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| The economic times now and then; compare 1932 with 2008 | |
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| Tweet Topic Started: Apr 6 2008, 12:16 AM (149 Views) | |
| somerled | Apr 6 2008, 12:16 AM Post #1 |
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Admiral MacDonald RN
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In 1932, 13 million people in the United States were unemployed . Home foreclosures and bankruptcies were common. A large percentage of the American population was desperate. The worst economic situation they had ever faced, the Great Depression, was caused by a number of factors, many of which were beyond the control of the average man and woman. These factors included inequality in the distribution of wealth, stock market speculation, drought, and a weak international economy. In 2008 , there are some similarities to 1932 , and some dissimilarilies too. This poll can also apply in countries other the USA. |
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| Dandandat | Apr 6 2008, 02:10 AM Post #2 |
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Time to put something here
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:rolleyes: in 1932 approximately one out of every four Americans was unemployed, in recent months unemployment in the US rose from below 5% to just above 5%. If we forgo the notion that 5% is just about what is considered full employment by most economists. It would still mean that is nowhere close to the 25% unemployment rate of 1932 and right on par or better then every other nation in the world. Home foreclosure disparity between 1932 and 2008 is equal in magnitude as the above example. The main cause of the Great Depression was the world’s inability to deal with the industrial reevaluation following WWI. Production capacity far exceed the public’s ability to consume. Without a reliable and large enough consumer base businesses wore forced to retract and a slow down and then depression ensued. In 2008 the world’s production capacity does not meet the public’s ability to consume. What is fueling the current slowdown is uncertainty in financial markets, which as we can see is a disruptive force but not at all as insidious as a forced retraction do to over production capacity. This is so because the current uncertainty will naturally find an equilibrium as the markets slow down and thus become less volatile (or more certain). Over production capacity, as in the 1930s, does not have a similar natural stabilizing force; it took a war, that required the production capacity, to bring the world out of the depression. So the premise in your poll/post is intellectually sloppy; while there are some similarities between the economies of 2008 and 1932, the differences are so much more numerous that there is no reason to compare them in the manner that you did except to scare people. I hope that is not your intention. The current economic problems of 2008 is much more comparable to recessions of recent years. All of which were weathered quite well. The only problem I see is the level of consumer debt. Consumer spending has been a positive contributor in the upswings of recent recessions. If we do enter a recession this year, the factor may not be able to help this time. To your poll question: If we do enter a reception and it does turn out to be prolonged, then I am not to worried about my own economic outlook. It is unlikely that I will lose my job and I have set up numerous safety nets in case it does happen. |
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| somerled | Apr 6 2008, 02:12 AM Post #3 |
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Admiral MacDonald RN
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I did say it is not the same now as in TGD. |
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| ds9074 | Apr 6 2008, 04:55 AM Post #4 |
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Admiral
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What if the public's ability and/or willingness to consume contracted sharply, perhaps because they loose their jobs, have to take a lower paying job, because credit becomes less avaliable and/or because they feel poorer because their housing is worth a lot less. |
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| Dandandat | Apr 6 2008, 10:19 AM Post #5 |
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Time to put something here
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It will have an effect, as I said debt levels are very high now, so people may be smart and stop sending, this will keep a slow econmy down longer. However this is not the same as with the Great Depression. In the Great Depression there where real phiscial limitations to consumtion. All people, whether they where rich or pore had a job or lost one, could not meet production demands. |
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| STC | Apr 6 2008, 10:35 AM Post #6 |
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Commodore
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A more realistic danger is a prolonged slump due to a combination of a collapse of asset values, and a liquidity trap i.e. that which happened to Japan during the 1990's. There are some parallels between now and the 1930's but not that many. |
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| Data's Cat's Sister | Apr 6 2008, 11:01 AM Post #7 |
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Commodore
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I do worry about an economic downturn. My job would probably be safe and if it wasn't I could probably find another one. The only responsibilities I have are to myself so I suppose I would feel differant about it if I had a family. |
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9:32 AM Jul 11