When do you start calling it a DEPRESSION? Bloomberg reports today the head of IMF saying advanced economies are already in a depression.

Obama is not using Bush level demagoguery, but the Pelosi chart is. There are a lot of good arguments to show the severity of the problem today. In addition to unemployment and underemployment, there is also housing values, the stock market, the national debt and the extent to which Bush has already pushed all the normal stimulus pedals (Fed rate, low taxes, budget cuts in many key areas). But the biggest problems today are the level of personal debt and the fact that we are no longer an industrial nation. Our economy is too much financial based.

But Pelosi merely takes one symptom and makes it look like 4 million jobs lost is absolute zero. I'm surprised she couldn't come up with a scarrier color, though. I mean really, chartreuse?

By my calculations we lost a job every five seconds in January.

Every five seconds!

That's pretty damned scary to me.

I agree--understated indeed. Of course there is a difference. Not all things that make us fearful are automatically to be discounted! I think they just don't want to really get this inconvenient truth. Because it doesn't fit with their embedded
ideology, because it makes them WRONG.

Wow--talk about collective denial!

I can't believe how understated and how undersold this whole thing has been. I can't believe how numb Republicans and Blue Dogs seem to be--or perhaps indifferent. And I can't believe how stupid people are to equate spending as being bad, as not being stimulus.

I'm concerned that too many people aren't concerned! That's what's really scary! Are folks that checked out? That detached? Or just that indifferent and that under-informed? I think a bit of all of this is going on.

I can't believe the Republic Rhetoric Kool Aid that has persisted for decades: That all tax increases are bad, that big government is evil..
that Reagan was amazingly helpful with his policies...I had no idea just how much this ideology has been embedded into the mainstream media.

I heard this same erroneous accusation on a version of "Lou Dobbs" this week--the anchor for the hour opened up by saying the Obama administration is engaging in fear tactics...(my god, how is that show allowed on CNN?).

If Eisenhower used 25,000 men to invade Normandy in 1944 it would have been a disaster. That's what a $780 billion package (including dumb tax cuts) is at this moment, it's woefully inadequate, it won't do the job, it's not worth supporting.

As Krugman has pointed, it's far better to err on the side of over stimulating at this point. If the the economy overheats (we should be so lucky), interest rates can raised to correct the situation.

We should support more than a trillion bucks in pure spending or nothing at all.

It's a great chart to use, Steve. Thanks for bringing it to my attention. I think it should be plastered everywhere, including the White House web site-- and Obama should use it this week when he hits the road.

They really need an "Educate America" team on board.

The NYT had an interesting (and scary) article yesterday showing that soon there will be more women in the workforce than men. Mostly, I think, because (1) women tend to work in areas with less contraction like health care, education, etc., and (2) women generally get paid less than men, so it's easier to keep them on.

Obama, in my opinion, has been WAY too laid back so far in talking about the economy and the Republicans' role in creating the problems we face now. He has to remind us of that as he also points toward a better future. If that takes a bit of demagoguery, so be it.

But the biggest problems today are the level of personal debt and the fact that we are no longer an industrial nation

Dead wrong and dangerously wrong (well, you're right about the industrial economy). The biggest problem today is a shrinking economy and people falling into poverty. Debt is just a sideshow at this point.

The economy is failing because people are losing their jobs or afraid of losing them. That makes them stop spending. They need to spend more, despite personal debt. The brakes were slammed on consumer consumption, putting us into paradox of thrift territory.

The only way out of this is to give people confidence that they will have jobs. They can then return to responsible spending levels.

They need to spend more, despite personal debt.

I suppose we could bicker about what "responsible spending" is, but can we also agree that regardless of what people should or should not do, that given small amounts of money, many will use it to pay down credit cards or mortgages? And that's not particularly stimulative unless they then go back to those levels, or the banks find worthy people who want to assume more debt.

Ran into this last night while looking for details on the "centrist compromise" that got this turkey moving toward the oven, just after realizing that emergency educational support for the states had been cut out. No jobs involved there, of course, only the most important ones. David Sirota in Salon this morning makes the case that we've merely done the face dance once again, exchanged one bunch of insiders for another, admittedly worse one, but without the change we need to survive. We've lurched back and forth since Teddy Roosevelt, but it's getting harder to pretend that every step doesn't bring us closer to disaster. Andrew Bacevich in "The Limits of Power" compares it to a woman with a history of marrying abusive husbands who hopes the next one will be nice to her for a change.

What do we do? We have to champion real solutions while dealing with crooks and deceivers and bringing along those who truly don't realize the extent of the problem, all while fighting off fascistic psychopaths who would destroy the country quickly rather than slowly. If politics was an acrobatic act, it would be top of the bill at Cirque Du Soleil. We're all doing the Chicken Dance, and the world is our Baked Potato. All praise to Saint Agnes.

The panic and fear occurred back in 2006, through 2007 and 2008. The "nobility" kept saying everything was grand, we're whiners blah blah blah.

2009 is the pissed off phase. The fear phase has already passed.

I wrote about exactly the same thing this morning (http://www.thresheronline.com/archives/545), saying

"Like I said, I’m no economist. But I can read a chart, and it seems to me that if we’re mortgaging our children’s futures in order to make a downpayment on a stable economic horizon, we should probably put that money where it will DO THE MOST GOOD."

Also used the Moody's Image of yours, Steve. Hope you found the Trackback.

Bad post, worse Time chart, which compares apples to oranges. Is everybody nder the age or 35 unaware of the 1980-82 Carter-Reagan recession? The one which showed you can have a “real,� serious recession, yet it’s still far short of a depression?

So, YES, the MSM probably is fear-mongering. And, as a newspaper editor, I get asked that question personally on occasion.

Let’s get back to the Carter-Reagan recession. As noted on how bad it was, BOTH 1982 and 1983 had worse job losses than 2008, by percentage of workforce.

Has the MSM mentioned that? Or, most liberal blogs?

Uhh…

So, if you ARE under 35, try finding some historic perspective first, please.

Danp--

Yes, exactly, most people will use extra money for savings or paying down debt. That's why tax cuts are a dumb idea and govt. spending is a really good idea, less of that money gets sucked out. Who the hell is going to buy a new car right now unless they absolutely need to?

Eventually, we want to encourage those who are not debt-ridden to return to normal spending levels. Obviously, those who are bankrupt are out of action.

But Pelosi's chart captures the essential problem better than any speech or op-ed piece I've seen. It looks scary because it is scary.

Well Mr. gadfly, I am older than 35 and I know 1982 and 1983 were bad. But the point, which I thought was obvious, is that things are getting worse, and could likely get worse than the early eighties.

And then you can write a post six months from now and say I was around in 1982-83 and yes, things are now indeed worse then they were back then. Would that make you happy?

g. powell - We are in complete agreement on the general effect of tax cuts vs spending. I would add one other thing that Bush (with help) did to exhaust potential remedies was to make it more difficult to file for bankruptcy. This gave banks the green light to raise credit limits to the point where people found it too easy to overspend, whether on mortgages or credit cards.

The fundamental problem is that the so-called "economy" is overwhelmingly based on lots of people buying lots of crap that they don't need. When people stop -- or even significantly cut back -- on buying lots of crap that they don't need, the whole house of cards collapses.

The automobile industry for example depends on selling millions of new cars, every year, year in and year out, forever. If everyone in the USA refrained from buying a new car for a year, what would happen? First of all, people who drive cars would suffer little, if at all. Most would hardly even be inconvenienced. They'd keep driving their old car, or buy a used car, or ride a bus. But huge corporations would collapse, and millions of jobs would be lost -- because they are all dependent on people buying millions of new cars every year that they don't really need. Indeed, jobs are being lost and huge corporations are on the brink of bankruptcy just because people are not buying as many new cars that they don't really need as they used to buy.

Everyone seems to think that the answer is to pump a lot of money into "the economy" to "stimulate" people into buying more stuff that they don't really need, to keep the "consumer economy" game going as long as possible. At best that is only postponing the inevitable reckoning, the inevitable collapse of the house of cards. Meanwhile, of course, it does keep wealth flowing into the hands of the corporate oligarchy -- which is, after all, the ultimate purpose of the "consumer economy".

What we really need to do is to transition to an entirely new, sustainable economy, not prop up the "consumer economy". We need to replace the economy of endless growth, endless consumption of "resources" to produce "consumer goods" which then become "waste", while in the process concentrating wealth in the hands of the wealthy, with one whose purpose is to create real well-being for real human beings, living within the carrying capacity of the Earth's ecosystems, in a relationship of respect and harmony with our fellow creatures.

SecularAnimist: agreed.

Dear socraticshitforbrains comparing the recessions of the 1980s to now shows a startling lack of perspsctive. Your level of not understanding the problems we're faced with now is awe inspiring in that it's hard to imagine anyone could be that shallow.
Start comparing all the variables and not just the percentage of workforce. Let's start with total and yearly national debt.Personal debt rates.Lack of manufacturing base.Levels of home foreclosures. Banking sector strength.Balance of trade deficit. Foreign oil dependency.Median income loss. Concentration of wealth to an ever decreasing percentage of people. Two ongoing foreign wars. I'm sure I forgot a number of other salien factors.

(I've been trying to get a chance to make this point for months, but this is the first chance I've taken to say it.)

One thing that scares me is when people compare now to '29 and argue "even if the economy gets that bad, the social safety nets will lessen the pain."

That's true, but we forget we've lost other 'safety nets' and that other conditions have changed. Then, most Americans either lived on a farm or were maybe a generqation removed from the farm. They migt have been reluctant to do so, but they could go back, and at least they wouldn't starve.

People actually cooked then -- from scratch I mean. Not as a 'hobby' or a way of showing off to friends, but as a way to eat. And when you cook from scratch, you can always use some tricks to save money, maybe a cheaper cut of meat, maybe more 'filler' etc.

(To make my point, I'll challenge any of you to live for a week without using any frozen foods or prepared products. Spend a week cooking everything -- okay, boxed macaroni or breakfast cereals are okay, but with no additions. You want macaroni and cheese, you make it, not open a box. And turn off your microwaves for a week. You'll trade 'work' for 'money' and it usually isn't a good trade when you've got a good income. But can you do it, so if you have to, you'll be able to?

Entertainment was cheap. You could make a radio by hand. Books were cheap -- and authors didn't get million dolar advances. Sports had low admission prices, you could go to a baseball game for a quarter -- and you weren't paying anyone a million dolars a year, or even $100,000. Movie stars didn't get paid spectacularly, and you could afford movies. And you didn't have to worry about a wide-screen tv or upgrading your download speed, or which cell phone you'd buy. (And entertainment isn't a luxury, particularly in hard times, but a necessity.)

There are other factors that might make things worse. Unions -- and legalizing them was one result of the New Deal -- are good, but they can make it impossible for a desperate man or woman to get work, even if they'd settle for a low salary.

And, finally -- add others if you like -- the idea of government's right and need to regulate industry had been growing since the first Roosevelt, and the 'progressive Republicans' -- further left than most Democrats of the time -- kept the Harding-Coolidge-Hoover Admisistrations from rolling it too far back. So Roosevelt could build on a solid foundation.

Now we have to rip up Reaganism to start to rebuild a sane regulatory system.

There's been some talk this week about President Obama's dire warnings about the economy. Given that Americans had to endure eight years of governing through scare tactics, it's understandable that many are hesitant about White House rhetoric about possible calamities.
======================

Gosh, where has this talk been talked? No one I've heard talking talks like this.

Could it be that "some talk" is being talked on the TV and on Nice Polite Republican radio and over boardroom lunches at the Washington Post?

Given that the Professional Journalists™ never so much as said "boo" -- or were fired, if they did -- to "eight years of governing through scare tactics," what's most "understandable" is that this purported hesitance "about White House rhetoric" is a tire-screeching brakes-locked 180 from their previous norm.

It's appropriate to be hesitant at fact-free govern-by-the-gut scare tactics, and appropriate not to confuse those with fact-based, govern-by-reason explanations -- but these particular "some" sayers applauded the first till their palms were red, all through the last eight years, and now they show every sign of planning to spend the next eight kicking dirt on the shoes of the second.

It has nothing to do with who's in office, of course. It's journalistic objectivity.

Professional Journalism™ -- gotta love it!

Kind regards,
Dog, etc.
searching for home

@SocraticGadfly

Huge differences. First, and last, is that in the 82-83 Recession, the Fed still had tools available to them. Interest rates were sky-high as a tool to fight inflation. They could be lowered to stimulate spending. This time around they're at zero already with nowhere to go.

Apples and oranges indeed.

Maybe it's a typo, but Ambinder should have written "Want higher than that? Go to the 1980s." not "Want higher than that? Go to the 1970s."

The post WWII peak of US unemploment 10.8 % came in December 1982. This easily surpassed the highest laevel in the 70s which was 9% in May 1975.

A typo ? Very possible. However, I tend to suspect that Ambinder is influenced by the unquestioned stainding of St Ronald, and so, failed to recall that the US unemployment reached its peak when he was president.

At this rate Obama will soon be the Democratic president with the highest unemployment rate since Truman (at least). The current Democratic President peak since Kennedy was elected is 7.8% in July 1980 (OK I'm working on memory for the 60s but it's true).

http://www.economagic.com/em-cgi/data.exe/feddal/ru

we've lost other 'safety nets' - Prup

Let me add a few. 1) You could support a family with one income. My grandfather had a wife and 9 children. He was a meter reader. 2) Churches, grange halls, and other community centers played a larger roll. 3) Living without a car may have been an inconvenience, but few people lived more than 5 miles from work, either. 4) You didn't have Walmarts and McDonalds, chains so large that opening a small shop or restaurant made zero sense. 5) You weren't competing with Chinese labor.

"They're using the language of Democrats who criticized Republicans and the Bush-Cheney administration for trying to scare the American people into a state of suspended obedience to political authority. The terrorist threats might have been real, but we know now that a lot of the "facts" marshalled to support the rhetoric wasn't."

i'm confused. is he saying that democrats were right in their criticism? is he conceding that republicans were wrong?

if so, rather than coming to the conclusion that the bush administration was wrong and therefore the obama administration is wrong, shouldn't we be assuming instead that the people who got it right in the first instance are more likely to have it right now than the people who were wrong in the first instance?

"When Bushies sold the war in Iraq with rhetoric about ..."

I think you meant "Bushies and almost all Democrats".

It's funny how that little detail gets unremembered.

well, when i say "he," i don't mean marc ambinder ...

i'm tired.

you all understand what i mean, though, right?

Oops that's seasonally adjusted unemployment.

I don't want the first warning in the War on Recession to be an economic mushroom cloud.

If one accepts the concept of stimulus as an economic given, then the Obama arguments make sense, but...

1. Calling profligate spending "stimulus" (or "investment") is putting lipstick on a pig; it's still a pig.

2. It seems to many of us that the economic problem is DEBT and the borrow-and-spend profligacy of Bush and the Republicans. We were looking for change from a more fiscally responsible Democratic administration. Instead we get borrow-and-spend such as the world has never seen. Even the King of Spenders, George Bush, is probably shocked and awed by Obama.

3. Economics isn't well developed. We are still waiting for the One-Armed Economist to make an authoritative decision on whether: on the one hand, stimulus will help the economy; or, on the other hand, whether vastly increased debt and deficit and printing of money will hurt the economy. Frankly I don't see much difference between the proposed massive borrow-and-spend of the Democrats and the massive borrow-and-spend that took place under the Republicans.

Please don't too much stock in unemployment figures, they fail to capture a lot of real information.

Compared to the early 1980s, there are now a lot more workers classified as "freelancers" and "part-timers." When their hours are cut, this is not recognized as unemployment.

So the real situation now is probably worse than that captured by the stats.

Sorry, Luther, you're wrong. A large majority of economists, even those with two arms, understand what's going on and they prescribe the same thing: lots of stimulus spending.

You, on the other hand, sound a lot like Hoover.

i'm confused. is he saying that democrats were right in their criticism? is he conceding that republicans were wrong? - karen marie

What he is saying is that Dems criticized Bush for over-hyping the terrorism (and I would include Iraq/WMD) argument. Ambinder doesn't actually argue who was right or wrong, but it was an effective argument. But now Republicans are using the same language Dems used, but they're accusing Obama of over-hyping the bad economy. Here Ambinder thinks it is an unfair accusation.

I think, by the way, you can look at a lot of arguments Dems made against Bush, that Reps are mimicking. 1) Obama is spending all his time campaigning instead of working on problems. 2) Obama is too cozy with special interests 3) Obama is speaking like a fair minded person, but he's leaving himself some wiggle room to stay in Iraq, torture prisoners, keep Gitmo open, etc.

When you look at the issues carefully, they're nonsense. But when you only look at the language, it sure sounds like, "Everybody does it."

(To make my point, I'll challenge any of you to live for a week without using any frozen foods or prepared products. -- Prup, @13:00

The only frozen food we eat is leftovers that I've frozen myself and some vegetables (some from the garden and some off the store shelf). The only "prepared" food is prepared here, at home. The one exception is cheese but, even there, I make some of our own (pot cheese; much better than cottage cheese). It has been like that, for 35 yrs, not just for an experimental week.

It's, often, more expensive, than buying "ready made" (my husband bakes all our bread, for example) but I can't abide that oversalted (but otherwise tasteless) crap that the stores peddle as "food". May have to learn, though, to cut corners some more...

Secular Animist wrote,

"What we really need to do is to transition to an entirely new, sustainable economy, not prop up the "consumer economy". We need to replace the economy of endless growth, endless consumption of "resources" to produce "consumer goods" which then become "waste", while in the process concentrating wealth in the hands of the wealthy, with one whose purpose is to create real well-being for real human beings, living within the carrying capacity of the Earth's ecosystems, in a relationship of respect and harmony with our fellow creatures."

See: Draft Submission to the White House Task Force on Working Families http://econospeak.blogspot.com/2009/01/task-force.html

People are too freaked by the D-word. Not all depressions are "Great". That is why the one from the thirties gets the big name. Think of, say, 1921. Or better still, just think.

A short, sharp depression would have its uses. Indeed, the process could be like a controlled burn. I would welcome such a depression. It would be fun.