What Does A Depression Look Like?
By Justin Gardner | Related entries in Barack, Economy, HistoryPractically speaking, at our current rate we’d need the GDP to drop 6.6% in 4 straight quarters for it to hit the purple line below.
While that’s not very easy to do, it’s much more likely if the banking problem doesn’t get solved and credit freezes up again.
Calculated Risk offers this handy graph…
And, as you can see, we’re already very close to this being the worst recession in post-war history, and with some mortgage time bombs about to go off, I’m almost certain that this one will eventually lay claim to that dubious distinction.
Still, will we get to an actual “capital D” Depression?
To be painfully honest, with every passing day I think it’s possible. I hate to say that, but we’re talking about another $2+ trillion in toxic mortgage backed securities being dropped on top of our heads in the next couple years. And that could easily work to undermine any fixes that the administration puts in place for the banks, the economy, healthcare, etc.
Yes folks, consider me truly Worried.
This entry was posted on Wednesday, March 11th, 2009 and is filed under Barack, Economy, History. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 11th, 2009 at 8:24 am
Well, whatever the cause of this little ‘downturn’, Alan Greenspan says he had nothing to do with it.
Why? Because he said so, you silly goose!
http://online.wsj.com/article/SB123672965066989281.html
March 11th, 2009 at 9:01 am
[...] « What Does A Depression Look Like? [...]
March 11th, 2009 at 5:59 pm
It may get worse – but not much. Rremember, a great deal of this crisis was caused by lack of regulation and over sight in many areas of the financial sector – that’s getting alot of attention currently. In addition, the short selling rules (lack of them actually) allowed for a vast conspiracy of value neutral traders to take companies down if they could get away with it – and they did. Recently the SEC has begun to flirt with the re-implementation of the “uptik rule” – if this is done we will see a leveling of the markets (as opposed to the up and down and down again gyrations) like we haven’t seen in years. Don’t buy anything right now unless you like CHUBB, Schlumberger, Gold of course, and the Yen is looking particularly interesting with all the other world currencies lowering their interest rates (the Japanese central bank has been at or near 0 for some time so the Yen won’t lose value in the coming years as other currencies will).