Hardly a Depression
Posted July 4th, 2008 by xntryk1
output
July 3, 2008
Hardly a Depression
By JOHN STOSSEL
'It's been described as the most serious financial crisis since the Great Depression. And it brings with it grave dangers for all American families," said Martin Bashir on "Nightline." "Recession looms ..."
On the "Today" show June 20, David Faber referred to "the recession ... these tough economic times." Yet that very day first-quarter gross domestic product was revised upward again to 1%.
America is not in recession, and who knows — maybe we'll be less likely to have one if my compatriots would just chill. A recession is defined as two quarters of negative economic growth. We haven't even had one quarter of negative growth.
Yes, growth has slowed, and many people are suffering because of falling home prices and higher food and energy prices. These are real problems, but watching TV, you'd think we were in a recession so severe it must be compared to the Great Depression.
Maybe I was just watching at the wrong times and just catching some outliers? No. A study by the Business and Media Institute found that ABC, CBS, and NBC regularly "hyped similarities to the Great Depression."
BMI took a novel approach. It compared the economic news coverage by the New York Times, Wall Street Journal and Washington Post between October 28 and November 3, 1929, around the time of the stock market crash, with the coverage by ABC, CBS, and NBC between March 13 and 19 of this year.
"The difference between how the 1929 and 2008 media handled a crisis was profound — with modern journalists hyping every event." Today's coverage is much more alarmist. In 2008, few reporters pointed out "the differences between today's economy and the nation's darkest economic years, or bothered to note that America is not in a depression."
So let me stop here to repeat that. We are not in a depression. We are not even in recession. Get a grip, guys. We ought to point out that whatever today's problems bring, we are far away from reliving the Depression.
As Amity Shlaes points out in her book "The Forgotten Man: A New History of the Great Depression" by November 1933, unemployment had skyrocketed to over 23%. Think about that: 5% unemployment today vs. 23% during the Depression. Amidst today's talk of stock market "collapse," remember that during the Depression, the Dow plummeted to 90, a loss of nearly 75% of its previous value. "This downturn is to the Depression as a drizzle is to Katrina," Miss Shlaes, senior fellow at the Council on Foreign Relations, says. "In the Depression, America confronted deflation. There literally wasn't enough money. People made their own scrip, Monopoly money, to pay their bills. In Utah, they made a currency called the Vallar. Today, we are in an inflation. If this period is like anything, it is like the 1970s."
Positive news doesn't fit the narrative. On a day the Dow rose, writes BMI's Dan Gainor, ABC "Reporter Dan Harris seemed puzzled during the ... broadcast of 'World News with Charles Gibson' when he asked: 'The sky is not falling. Why not?'"
All three major broadcast networks are culpable. But BMI says CBS was the worst. That's typical when it comes to economic coverage, BMI added. "Business reporter Anthony Mason was even called 'the grim reaper' by his own anchor Katie Couric." "Early Show" co-host Julie Chen talked about "a world financial crisis" as if a "crisis" was just a given.
The state of economic reporting in this country is abysmal. We might laugh at it if it didn't have bad consequences. But the more people hear such inappropriate comparisons, the more apt they are to believe them and change their behavior accordingly — investing less and taking fewer economic risks — thereby aggravating bad economic conditions.
Mr. Gainor writes: "On March 17, 2008, USAToday.com reported the majority of Americans thought a new 'depression' was likely. 'Asked if the nation could slip into a depression lasting several years, 59 percent said it was likely, and 79 percent said they were worried about it ... 'Americans weren't just feeling the pain of an economic downturn. They were repeating what they were told in the mainstream media.'"
No wonder, as the Associated Press reported, "U.S. consumers are the gloomiest they've been since the tail end of the last prolonged recession."
It's true that GDP wasn't strong in 2007, but it did grow: 2.2% in 2007 and another 0.6% in the first quarter of 2008. There have been job losses, but that shouldn't come as a surprise. The remarkably unpublicized good news is the millions of new jobs that have been created: Before January of this year, America had had positive job growth for 52 straight months.
I am not saying the 1929 coverage was great; looking back, much of it was naive. I'm also not saying there are no economic problems today. But today's problems are no excuse for reporters to make glib comparisons to the Great Depression.
Mr. Stossel, co-anchor of ABC News' "20/20," is the author of "Myth, Lies, and Downright Stupidity."
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It's objectively true that we're not in a depression
So why are some people here getting upset at him pointing this out?
We may be in a recession maybe, but definitely not a depression.
Mr. Stossel needs to lose HIS job
.
In the last year alone,
my small city of Gardner, Ma has lost 2 of its biggest employers, and my company has moved its manufacturing overseas
Why, because the work that our people did is now being done in China and Mexico. Dominican Republic, Canada, India, etc.
We have a lot of people now without jobs, but if I know 100 people, then at least 12 of them are out of jobs.
So, I never believe the Government numbers.
But I do believe that Ron Paul would be better at making America work for Americans.
If you have been on unemployment for more than six months...
...they stop counting you as unemployed. The government in its infinite wisdom, decrees that anyone unemployed for more than six months is self-employed. The reasoning is that people just don't want a new job, because they have created thier own. But they did admit that the official figure of unemployed may be 1% or 2% short of the actual number.
unemployment--do they factor in unemployed independent workers
Is unemployment really 5%? How do they calculate it?
Beth
I dismiss
anything anyone says once they start spouting government numbers. Those numbers are wrong, wrong, wrong. Peace
I think it's a downturn
Soon to be a recession, hopefully not becoming a depression unless the government does something very dumb....or smart (national service, rationing, lower speed limits).
As to Starbucks, the fact that it existed at all was indication there was a lot of funny money around. Who the hell can seriously afford $5 coffee on a regular basis? And pay for all their other more important expenses, savings etc?
I Couldn't agree more....Its the 1970's all over again.
Rising prices....
Take 1972 as an example, a brand new suburban sold for $3,200
by 1979, seven years later it cost $15,500
Take 1976, housing prices, a new suburban 3/2 with pool sold for $33,000
by 1979, that same house sold for $59,000.
Interest Rates, low in 1972, a low as 3% climbed to + 13% by 1979
(This is yet to happen, but I fully expect it will)
Inflation in 1972, was getting out of hand at just 4% and Nixon & the Democrats thought that "Wage and Price Controls" were the answer, but by
1979 inflation was up past 8% or more.
Gold as you know, was pegged at $35 per ounce, but shot up soon after that.
Take gas prices in 1976, it was $2 per gallon in todays prices...by March 1981, thanks to the CIA inspired Iraq-Iran war, it was $3.41
http://zfacts.com/p/35.ht...
One of the reason Dr. Paul loves the free market and believes in it so well, is its resiliency. And this Resiliency comes from the Price system which functions as an Informational Feedback Loop -- meaning, its self adjusting.
Notice that in Ron's latest statement, he says that the market is stronger than the conspiring world banks which have for 15 years monetized our Congresses spending habits. He knows that the "Power of the Market" as Dr. Friedman would say, cannot be denied for long. The system is self correcting....and there will be hell to pay, but the market will and can get back to natural productive growth.... as long as we don't allow Congress to interfere and make the situation worse, as he notes FDR did long ago.
The 1970's was payment for the Vietnam war in many ways. Payment for Bush's wars is now upon us. The question is, are we going to make the situation worse via government actions, or are we going to lessen the burden & costs of big government and let the free market do its magic?
I cannot forget a funny cartoon. I wish I saved it. Let me describe it to you. I first saw this cartoon back in 1985 when the Chinese govt delegation to the USA announced that they were "giving up on the principle of equality"
The American cold war 'govocrats' did not seem to understand the significance of that statement, so worried they were about "another arms race". But I did and so did a Cartoonist. He drew a side of a mountain and called that mountain, the mountain of wealth. And upon that mountain he had old Uncle Sam high close to the top. On Uncle Sam's back was a very heavy backpack all loaded up with social welfare programs including the cost of military cold war goodies. He had Uncle Same carrying Pershing 2 Missiles high up on the backpack and he had a giant Social Security water bottle that was 2/3 empty, and so on. Down below Uncle Sam were Brittan and French hikers hiking up well behind him about half way down the mountain. They too had super big Back packs on, even bigger than Uncle Sam's which made their knees buckle and so they required walking sticks or canes to help them up the mountain of wealth. Then down below, at the base of the mountain, was a Soviet Russian hiker with a super enormous Backpack on, so big he had to crawl on all fours to go up the mountain. And there next the Russian hiker was the Chinaman Hiker who had dropped his super enormous Backpack, and put on a small little waist pack on. And as this Chinese hiker started up the mountain he says, "Just give me 20 years and I will beat you to the top old man!".
Well in 1985 Reagan and Congress could not imagine China would in 20 years out produce and be making just about everything. So they Grew Uncle Sam's Government BackPack, even bigger. By 2005 China still has not beat old Uncle Sam to the top of the Wealth Mountain, but in 2008 at the Olympics, they plan to show us and the world that they are poised to walk right past Old Uncle Sam as he gasps for breath under his crushing government debt backpack. What Ron Paul wants America to do, is downsize that huge backpack immediately to a small and manageable "day pack" so Old Uncle Sam can pick up the pace and win the race to the top of the Wealth Mountain. There is still some time left....if we hurry.
In Peace & Liberty,
Treg
Good points. This
Good points.
This hyperinflationary spiral is by design, not accident.
A lot of people in our movement get it wrong, though. They think the elites are crashing the economy on purpose to usher in the Amero, or they are crashing it to pay for the wars and staggering deficit. These may be purely secondary motives, but they are crashing it so the elites can get richer, and make more money. ('Ballooning it' would be a better term than 'crashing it', actually.)
They are ballooning petroleum prices to this end and printing paper money toward that end. The more the elites own in energy stocks, wells, and real estate, the more money they will make, while the poor are struggling to pay off their silly new cars and overextended credit cards.
Go back to your 1970s references. "Take 1976, housing prices, a new suburban 3/2 with pool sold for $33,000 by 1979, that same house sold for $59,000." And nowadays the same house with pool, after some renovation (covered by tax writeoffs, of course), sells for $150,000 or more.
Now suppose you had mortgages on 100 homes that size, just as an example. And suppose you knew that, within two years, the price of the home would double again despite the 'real estate bubble pop', and people would buy them at that price, because by then a gallon of gas would cost $8, and a 44 ounce soft drink would sell for four bucks?
You'd want that hyperinflation, wouldn't you?
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wow
Take off the quotation marks there and you've about got it, IMO.
I like how he cites the CFR and the gummint as his authoritative sources here. He really ought to know better by now. I'm glad he wasn't actually running for anything; I now know he's unworthy of holding any major office.
Wow.
I especially like this part:
Someone needs to get him a copy of any of Ron's speeches about the Fed inducing too much risky investment and how we're in need of a major correction, as painful as it will be. He clearly does not get that concept yet, at all.
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No One that is on the Old
No One that is on the Old Media is exempt from spewing garbage. Even the "nice guys" like John. The thing I like more and more about articles like this is because of reverse psychology I know what to do. Unfortunately a lot of people get sucked in. Of course John won't have to worry about a thing will he?
I like Stossel, but he
I like Stossel, but he occasionally gets too Pollyanna--perhaps because the only way the powers that be will allow a libertarian on the airwaves at all is if he's not an alarmist.
We're not in a depression, though, if that's his point--we are in fact in an increasingly dangerous and accelerating inflationary cycle. Some things are worse than a depression, as the Weimar Republic discovered early in the Twentieth Century.
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John's been drinking too much government issued Kool-Aid
Even coffee shops are closing down. If it were not for military spending, using fiat money as their currency, my home town would be a ghost town. The stock market is pure fiction these days. Over half of the listed companies trading "at some price" don't even turn a profit. The markets keep trading though, due to all the foreign money that has been siphoned out of the American driver's pocket at the fuel depot. And look at the ownership of most corporations, you'll see that 85%-95% are owned by mutual funds that are holding everybody's retirement funds. You may own shares in a mutual fund, but you have no say in the governence of the companies that the fund owns. Only the fund managers, and they are in cahoots with their investments. And you can't get your money out, either. You've been suckered by the bait and switch promoted by Congress: Give us your cash today, and we'll give you some tax favors, and some promises, and some goodwill, and some rosey economic talk, and maybe, just maybe you'll get some of your money back - after we TAX it! Smoke and Mirror, folks.
You got to account for REAL
You got to account for REAL inflation - 12 percent - and real unemployment - closer to 10 than 5 - before you start putting together all of these statistics. The government curves these two in its favor by not counting commodities in inflation and by not counting folks who fall off the unemployment rolls.
Regardless of how you feel about the numbers, we are staring at a deficit and impending deficit, socialist entitlements, at over $60 trillion. There is no way this country can avoid a depression without dealing with this.
The dirty little secret is social security is up in 2017 because of all the IOUs in the 'trust' fund.
Stossel
John makes some great points. Many here are so caught up in certain possible outcomes, they are not objective any more. There are serious risks, no doubt, but there always have been, for the 35 years I've been paying attention. I think John is correct in his analysis here, although I am busy prudently preparing for bad times, just in case. Always a wise idea to be prepared.
Worst June for the S&P 500 & Dow Since the Great Depression
Visit this thread and DIGG: Worst June for the S&P 500 & Dow Since the Great Depression
Also, worst half year for Dow since 1970.
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The laughable part
about Stossel's article is that he claims that the media is all gloom and doom about the economy, when actually they are propping it up with propaganda such as his.
They're actually not saying nearly enough about the decline. And the reason for that is that the money is only backed by "full faith and credit of the American people", and no real physical backing. No physical backing, that is, unless you consider all the property that the gov't will confiscate from the citizens if there is a shortfall. So, if the faith in the currency falls away, so does the dollar.
It's all a Ponzi scheme.
Good point. The media is
Good point. The media is corporate-owned and is doing its level best to broadcast "There aren't any sharks on our beaches!"
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Another laughable part
is how he so easily accepts the government lies about GDP. When will most of these idiots wake up and realize that these government figures are nothing but lies, oh wait, they can't do that because then they wouldn't be shills for the system any more.
And the really mystifying part is...
Stossel is NOT a "shill for the system." He's usually VERY libertarian. So I'm confused as to why he's falling for gov't lies in this instance...
http://groups.yahoo.com/g...
He's a big media-approved
He's a big media-approved libertarian, like George Will, Tucker Carlson, et al. In other words, it's okay to be a libertarian on the corporate TV networks as long as you (a) Are 35% Republican, (b) Are never anti-government, and (c) Only tell the truth when it doesn't threaten the Status Quo.
I would call Stossel a "one-testicle libertarian".
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