs again. Globalization is a rigged-game for an above-the-median nation...the only way to win is to not play or to cheat by using your power to make the rules suit you to the detriment of others.

[Bucky]

27. Ah, I see the problem.

You don't count services and information as exports. If you restrict exports to second wave, industrial technologies, then yes there's a big problem. But the US is the world's largest exporter of services and data. We're still running a terrible trade deficit, but the key to improvement is going forward, not lamenting the changes from back in the 20th Century.

[Taitertots]

34. You have no idea what caused the great depression

[Bucky]

21. Neither. It's actually a result of Republicans sabotaging the system of regulations

The systemic response to deregulation is increasing cycles of reckless investments--which lead to speculators chasing schemes that will generate dollars instead of business investments that will generate earned profits. The commodity glut and buying on margin madness of the 1920s that lead to a bubble that lead to a bubble burst was pretty much repeated in the Dubya Bush era--accelerated greatly by Bush's even more aggressive non-enforcement of the watered down Clinton era regulations. And so we got yet another bubble burst.

I just think it's a relief that we only have to learn the same lesson every 80 years or so. Historians used to talk about a 70 year cycle in history, so theoretically we're getting smarter (or getting dumb slower).

[TheKentuckian]

24. Its all systemic, even the cycles are symptoms of the failed system.

[guitar man]

26. Systematic

The systematic destruction of the middle class' income has cut the heart right out of our economy and left it on life support. I can't think of anything more un-American than to put our well being at the mercy of outside interests like China and others. If they pull the plug, we're fooked!! :(

[WeDidIt]

28. WTF?

When was "Depression" declared?

Or is this an emotional state with you? There are medications that can help with that, you know. Depression is a terrible thing and if you're feeling really depressed you should seek professional guidance on how to proceed.

[krabigirl]

29. I am afraid that yes, it's the latter.

[applegrove]

30. Like Bernackie said. Lack of proper regulations.

[area51]

36. I fear it's systemic.

Our govt. is subsidizing companies via tax writeoffs to offshore jobs, healthcare costs are out of control in this country because no one in govt. wants to be accused of being a "socialist" though we have socialized fire and police protection.