The Next Great Depression Is Here... If We're Lucky
Don't panic — this is just a speed bump. You want to ride this one out. Think long-term. It's a marathon, not a sprint. Keep your money where it is — trust the market. The worst thing you can do is panic.
Reassuring words, which can all be traced, ultimately, to the same dudes who ringed our noses and walked us to the edge of this particular ravine in the first place. The Dow is literally in freefall as we speak, plunging beneath a five-year-low, with no bottom in sight. So here's my open question: Are you guys sure we shouldn't panic?
You know, not that we don't trust you absolutely anymore.
I, for one, think this is an excellent time to panic. I'm strongly considering curling up in the corner over there and rocking like a freaked-out autistic kid.
The challenges we face as a nation grow more complex every day, and every day, America's superstrength weakens. Our financial institutions — the only corner of industry we haven't already sent overseas — are imploding. Every day our political process grows more absurdly corrupt, while our watchdog media slumbers, dreaming of Britney. Our families are virtually all fractured; our prisons are teeming; our schools are churning out violent morons.
How bad does the state of the nation have to get before we will be advised it's okay to panic?
Collectively and individually, we are already enslaved to a diminished future by decades of unrestrained gluttony and greed. And we are getting fatter, stupider, and more indebted by the moment. I'm not being judgmental; that's just a sober read of the stats. One in five Americans today believes the sun revolves around the earth. One in four read no books at all last year. One in three believes in UFOs.
Kind of makes you wonder who we are, anymore. I think we've been bellied up just a little too long at the all-you-can-eat buffet of the world. You probably think I mean that figuratively. But one out of five Americans is overweight now, and one in four of us is clinically obese. Yowsa! One in four!! We are not just the fattest people on Earth, we're the fattest people in the history of people. We're so fat our favorite color is gravy. We're so fat that when our beeper goes off, other countries think we're backing up.
But I digress.
Time to put two and two together, people, whatever THAT adds up to, and take a good hard look at what we've let ourselves become. Not too long ago, America led the world in things like energy production, automobiles, cotton, hope. Today we lead the world in substance abuse, incarceration, bulimia, and serial killers. America's #1 export today is — this is true; can anyone guess?
Debt.
As esteemed philosopher Dean Wormer of Faber College once noted, "Fat, drunk, and stupid is no way to go through life." Yet here we are, living that immature dream, inspiring nobody.
When you're driving as fast and recklessly as you can, a 'speed bump' is quite sufficient to wreck a car. I say it's time to panic. And rejoice. Because things are going to get a hell of a lot worse before they get better. And that may be exactly what this country needs.
The Great Depression was no barrel of laughs, by all accounts. Poverty, despair, unemployment, hunger, and hopelessness are harsh mistresses. But in retrospect, they raised us right. The Depression built character on a national scale, taught us virtues like self-reliance and sacrifice and compassion, brought families together. Roll your postmodern eyes at the quaint earnestness of it all, but it truly did make our nation strong.
And just as the Great Depression brought out the best in us, our postwar prosperity has surely brought out the worst. Our blissful blinkered indolence has left us thoroughly unprepared for the challenges of the new millennium, challenges which couldn't be more immediate or acute. Iran is twenty-two seconds from becoming a nuclear power. Russian warships are steaming toward Venezuela, literally, as you read this. And here, right at the moment when we could really use the Greatest Generation, we find ourselves armed with...the Me Generation.
D'oh!
I modestly propose that a new Great Depression is exactly what America needs to wake ourselves up, put some moral fiber back in our diet, and give us some breathing room so we can catch up to the rest of the world again. We got ourselves into this mess, and it's high time we got ourselves out, by deliberately provoking a painful and protracted worldwide financial calamity. We did it to them in 1929, and by God we can do it again.
It shouldn't be that hard... These are fragile times, and information moves at the speed of light, and we have the herd effect on our side. Does anything seem unsinkable this week?
Consider this scenario: A local TV pundit half-jokingly suggests, after some next bit of bad financial news, that maybe we'd better pull our money out now, before all the ATMs stop working. A few people take him seriously; they tell their Facebook friends. A news chopper films the line forming outside some local bank; Fox News picks it up for the national feed, and next thing you know your spouse is calling you at work, saying 'Honey, they are closing banks and there's cops everywhere..."
The FDIC 'insures' your $3 trillion in consumer deposits with just $45 billion in assets...that's just one and a half cents per dollar. Won't take much to empty that box — WaMu alone was projected to cost the FDIC $24 billion, so you do the math. Math is hard! The FDIC will have to take the collection plate to Treasury, who'll have to go to China, who'll tell us to screw off. Or to turn the other way while they take Taiwan out back for a beatdown.
There's no question in my mind that America can be strong and resourceful and self-reliant again. But it's going to take an actual catastrophic system failure to drive those lessons home. Sure, maybe we can heed this 'dress rehearsal' warning and wise up and put ourselves back on track, but the smart money's on no fricking way. You know us; we're going to fall right back into our crack-addict habits as soon as the credit lines open up again. There are just too many suits in cahoots working to keep us spellbound, too little in the way of countervailing force. Brace yourself to resist the messaging this winter, as retailers try to shore up The.Worst.Christmas.Season.Ever.
You know what'll probably make you feel better about this whole thing? A new iPod Touch. Click here to buy it right now, and make no payments for the first six months!!
I'm not saying a new Great Depression is definitely coming, I'm just saying put what's left of your money in a mattress, plant apple trees in your backyard, and buy a gun. And bullets — don't forget bullets! To be first in line for the run on a bank is irresponsible to your country. But to be last in line is irresponsible to your family.
Don't let anyone tell you to relax...That's how they walked us off the cliff in 1929. Embrace your fear. Fear makes you smart; fear makes you strong. It's the only proper mindset to face the coming storm. In fact, why not practice? As an experiment, try to live within your means, just for a week. Buy only some things you absolutely don't need, and try eating only 50 or 60% more than your body can possibly process. Put a couple of dollars in a box and see if they're still there at the end of the week. Try it! Just for fun!
The only thing to trust is fear itself. Because the reality is, if we all choose to get a little leaner and hungrier, it might not hurt quite so bad later this year or early next year, when that choice is taken from us.
Follow Keith Blanchard on Twitter: www.twitter.com/KeithBlanchard
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The entire state of Michigan is crawling up in a ball in the corner with you, only we've been there for two years already. Welcome, mate!
You've been told this time its different. Yes its different - in the same way. Watch out, because this is the baby boomer long-wave cycle. The government should have a long term plan for this situation, not just an overnight fix.
http://www.longwavepress.com/Baby_Boomers_Generation_X_SCv1a.pdf
Holy crap! I'm late to the party here--been taking a little soul break--but did I just really read what you wrote?
You called us--the American People--every name in the book, and for some strange reason, at least for me, it felt oddly good and right! This is exactly why the Europeans laugh at us. They've been through the ringer of war and poverty and plagues and you name it for a thousand years. They know what it's like to watch the bombs fall and have standing armies patrol their streets. They've seen every scam and dictator up close and personal, and they can't believe that we--the Greatest Country in the World--are still so stupid, naive, ignorant, and blind to these things. And the reason we are is that, just maybe, we haven't suffered enough to have learned the difference between the Truth and what just makes us feel good--for awhile.
Today generation in a depression? Screaming headless chickens that think spaghetti grow on trees and would not know how to pick them.
Keith Blanchard
"So here's my open question: Are you guys sure we shouldn't panic?
I, for one, think this is an excellent time to panic."
I just want to tell you that when you write like that in a tone of rising panic - we feel your pain bro, honestly we do.
But I tell you what, why not calm down by blowing into a paper bag a few times and wait for the meds to kick in?
What! You couldn't afford the meds?
O.K. panic away.
Hysterical !!!! I alsmost laughed myself out of my chair !! Thanks.
Well, I went through the Reagan recession with its 9.7 percent unemployment. It wasn't fun. Before me, my mother went through the Great Depression who was one of the "Okies". She was glad to make 50 cents in 12 hours working in a cannery in California. Surprisingly and ironically, the people who didn't learn anything from the Great Depression and the Reagan recession were the Republicans who gave America ideological horse manure such as "free markets", "free trade", and "supply-side economics" the very things that cause economic downturns. To use Napoleon's term, Republicans are "dangerous dreamers" who neither have a sense of history nor any measure of prudence.
The US has been pushing toward free trade since the late 1940s, deregulation since the mid-late 1970s, and supply-side economics since 1982. Maybe no one has noticed, but since 1982, a period of 26 years, the United States has only had two very short and shallow recessions. With the economic policies and mantra leading up to Reagan, we had nasty recessions in 1970, late 1973-mid-1975, 1980, and 1981-1982. From this it is very apparent that the policies over the last 26 years have resulted in a much better economy than the ones of the 15 years before Reagan.
:-(
I think a Depression would not be survived my many people today. The societal values of people prior to entering the Great Depression were what carried them through it. The cultural anomie that prevails in America today leaves us ill-prepared and lacking in
Want to know what to do next? Want to have a real understanding of how we got here as a people and where we are going from here? Time for everyone to read a book from 11 years ago --- "The Fourth Turning" by WIlliam Strauss and Neil Howe. It foretold the current mess we are in, how we would get here, and (in broad terms) what's going to happen -- for the next 20+ years. The only clue I'll give you to the thesis of the book is a favorite quote from Mark Twain: "History doesn't repeate itself, but it does rhyme". You can buy the book used on Amazon ....
I read that book too and tried to tell people about it but they pointed out small crashes that didn't fit the idea so I quit trying. I found it a frightening possiblity 11 years ago but then pooh poohed it because it was so uncomfortable. Recently I have pulled it off my shelf again
Further, look what followed the great depression and brought us into WWII - the rise of the Nazi state and Hitler which was foreshadowed by the years running up to 1941.
Jared Diamond also writes some damn fine books too such as Collapse.
I already live at depression level. I have not owned a new car in 22 years; I pay cash for used cars. I sew and hem my own clothes and buy most of them second-hand. I bag lunch to work every day. We don't eat out, take very few vacations and then on the cheap, and live in a 40 year old home. I save for retirement and buy health insurance and put myself through school. The real problem in Florida is the lack of a living wage. I am a paralegal, a professional, yet wages have been stagnant here for years. I have seen my living wage seriously eroded even more by rising health care, daycare, gas, electric, outrageous property insurance rates which have QUADRUPLED in 2 years, and 3% cost of living raises don't keep up with the reality of prices for food, etc. For most of us, there is little left to trim in the budget, quality of life is already suffering, and we are not wasteful spendthrifts like Repugnants believe. Florida is considered paradise and is a service economy so the attitude here for the last 30-40 years is that you can accept what we pay or leave; there are ten more waiting for your job. I had planned to move away after living here since 1979, but now cannot sell my home. I believe this election is the most important in my lifetime and I am working hard to get Obama elected.
"outrageous property insurance rates which have QUADRUPLED in 2 years"
"I had planned to move away after living here since 1979, but now cannot sell my home."
Kim, at some point we need to face reality and re-assess the settlements that we have placed in the path of natural disasters. Between sea-level increases and increased hurricane intensity/frequency, places like coastal Florida (and New Orleans, for that matter) are getting too expensive to maintain. We will need government programs to help people who currently live in those areas to relocate.
Neither candidate in the current election is thinking that far ahead.
I also live in Florida, and can see your POV, except for this line:
"I already live at depression level."
Consult a GD survivor and/or read up on the Great Depresion; what you describe as your lifestyle is well above what the majority dealt with after the crash of 1929.
When you so distrust banks that you refuse to open a checking account--which was the attitude my father maintained his entire adult life--then you'll know the difference. Let's just hope that we don't get driven that far down into debt and despair by the current...whatever it is.
Does your husband work? Have you or your husband tried to get a higher paying job? Unemployment for skilled workers in Florida has been so ungodly low, it seems almost impossible that you couldn't have gotten higher paying jobs if you tried to.
A Depression Wouldn't Exactly be a good thing for Obama. Sheesh.
Or the rest of us. Duh. Question is more one of: would Obama be a good thing for a Depression?
We've been looking in our rear view mirrors, some of us, wondering what the last 8 years would have been if it had been President Gore. I'm grateful enough, however flawed Obama may prove, that it will be him.
Of course a lot of folks are looking for Obama to kiss it and make it all better - stocks, housing, the lot of it. Or at least for us in the lower 95%. Won't happen; even candidates of honor can't often concede how dire things really are, when they are, and hope to win.
As it is, all the TeeVee talking heads right and left seem to be united on very wrong headed things - the need to keep housing prices up (well above any traditional, historical correlation with income - so your kids can never afford to really OWN one rather than forever debt towards it), the need to keep the markets and businesses stable (capitalism or socialism in the markets? PICK. ONE.), and the need for - um - oh yeah, jobs. Hey, one out of three, that's a little heartening!
I think "what's good for Obama" is not on the top of our lists. We need to elect him, but more importantly -- we need to survive.
A depression would be a tough play for a narrowly elected President Obama. He will have to prop up the economy with landmark legislation and vast infusions of cash, inviting cries of "Socialism!" from the Main Street conservatives who've found a voice, or at least a face, in Palin. FDR, the original "candidate for change," was denounced by Republicans with invective not heard in U.S. politics since the days of Aaron Burr. But FDR had a clear electoral mandate and he exercised it decisively, if not always wisely. I know he'll take a win any way he can get it, but Obama knows that an FDR-like landslide will make it easier to impose his will on Congress, Wall Street, and the courts.
The stock market fiasco does make you think long and hard. Have we bought into the idea that this is where to put our money? Have we been brainwashed to do this for our retirement so that those at the top benefit?
Whenever I see McCain supporting reaching out to him I think they are saying "Here, take all my money, give it to your rich friends."
Perhaps we are doing the same thing in the stock market.
Do I wish that we could re-learn the lessons that the Great Depression taught those who lived through it? Absolutely. But do I want to see a depression? Despite some of my philosophical leanings and beliefs, the answer is no. Why? Besides some obvious reasons, I, like other posters here, fear that there would be a dramatic escalation in violence--because there are more guns in the country than there were during the Great Depression, and because I don't think that the majority of us could tolerate the change in lifestyle.
During the depression, people still knew how to do things! Men and women--even children--knew how to make butter and other food staples; they knew how to sew and make their own clothes. In short, they were still incredibly self-sufficient. We've got a situation today where even college grads can't write a fricking paragraph. Kids aren't taught valuable skills by mentors anymore--they are apprentices of the Nintendo Wee and other gaming systems! Of course, people still have the capacity to learn how to produce and how to survive hardship. But I am afraid that in this day and age of instant gratification, a lot of us would have such a hard time coping with the loss of all of the things that we take for granted that we'd resort to violence.
Make butter!
I'm confused about this "clogging" of America's credit arteries.
Here in Upstate New York (where a fabulous job is the over-night shift at a conveniece store because it pays 25-cents more per hour) our local paper reported three weeks ago that there is no "credit clogging" here.
Quoting five bankers, the upshot was that they're lending on cars and homes and -perhaps because they didn't pig out at the Wall Street trough, all is well.
Friday morning, I hear that home sales are up 5.6% - biggest rise since 2003. Now, a home sale has to be completed and recorded by the County of Record before it's counted. And typical real estate transactions take at least eight weeks.
Sooooo - 8 weeks ago, at the latest - the arteries weren't terribly clogged if they allowed that level of transactions to go forward.
Who's at the art of this ball-out heist?
I've never bought a stock in my life, but I'm betting it's the GOP big money interests, on their way out of Dodge.
The worst thing anyone can do is take his or her money out of the bank. I am married to the Fraud and Forgery officer and AVP of a community bank. They are fine. They have weathered this crisis so far and have made a profit continuously each quarter. The problem is people creating panic. Yes, it is bad and it is scary but now is not the time to panic and overreact. America is strong. The world is strong. We will recover. It will not be easy but it will happen. I grew up on a farm where we were self-sufficient, we grew our own fruit and veggies (and I am only 30 so it was not “back in the day”). I have carried that resiliency and knowledge with me and knowledge is important for survival in any economy.
Some of the small banks are fine and did not get caught up in the derivative market scam. I qualified for a loan last month and closed friday on a small farm in the midwest. I have lived in Los Angeles for 16 years and am making plans to have a place to live and grow fruits and vegetables with helpful neighbors that can supply meat, eggs etc. I will not be staying in a big city with the way things will be in a year or two. I am single and will have it designed for 3-4 adults can share the place and expenses. It is my 401k type of plan. Learn to garden and share your home with friends. Survive.
Thanks for that.
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