posted on Jan, 4 2009 @ 12:24 PM
People don't believe a depression is possible because they don't have a good understanding of what a depression is. Most people conceive of a
depression in a very "dramatic" way -- like most other topics, they have been conditioned by the media to look at it as a series of cinematographic
jump-cuts, perhaps with stirring orchestral music in the background. We see grainy old black-and-white shots of bankers plunging from windows,
ragamuffins in floppy hats selling "apples: 5 cents," old-timey model-T cars rolling around, breadlines, solumn-faced farmwives in gingham dresses.
Or perhaps they conceive of it as a "Mad Max" movie, with motorcyclists in ridiculous 80s hairdoos riding around the desert shooting each other and
eating dogfood out of tin cans.
Then they look out the _ The sky is blue, some kids are playing on bikes at the end of the cul-de-sac, the birds are chirping. They have to do
the same daily grind as always -- wash clothes, make dinner, etc etc -- they literally can't put this slow, stately, and boring (yet comforting)
perception of daily life in the same conceptual space as the dramatic scenes above. So it seems like "it could never happen here."
Well, what people forget is that it took a whole decade for the depression to pan out. You had 25% unemployment during the great depression, which
means 75% were going to the office or factory, etc. every day: not great numbers, but hardly Mad Max-land. Things happened slowly, there were plenty
of days with blue skies, people continued to get married and have kids, and some businesses even thrived.
The ONLY way to get a grip on what is going on is to look at the NUMBERS and complely put aside any emotion-based analysis rooted in film imagery, or
"well my buddy's company just got a ton of new orders so I guess everything is good." The experience of your buddy, one person among millions, has
NOTHING to do with overall conditions. We can only gain an understanding through NUMBERS. And its worth remembering that the numbers today are highly
"massaged" and manipulated by the govt and companies to make things look better than they really are.
To get the true picture, you have to comb through all the fine print, something that makes people's eyes glaze over. You also have to realize we have
had just one bad year so far. We won't know for five years or so whether this is the beginning of something horrific or just a hiccup. I will tell
you that my analysis of the numbers and facts suggests this is more than a garden-variety recession. We have seen the entire investent banking
industry go up in smoke, and we are only now starting to get the highly disturbing numbers in from the murky worlds of private banking and hedge
funds. This has been the worst year for the stock market in percentage terms since the 1930s, and also the only time that housing has fallen
nationwide since that decade. Unemployment numbers are reported as being much lower than they really are, because they don't count people who have
been without work for more than certain period of time (several months). The dollar is cratering, manufacturing orders are at 1950s levels, retail is
having a bad year (although a few companies might report decent sales)...I could go on and on. Then there is debt, derivatives, and other 500-pound
elephants luring under our sofa.
All of this will take years to play out so don't expect to look out your window or at your neighbor's lawn and draw any meaningful conclusions. The
economy is too large and complex for the human mind to fathom on any intuitive, emotive level, or even through personal experience. All we have are
numbers, and for now they ain't pretty to say the least.