Tuesday, May 06, 2008

Great Depression of 2008 = Great Disappointment

Whatever happened to the Great Depression? Not the real one from 70 years ago, the lost decade of unimagined misery and Steinbeckian angst, the worst period in the history of modern capitalism. I mean the replay we were promised this year.

I don’t know about you but I feel a bit cheated. There we all were, led to believe by so many commentators that the sub-prime crisis was going to force the United States into a new era of dust bowls and breadlines, a slump that would call into question the very functioning of the capitalist system in the world’s largest economy. Carried away on the surging wave of their own economically dubious verbosity, the pundits even speculated that this unavoidable calamity might presage some 1930s-style global political cataclysm to match.

Well, it’s early days, to be fair, but so far the Great Depression 2008 is shaping up to be a Great Disappointment. Not so much The Grapes of Wrath as Raisins of Mild Inconvenience. Last week the Commerce Department reported that the US economy – battered by the credit crunch, pummelled by a housing market collapse and generally devastated by the wild stampede of animal spirits – actually grew in the first three months of the year.

From "Steinbeck’s Grapes Lack Wrath This Time Around"

9 Comments:

At 5/06/2008 10:06 PM, Blogger Cautiously Optomistic said...

Great Post Mark--I totally agree. My sister is a PhD psychology student at Marquette and she taught me the word
"catastrophize" Every time I pick up the paper and read the headlines I think: "They might as well just write -"we're F#$%ed!" over and over again" ;-) By the way, I have seen you on Kudlow--way to stay optimistic my friend!

 
At 5/06/2008 10:40 PM, Blogger Ken Braun said...

Maybe we should sell t-shirts?

"The media promised a depression and all we got was yet another lousy quarter of economic expansion."

 
At 5/07/2008 2:07 AM, Anonymous Anonymous said...

How about we report inflation the old way before the Boskin Commission introduced the wonderful world of substituting and hedonics. Underreport inflation means overstating real GDP.

 
At 5/07/2008 7:46 AM, Anonymous Machiavelli999 said...

People really do overreact. There will never be another Great Depression, I can safely bank on that. Think of Russian in the late 90s. That was a financial disaster. Their currency defaulted! And yet, there were no breadlines. The world is too integrated for a complete meltdown. While it is true that some financial institutions were low on capital, the capital came in via infusions from sovereign wealth funds. Capital goes where it is most needed. Hooray globalization!

 
At 5/07/2008 7:47 AM, Anonymous Machiavelli999 said...

Having said all that, what is going on with the world's natural resources bothers me a great deal. I read that the rice producing nations of South Eastern Asia are planning a Rice Cartel. If you thought prices were high now, wait until this cartel takes place. And once people start to go hungry, wars take place. That is what worries me much more then the "credit crunch".

 
At 5/07/2008 8:16 AM, Anonymous Is said...

I read that the rice producing nations of South Eastern Asia are planning a Rice Cartel.

Seems to me they would be subject to substitute products. We have to put petroleum in our vehicles; we do not have to put rice in our bodies. I know it is the basis of diets in SEA, but still...

 
At 5/07/2008 10:42 AM, Blogger OBloodyHell said...

> ...battered by the credit crunch, pummelled by a housing market collapse and generally devastated by the wild stampede of animal spirits – actually grew in the first three months of the year.

You forgot "...hammered by increasing gas prices..."

P.S. Ken, great line. I concur: T-Shirts.

 
At 5/07/2008 10:52 AM, Blogger OBloodyHell said...

> Having said all that, what is going on with the world's natural resources bothers me a great deal.

Oh, come on.

a) As someone else noted above, when push comes to shove, it's not like rice is truly fungible. Only "all grain products" would be subject to such things...

b) "the world's natural resources"? Could you maybe be more specific, last I'd seen the price of most things, in real, fixed dollars, was trending mostly downward -- As Mark noted, even the NYT had to ack this, it was so obvious

c) if you want a militaristic concern, note that the baby restrictions have made China's M-F ratio go all askew. This, historically, leads to jingoistic impulsiveness, as the males compete for the attention of the females (... and frankly, any father that was giving a preference for a boy, in that mileau, was an idiot -- it's handed the real power to the women, not the men). THAT is far more likely to lead to war than a silly rice cartel. "Oh, no, the price for my gumbo's gone up by a dollar!"

 
At 5/07/2008 4:11 PM, Blogger MySearchisOver.com said...

http://www.youtube.com/watch?v=25_APRkrXeY&feature=related

 

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