"Depression 2009: What would it look like?" - Answers

Now, that is an excellent point.

Does anyone really know how to do anything anymore? Not so much.

It will certainly be all about tangible skills. Service jobs? I say, unless you are a doctor, service who?

Interesting post. I've often pondered the idea of what life is going to look like when we actually enter a depression.

And above all, a depression circa 2009 might be a less visible and more isolating experience.

www.boston.com...

I agree with this completely in respect to a depression. Although all of us will experience some hard times in some shape or form.
I believe those in the small little farm towns and rural mountain ranges will suffer less than those in the cities and suburban America. Many farms in the midwest especially, have been in the family for a century or more and the property and home are paid for. There is still a hefty property tax to be paid, but non the less it is paid for.
Let's not forget that the U.S feeds most of the world. The price of food may go up, but the demand will always be there.
I believe the same applies for the one that is skilled in various trades and professions. Flexibility is the key.
For those that have been behind a desk most of there employed life, or lack a proficient knowledge in survival skills, are going to suffer the greatest.

Interesting that today my husband my daughter and me were talking about the meaning of the economical crisis on the regular hard working Americans.

It seems that as big companies goes into bankruptcy and release their employees the trickle will be felt from the top to the bottom.

We took for example the Auto industry to be the next casualty of the crisis.

As my daughter pointed out once these companies fall and the employees are left unemployed it doesn't stop there.

It will affect any small businesses at local level linked to the big industry.

From the local dealers to the mechanics and part sellers and you name it.

Everything gets affected one way of the other as one company follows another one on the economic downfall.

As more and more people gets hit at local level that is when the depression will be felt by everybody around.

And as usual as less taxable income is there for the government to leech so the states will start leeching the reminding available tax payer in order to survive at state and local level.

See it's starts high up and it hits everybody in the pipe line down to the lower end

2009 is going to be the worst year for this nation, the tax payer and the hard working America still with a secure or semi secure job like my husband.

But no to worry Paulson is making sure that the big CEOs in his littler book of favorite people are going to get their mulitimillion bonuses this christmas.

reply to post by highfreq

Let's not forget that the U.S feeds most of the world. The price of food may go up, but the demand will always be there.

Ah, but you forget, or perhaps were not aware, that during the 1930's the food supply was NOT there. The Great Dust Bowl, which lasted about 10 years, made our "bread basket" a dust basket. If such were to happen today, we could be in for another famine, in addition to a Depression.

One of the factors said to cause the Great Depression, and the one which Bernanke believes was the MAIN cause of the Great Depression was something called debt deflation. Let me quote from Wiki:

Debt deflation
Irving Fisher argued that the predominant factor leading to the Great Depression was overindebtedness and deflation. Fisher tied loose credit to over-indebtedness, which fueled speculation and asset bubbles. [8] He then outlined 9 factors interacting with one another under conditions of debt and deflation to create the mechanics of boom to bust. The chain of events proceeded as follows (1) Debt liquidation and distress selling (2) Contraction of the money supply as bank loans are paid off (3) A fall in the level of asset prices (4) A still greater fall in the net worths of business, precipitating bankruptcies (5) A fall in profits (6) A reduction in output, in trade and in employment. (7) Pessimism and loss of confidence (8) Hoarding of money (9) A fall in nominal interest rates and a rise in deflation adjusted interest rates.[8]

During the Crash of 1929 proceeding the Great Depression, margin requirements were only 10%. Brokerage firms, in other words, would loan $9 for every $1 an investor had deposited. When the market fell, brokers called in these loans, which could not be paid back. Banks began to fail as debtors defaulted on debt and depositors attempted to withdraw their deposits en masse, triggering multiple bank runs. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets.[9] Outstanding debts became heavier, because prices and incomes fell by 20–50% but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 US banks failed. (In all, 9,000 banks failed during the 1930s). By 1933, depositors had lost $140 billion in deposits.[9]

Bank failures snowballed as desperate bankers called in loans which the borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending.[9] Banks built up their capital reserves and made fewer loans, which intensified deflationary pressures. A vicious cycle developed and the downward spiral accelerated.

The liquidation of debt could not keep up with the fall of prices which it caused. The mass effect of the stampede to liquidate increased the value of each dollar owed, relative to the value of declining asset holdings. The very effort of individuals to lessen their burden of debt effectively increased it. Paradoxically, the more the debtors paid, the more they owed.[8] This self-aggravating process turned a 1930 recession into a 1933 great depression.

Macroeconomists including Ben Bernanke, the current chairman of the U.S. Federal Reserve Bank, have revived the debt-deflation view of the Great Depression originated by Fisher.

Of course, that describes to a t, the housing crisis that we have been experiencing for the last 2 to 3 years. If an economic Depression were to hit with another major drought, this country would be in dire straights. In addition, any attempt to mitigate the drought with advanced farming techniques would have us further beholden to the Middle East oil suppliers, and any cutoff of the 70% of oil that we import would doom us.

My real concern is that with oil prices down again, we are forgetting that we had better get off oil as quickly as possible. It is horrifying how fast people AND politicians relax once oil and gasoline prices are down, where they are now.
Like it or not, many of the components of a Depression are in place. It remains to be seen whether or not we can pull out of the tailspin which the US, and the entire world is in.

There is another theory regarding the cause of the Great Depression. It is called the Austrian School Theory:

Another explanation comes from the Austrian School of economics. Theorists of the "Austrian School" who wrote about the Depression include Austrian economist Friedrich Hayek and American economist Murray Rothbard, who wrote America's Great Depression (1963). In their view, the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In their view, the Federal Reserve, which was created in 1913, shoulders much of the blame.

In opinion, Hayek, writing for the Austrian Institute of Economic Research Report in February 1929[18] predicted the economic downturn, stating that "the boom will collapse within the next few months."

Ludwig von Mises also expected this financial catastrophe, and is quoted as stating "A great crash is coming, and I don't want my name in any way connected with it,"[19] when he turned down an important job at the Kreditanstalt Bank in early 1929.

One reason for the monetary inflation was to help Great Britain, which, in the 1920s, was struggling with its plans to return to the gold standard at pre-war (World War I) parity. Returning to the gold standard at this rate meant that the British economy was facing deflationary pressure.[20] According to Rothbard, the lack of price flexibility in Britain meant that unemployment shot up, and the American government was asked to help. The United States was receiving a net inflow of gold, and inflated further in order to help Britain return to the gold standard. Montagu Norman, head of the Bank of England, had an especially good relationship with Benjamin Strong, the de facto head of the Federal Reserve. Norman pressured the heads of the central banks of France and Germany to inflate as well, but unlike Strong, they refused.[20] Rothbard says American inflation was meant to allow Britain to inflate as well, because under the gold standard, Britain could not inflate on its own.

In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a depression was inevitable.

The artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. According to Rothbard, government intervention delayed the market's adjustment and made the road to complete recovery more difficult.[21]

Furthermore, Rothbard criticizes Milton Friedman's assertion that the central bank failed to inflate the supply of money. Rothbard asserts that the Federal Reserve bought $1.1 billion of government securities from February to July 1932, raising its total holding to $1.8 billion. Total bank reserves rose by only $212 million, but Rothbard argues that this was because the American populace lost faith in the banking system and began hoarding more cash, a factor quite beyond the control of the Central Bank. The potential for a run on the banks caused local bankers to be more conservative in lending out their reserves, and this, Rothbard argues, was the cause of the Federal Reserve's inability to inflate.[22]

Thus, the attempts by the Fed, and Congress may actually CAUSE a Great Depression, if the Austrian School Theory is correct!

[edit on 16-11-2008 by ProfEmeritus]

reply to post by marg6043

We took for example the Auto industry to be the next casualty of the crisis.

As my daughter pointed out once these companies fall and the employees are left unemployed it doesn't stop there.

It will affect any small businesses at local level linked to the big industry.

From the local dealers to the mechanics and part sellers and you name it.

Everything gets affected one way of the other as one company follows another one on the economic downfall.

Yes, Marg, that seems to make sense. However, if you look at my post above, if the Austrian school theory is correct, then government interference,in an attempt to boost the big 3 American Auto mobile companies may actually cause a worse problem.
If, instead of trying to bail out companies that have not run efficiently or made smart decisions, such as building small, gas-efficient cars, rather than gas guzzling SUVs, they were allowed to FAIL, then other companies, such as Toyota would pick up the business, and many of the workers that lose their jobs if the "big 3" fail. Giving money to companies that cannot produce sufficient cars for sale that the consumer wants, is throwing money away.
In addition, although Congress will call the auto bailout a "loan", how can a company that goes bankrupt pay back that loan? Bottom line- they can't, and now YOU and I are stuck with that price tag, in the form of higher and higher debt, and higher taxes, for us, our children and our grandchildren.

This bailout of the auto industry is nothing short of treason on the part of Congress. Haven't we learned? The bailout of the banks was supposed to free up the money supply so that people could get auto loans, student loans, and mortgages, BUT IT DID NOT HAPPEN.

Congress continues to enact TREASONOUS BAILOUT BILLS for its buddies, while executives of banks are receiving HUGE BONUSES, while still NOT lending money. It will only get worse, as Obama is committed to further bailouts of the auto industry, and God knows what else.

reply to post by ProfEmeritus

Ah, but you forget, or perhaps were not aware, that during the 1930's the food supply was NOT there. The Great Dust Bowl, which lasted about 10 years, made our "bread basket" a dust basket. If such were to happen today, we could be in for another famine, in addition to a Depression.

You are correct about the Great Dust Bowl and though there was a considerable drought during that time a great deal was attributed to man made causes that modern farming has overcome.
To also quote wiki.

The Dust Bowl, or the dirty thirties, was a period of severe dust storms causing major ecological and agricultural damage to American and Canadian prairie lands from 1930 to 1936 (in some areas until 1940), caused by severe drought coupled with decades of extensive farming without crop rotation or other techniques to prevent erosion. It was largely a man-made disaster caused by an abnormally severe drought combined with the deep plowing of the virgin topsoil of the Great Plains, which killed the natural grasses. Such grasses normally kept the soil in place and moisture trapped, even during periods of drought and high winds.

en.wikipedia.org...

There are many CRP programs that exist today that the government and state offer to farmers not to plant crops to replenish the soil and land. Irrigation and erosion control are managed much better with the advent of corrugated tile and the ability to own and operate there own heavy machinery.
If anything this past year we suffered from to much rain. Which can be just as bad as a drought, but fortunately Most farms have descent irrigation systems that help offset some of the damage that could have happened.
Your point about experiencing a drought is a major one though. In today's inter linked society, a drought in the heartland of America could spread famine globally.
However there is still a supply of food and the means to grow and cultivate it, unlike the Great Depression era.
I do understand though that some of the smaller farms will eventual cease to exist as the cost to operate a modern day farm increase.

since it hasn't been mentioned much in the news media lately did you know that the BIG THREE had been acting more like BANKS who also "oh by the way made some car's as well.

there financial operations began to become larger than there car making operations

ever since the dollar went off the gold standard it appears a quite distrubing trend has taken place in the world. More and more of the money/debt created has gone into financial "alchemy" i.e innovation than industry i.e into actually producing tangible things. The greed has chased high yield. Now i'm not a genius, so this may just be some sort of co-incidence but it is an observation.

Now it is taking around 5 new $ of debt to create 1 $ in GDP, not a confidence inspiring trend. Couple this with a service sector economy particularly vulnerable to the REINFORCING cycle of higher unemployment and less spending and we truly have a recipe for disaster.

No one can publically go on TV and say this because they don't want to INCITE PANIC. We need to do something drastic or by the time the "market or economy" sorts this out we will be in a new dark age, with millions going hungry ( due to the frozen LOC market i.e food shipping/ letters of credit) and god knows what else.

The following is what i believe to be a solution based on my opinion and the multiple different economic steps i have been reading and have found throughout history.

A drastic but needed solution would be to do a one time devaluation of all major currency's that monetizes (lessens/ wipes out debt public and private) Past economic depressions occurred cushioned by the backbone of a strong industrial sector now we have a feeble service economy. I don't know wether to laugh or cry, because i am hoping i am wrong and things aren't that dire (but they truly appear to be) and i have to be honest with what i believe is coming down the pike. Don't shrug your shoulders about wiping out the debt, in a fraction reserve lending system, more and more debt is created to be serviced at interest, which means as time goes on there is more and more money OWED than there is in supply. This continues into the debt overhang suffocates the central banks best efforts, when the pressure builds to a boiling point .........countrys who err on the side of debtors ...........can rebuild ..........country's that err on the side of creditors (like Rome did) fall and there citizens go into debt serfdom or starve. I think we will initially do a bit of the former and finally go the later route albeit in a new society run more like a claste system several years down the road.

The depression will look like something we have never seen or witnessed, and a phrase to sum it up will be "how did we allow it to get this bad"

My bottome dollar is betting on the depression to go on for another 18-36 months with conditions becoming worse and gaining steam, I beleive this period will be utilized by those in power to consolidate power and cherry pick who survives and whose assets are swept into "connected banks/corporations,etc". I also believe that the increasing pain will be used to leverage the people's free will into accepting less freedoms and drasctic changes (later...when the solution is proposed) in there way of life....as well as the current structure of soverign govt's and courts and the like (world gov't is coming w micro chips) ........because i believe there is a plan for the future ......i don't believe it is as EVIL as some would like you to believe but i do think it is a coldblooded plan because many will die somewhat unnecessarily but i think those crafting the plan see it as survival of the economically fittest and have no remorse or shame for it, and would actually blame those who can't keep up.......but the pain of the coming years will be leveraged to get people to be low and desperate enough to MORE WILLFULLY accept the solution which they otherwise would fight against it were it attempted to be implemented now.



[edit on 16-11-2008 by cpdaman]

reply to post by highfreq

You are correct about the Great Dust Bowl and though there was a considerable drought during that time a great deal was attributed to man made causes that modern farming has overcome.

Point well taken. You also brought up another excellent point- namely too much rain. The variability of the weather continues to be a crucial concern today. In fact, I had posted this on another thread about Global Weather changes:

..the world is at the end of a golden era. that of benign climate and food surpluses. Moreover,climate change has set in, and it will be 40 to 60 years from now at a minimum,possibly centuries before we can hope for equally benign weather.

That excerpt was taken from the book "The Weather Conspiracy", Impact Team. I can't link to the quote, because it is on my desk, and not on the net.

here are four characteristics which will pick up steam thru the end of this year and continue to do so though out 2009 (minus) a Major unprecedented fiscal stimulus directed at industry/infrastrucuture/job creation (which i don't see happening........in anything but a meager scale)

increased Business bankruptcy

increased Personal bankrupty's/foreclosures

Decreased consumer spending

Rising unemployment ........this will become a re-inforcing cycle which will gain steam............another wild card is the availability of Letters of credit required to ship goods (inc. food) this could lead to food shortages soon as well

[edit on 16-11-2008 by cpdaman]

reply to post by cpdaman


And the first one leading to the collapse of the commercial real estate market, which then lead to more of the second one. And on and on.

but the pain of the coming years will be leveraged to get people to be low and desperate enough to MORE WILLFULLY accept the solution which they otherwise would fight against it were it attempted to be implemented now.

True. In fact, your quote above is the traditional CAUSE of serfdom. I don't at all doubt for a minute that the entire scenario is being orchestrated by powers far above the reach of the common man. However, serfdom, slavery or whatever we call it, can be avoided, but it takes a concerted effort of the populace, one which I am afraid cannot occur, without education, an education that the MSM won't provide, and neither will the majority of "elected" officials. If your dire prediction comes to pass, it will be because the majority of people allow it to happen.

Your quote shows that you have researched/and or/ have the knowledge, as do some of us. However, getting others to accept it is quite a difficult task, when many would rather sit in their easy chair and watch "American Idol", rather than research such issues. That is evidenced by our "American Idol Presidential Election" which was just held. Just look at the issues that were in the MSM, everything EXCEPT the critical issues of our times.

Today, you must add the willingness of america to go to war for ressources.

No employment: more army recruits, more war. Not to mention the RAND corporation suggestions of starting a major war to restart the economy.

You must also add the GMO crops, which makes us reliant on those who produce it... like Monsanto. If they want to make a killing, they can stop selling them, or reduce their output when the demand for food is high... kind of like OPEC. If they abuse their power, you could see revolt at Monsanto industries and then you would end up with no crops at all.

You must also add the police state and that the crisis will SURELY be used to take out political enemies while the medias and the people are focused on the economical crisis and living day to day life.

And of course you add the anti-gun of Obama/Biden that will probably create Waco events, and even more Waco events when people get thrown out of their houses and they won't go because they've been robed of it by the FED. And you'll also have WACO events on impossibility of paying taxes.

And you also add the VERY BIG lobby of the prisons, especially in California who will push for more laws and as crimes goes up, building of prisons and people in jail will go up, accelerating the war between the people and the government.

What we could see too is Mexico, and less likely Canada, closing their borders... Do you know that Mexico south border is HIGHLY defended? If the US becomes more poor than Mexico itself, they may close their borders... and Canada too, like they did in the 30s.

And of course, the militias and average people being really mad about the New World Order, North American Union, government raping us... will organise and probably revolt when there's nothing else to loose.


This could turn REALLY BAD. Because the US is gonna be bankrupt and will defaut on it's loans maybe even in 09.

reply to post by Vitchilo

And of course, the militias and average people being really mad about the New World Order, North American Union, government raping us... will organise and probably revolt when there's nothing else to loose.

Although I agree with many of the points you make, given that unfortunately (in my opinion) 52% of the voting public voted for many of the things you mentioned, I'm not sure that the conclusion you draw will come to pass. Remember, although the Bailout bill was opposed by 90% of Americans, and public opinion showed Congress with only an 11% approval rating, and Bush with only a 18% favorable rating, with 40-50% of peoples IRA's wiped out, they didn't take to the streets, and the militias were very quiet. People were losing their houses at an alarming rate, unemployment has been rising, food prices rising, and yet people sit home and watch "American Idol" or whatever else is on the boob tube.
Do I agree that they should be very upset? Absolutely. Do I think they shouldn't take it anymore? Absolutely. And yet here we are...and there "they" still are. It's amazing, isn't it? Obama was very clear in his positions, yet most people never read them. They were only interested in the fact the he was a good speaker and wanted change. It truly is amazing.

And the sad part is that it's all based on a conspiracy, & when they censor the internet, the people who refused to even look at sites like this & the PROOF that is out there, amongst the buffet of lies, they wont be able to even see the incriminating facts...

Perhaps they are crashing the economy slowly,so we are not all pissed off at the same time,and comfortable enough to watch the show on you-tube, i sadly agree, they will take this nation with little or no fight,the people will get their "change", mark my words.


[edit on 17-11-2008 by all2human]

reply to post by all2human


I don't think that's it. Have you talked to people? They seriously think this is only temporary and that it's only a normal recession that will be over in 6 months.

Until they really feel the raping, they won't do a thing. They think it's only a recession in the markets, that their pension funds will go back up...

There's only about 3-5% who lost they homes so far in the US... that's not ``that`` bad. Until we have 30% of people losing their homes, that they get individually beat up by a thug police, they won't be pissed enough to do something.

You all know someone that don't a thing about the financial markets, that they are in their world. When THEY'LL start noticing and studying what's going on, when they become angry, then'll I'll know that a revolution is possible. Until then, I'll think that most people are like germans in WW2, slaves who love the system.

Those most hurt will be the USA. At least, in the USA, there's real patriots, armed, and know the truth. In a lot of others countries, most people are slaves and are not armed. Even the militias may not even be able to overthrow the government, like Hezbullah against Israel. Can Hezbullah defeat Israel government? No. Can they piss them off, resist them and kill those who serve this government? YES.

I think it could be the same thing with militias in the US. Having fights with the police and army/mercenaries supporting the government with the slaves saying in the cities where you have food and work provided by the government, but you have no freedom, you're in a police state and martial law. I think a lot of people will support this because it will be the status quo, and that they will be able to eat and live like they lived today.

The US will be a third world country within 3 years.

[edit on 17-11-2008 by Vitchilo]