Starting to feel like 1932

[bigbadwolf]

In the Telegraph:

"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weniger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."

Last week the Bank for International Settlements called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us.

 

[bob]

My feeling is that, 100 years from now, people will look on the whole period from the dot-com bust--2000, painting with a broad brush--all the way up through now and on to whatever follows as a single epoch. I doubt it will look as severe as the Depression from that perspective, but it's certainly no picnic.

The interesting question for me is what the theme of this lost decade--and however many others may follow it--will be. Assuredly it will have something to do with the interaction between government and the economy, but whatever lessons one can learn from the experiences of the US, the EU, Japan, and China in this regard are in no way simple.

 

[bigbadwolf]

My feeling is that, 100 years from now, people will look on the whole period from the dot-com bust--2000, painting with a broad brush--all the way up through now and on to whatever follows as a single epoch. I doubt it will look as severe as the Depression from that perspective, but it's certainly no picnic.

Some of the people on the left are looking back thirty or more years -- for example David Harvey's A Brief History of Neoliberalism or Foster and Magdoff's The Great Financial Crisis. The deindustrialisation of the West, stagnating wages, rising inequality, fewer well-paying jobs, and the explosion of financial markets are looked on as different aspects of a crisis of late capitalism. If I have a bit of time, I'll write a few words on the latest such book -- Jack Rasmus's Epic Recession: Prelude to Global Depression -- that argues along the same lines (the book will probably be of interest to the people on this forum as it examine the financial aspects -- such as, inter alia, shadow banking -- in depth).

It would appear we're in terra incognita -- we're not going back to the world of ten or twenty years ago. The present situation is a phase change, or to use another metaphor, reflects a tectonic shift in the status quo. As such, talk of "recovery" is risible.

 

[bigbadwolf]

Another perspective, this one more nationalist:

And how has America fared in the new century?

One in every three manufacturing jobs we had in 2000, nearly 6 million, vanished. Some 50,000 U.S. factories shut down. We have run trade deficits totaling $5 trillion since NAFTA passed. The real wages of working Americans have been stagnant for a decade.

While China has resumed her 12 percent growth rate, the United States, with 25 million unemployed or underemployed, appears headed for a double-dip recession.

Though I think this is only part of a more complex picture. It seems the real winner has been global capital and the real loser global labor. These are arguably the bedrock realities girding the play of numbers in the financial markets.