Take a look at these astonishing charts. They show that as bad as things are in the US, they're much worse in the rest of the world -- worse, even, than in the Great Depression. Excerpt:
To sum up, globally we are tracking or doing even worse than the Great Depression, whether the metric is industrial production, exports or equity valuations. Focusing on the US causes one to minimize this alarming fact. The "Great Recession" label may turn out to be too optimistic. This is a Depression-sized event.That said, we are only one year into the current crisis, whereas after 1929 the world economy continued to shrink for three successive years. What matters now is that policy makers arrest the decline.
On the bright side, the authors, Eichengreen and O'Rourke, say that economic policymakers today are responding a lot more quickly than their Depression-era predecessors. But are they doing the right things?
I now understand more clearly what my economist friend meant last year when he told me by the time this thing was over, we were going to see revolutions in a number of countries.
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The Titanic is sinking under Steve and he's only interested in pointing out that a Republican was driving the boat.
Let prices collapse. Rip the Band-Aid off in one quick motion. Let other players swoop in, snatch up the assets, and get them producing value again. Prices have to come down. We can do it quick or we can do it the hard way.
They are obviously doing the wrong things. Like Karth said, and like I've been screaming for months, they're debasing the currency, and eventually we will get some nasty inflation. They no longer reveal M3, because they don't want people to know what's going on with the money supply. But everybody knows anyway, because we have been watching them as they loot the treasury.
The sound banks should have been allowed to take over a larger market share from the reckless dummies, but since we don't have a capitalist system that is not taking place. Instead, they are throwing money at the most politically favored.
We the people, the dumb taxpaying goyim, are screwed.
freddy-LOL, nope, I was merely pointing out the denial that existed, not placing blame. From the beginning, I have been pointing out the international nature of this crisis. Cowen's post may help you understand things better if you really are interested.
Karth-There are two things often missed which may tip over the European economies. First, military budgets. We essentially pay for their protection. If we ever tell them to pay for their own self defense, and they have to increase theie defense budgets accordingly, they willb e hurting.
Secondly, health care costs. We bear the burden of development costs for most new drugs, the real reason drugs cost more here. If we ever put our foot down, health care costs may shoot up in Europe.
They have some flexibility on both of these issues, but it would weaken their position even further relative to our own.
Steve
Robin Thomas @ 9:07 PM writes:
"We the people, the dumb taxpaying goyim, are screwed."
And without even a kiss first. Oy vey !
Your servant,
Lord Karth
WRT protectionism - I don't think any government wants it, but we could end up there anyway.
Relative to the US & Japan, EU isn't doing much to stimulate their own economies (either fiscally or monetarily), leading to the perception that they wish to mooch off the leakage of other countries' stimulus abroad.
China is doing massive stimulus (although, per Pettis & Shih, much of that may be smoke & mirrors), but also faces pressure to devalue their currency.
And the US continues to run a trade deficit of non-trivial size, which, combined with our rising unemployment, may lead Jacksonians to wonder why we should continue importing excess capacity from abroad.
Incidentally, IIRC Smoot-Hawley was a relatively minor contributor to the Great Depression (relative to tight money & the financial crisis).
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