Sunday, April 25, 2010

The return of the Great Depression?

Glenn just got Vox Day's new book in the mail, The Return of the Great Depression, so I picked it up and started reading. It is not for the faint of heart or the economically hopeful. Vox Day believes that though there are a number of cheerleaders saying that the recession is over, it has only just begun. Day ends his introduction to this depressing topic by reminding his readers that the old maxim about the value of keeping one's head when everyone else is losing theirs applies as well to the field of economics as it does to the field of battle.

Day discusses the Japanese economic decline and lack of growth starting in 1988 and looks at where they are 20 years later. It's really a fact-filled book with a lot of graphs and charts to back up some of his claims. If you are interested in where this recession might be heading, it's definitely worth your time.

I have noticed that house sales (at least in the lower prices) in our area seem to be picking up and people seem to be out buying again--or at least, they are in the stores. I wonder if this is just the calm before the storm or whether things are improving?

Labels: ,

37 Comments:

Blogger dr.alistair said...

i will generalise by saying that we are in a transition from a manufacturing to service based industry. where we are near toronto large manufacturers are closing thier doors, though ferraris are still prowling the streets.

i see this as an economic shift, and while it is stressful for those out of work, the money is still here.

the middle class bears the brunt of this and this is where the musical chairs gets played.

3:11 PM, April 25, 2010  
Blogger Vox said...

I'm glad to hear you cracked RGD open, Dr. Helen. My answer to your question is that this is just the calm before the storm. This is why:

First, this graph on debt outstanding by sector should explain why things look superficially as if they are improving, while they are actually doing absolutely nothing of the kind. When you look at the red line, keep in mind the massive Bush-Obama stimulus plans that have allowed the effective substitution of G for C over the last six quarters is coming to an end.

The idea was that government spending would bridge the gap in demand caused by the "global savings glut" until private activity picked up again. The problem, as I explain in the book, is that there never was any global savings glut and the gap is structural, not temporary. The real issue is that the US economy has finally reached the outer limits of its debt-inflated demand after sixty years of near-unchecked expansion.

In other words, there is no policy fix and we are rapidly running out of bridge.

3:15 PM, April 25, 2010  
Blogger I R A Darth Aggie said...

i see this as an economic shift

Dr. A, I'm afraid this is going to be a paradim shift without a clutch. Expect a couple of stripped gears.

I'm hoping we can avoid the whole depression thing, but with the remaining Bush tax cuts expiring 1 Jan 2011, and talk of a VAT, as well as cap and trade, and the big hits public companies have taken via health care reform I'm afraid that any "recovery" will be strangled in its crib.

Oh, and there's the million or so homes in some stage of foreclosure at this time. And that the time between the beginning of foreclosure and the end is about 24 months. And the commercial real estate market seems to be just awful. I know in my locale, there's plenty to choose from.

Things will get much worse.

And I find Vox's link to the graph on debt to be stunning. I knew household debt was...large. But I never dreamed it was on the order of $14 trillion. Financials, too. Who the heck is owning all this debt???

4:01 PM, April 25, 2010  
Blogger kodell80305 said...

I've only started reading this, but thought I would mention that the kindle edition of this book is currently priced at $1.59. This is an incredible bargain compared to the hardcover version at $17.13. Good for those of us already at depression spending levels.

4:15 PM, April 25, 2010  
Blogger Vox said...

FYI: the various ebook versions of RGD will never be priced above $1.99. I selected that price to demonstrate the utility of price elasticity to the publisher. The final results are not yet in, but it is already apparent that they have sold more than 5x the Kindle versions they expected to sell at their usual price of $9.99. This suggests that no publisher should charge more than $1.99 for an ebook unless it is one by a best-selling author where demand for the book is indifferent to price.

It appears Amazon further discounts it to $1.59 for some reason, but I don't know what's up with that.

4:33 PM, April 25, 2010  
Blogger Chuck Pelto said...

TO: Dr. Helen, et al.
RE: Vox Day

He and I 'disagree' on a number of matters....in particularly my coming to the 'rescue' of fair-young-damsels he is beating up on. Something about 'blood in the water', as he put it as dove in for the 'kill'. [Note: Hence my being 'killed' by him on his site.]

However, he's rather bright and articulate. And, something of a 'christian', albeit he has a bit further to 'walk', in my honestly held opinion.

On the other hand, he'll be amongst the first to be 'martyred' when the proverbial 'push comes to shove'.

Haven't seen this particular 'book' he's done, but I suspect it will correlate well with what I've been tracking for the last 20 years.

Regards,

Chuck(le)
[Christianity is the companion of liberty in all its conflicts -- the cradle of its infancy, and the divine source of its claims. -- Alexis de Tocqueville, Democracy in America, c. 1835]

4:42 PM, April 25, 2010  
Blogger fred said...

I must admit that I am suspicious of a writer who is a regular on World Net Daily, the paper that continues to assert that Pres Obama is really a Kenyan...if so, is he also an elite marathoner?

5:10 PM, April 25, 2010  
Blogger br549 said...

You have lasted longer than most, fred. Have they upped the pay or something?

5:23 PM, April 25, 2010  
Blogger Master Doh-San said...

What we're really seeing here is a "dead cat bounce". The excrement is about to contact the oscillating ventilator.

8:22 PM, April 25, 2010  
Blogger thevirus8792 said...

I took your survey on your violentkids.org website but it didn't go through. I saved the link that said "internal server error". It looks like my answers are in there. I don't know if you got it or not but if you can somehow figure this out lol...

http://www.violentkids.com/cgi-bin/form_mailer2.cgi?your_age=17&race=White&state=NJ&community=Suburban&sex=female&feel_about_school=it+feel+like+I%27m+in+jail&dislike_school=Junior+year.+The+work+just+got+really+hard+all+of+a+sudden%2C+and+there%27s+all+this+pressure+to+go+to+college.+On+top+of+that%2C+I+have+a+job+to+pay+for+my+car+and+save+up+for+stuff%2C+so+it%27s+a+12+hour+day%2C+plus+homework+at+the+end%2C+when+all+I+want+to+do+is+sleep.+It%27s+too+much+pressure+on+you+at+one+time.&become_violent=school&why_become_violent=School+can+be+brutal.+If+people+constantly+make+fun+of+you+and+you%27re+to+shy+to+fight+back%2C+of+course+you%27re+going+to+want+to+retaliate+in+some+way%2C+violent+or+not.+&explain_criminal_baby=Lots+of+rules+for+minors+in+general+seem+to+%22baby%22+them.+Like+how%2C+for+example%2C+you+have+to+be+a+certain+age+to+consent+to+sex%2C+as+if+the+government+knows+us+better+than+ourselves+and+can+determine+when+we%27re+ready+for+sex+or+not.+Or+how+you%27re+not+allowed+to+sign+yourself+out+of+school%2C+even+when+you+are+18.+If+an+adult+can%27t+even+sign+themselves+out+of+school%2C+what+freedoms+DO+we+have%3F&classmates_like_you=don%27t+know&classmates_dislike_why=The+only+ones+who+don%27t+like+me+have+an+issue+with+judging+people+because+they+dress+weird+or+have+different+views+on+them.+They%27re+generally+close-minded+and+feel+superior%2C+I+guess.&angry_hit=yes&hit_result=No.+I+just+wrote+down+my+anger+or+talked+it+out+with+someone.+I+don%27t+think+it%27s+worth+getting+in+trouble+over.&fist_fight=no&school_fair=no&why_school_fair=Well%2C+what+I+explained+above+about+18+year+olds+not+being+allowed+to+sign+themselves+out.+And+how+you+get+such+severe+punishments+for+skipping+class.+I+mean%2C+they%27re+supposed+to+prepare+you+for+college%2C+where+they+don%27t+care+if+you+skip+or+not%2C+but+if+you+do+it+here%2C+they+rip+you+a+new+one.+We+also+have+a+fundraiser+at+my+school+for+the+seniors.+They+sell+boxes+of+chocolate+so+they+can+afford+to+go+on+the+trip+to+Florida+in+April.+They+have+a+new+rule+that+chocolate+can%27t+be+sold+in+school

9:14 PM, April 25, 2010  
Blogger TMink said...

I have to agree with fred on this one. The World Net Daily is pretty heavy on the birth certificate thing. It makes sense to read the work of someone associated with them with a bit more scrutiny.

Trey

9:49 PM, April 25, 2010  
Blogger Jordan said...

How does birtherism apply to economics?

12:31 AM, April 26, 2010  
Blogger Slow Joe said...

Is this guy a birther?

I never read WND anymore, but I wouldn't be surprised if a very good author decided to use large readership sites that have easier entrance standards to keep the career moving.

If this guy was really a birther, I suppose the trolls would have pointed that out. Instead, this is exactly like denying someone's legitimacy because they were on CBS after all the kooky and lame stories CBS has put out. It's about as kooky to think Bush was AWOL as it is to not realize Obama was born in Hawaii (kooky for both).

The guy makes a good case so far, and I've just bought his e-book and see absolutely nothing kooky about it. I can't stand birthers or truthers or deranged nuts. The real problem is that this clearly shows that Obama's hyped recovery is hardly the sure thing I keep hearing it is. Perhaps far from it. And the rabble of people who personally attack anyone who threatens Obama are out in force. The best they can do is note that someone ELSE on a site this guy put articles on is a total crank. That's just stupid.

If Vox where using that kind of stupid reasoning you would actually have something to complain about.

12:55 AM, April 26, 2010  
Blogger Vox said...

For those who are interested, I do not claim to know where Obama was born nor do I pretend to have any idea what Bush happened to know or not know at any point in time. Nor do I care. All that concerns me is the $955 billion of their combined 2008-2009 stimulus plans, which
as a percent of GDP was one-third larger than the first two years of the New Deal.

There is really no need for anyone manufacture a reason to justify their decision to not read RGD; if you don't want to think about the possibility that the reported economic recovery is not real, then don't read it. You'll find out soon enough, one way or another. And I would encourage everyone who reads RGD to do so as carefully and as critically as possible. I could certainly be wrong. I rather hope I am wrong No matter what happens, a lot of economists are going to be wrong, as can be seen in the chapter where each of the six most likely scenarios are laid out and some of the better-known adherents of each scenario are listed.

Anyhow, for those who doubt my ability to reason on such matters, here is a list of some economic and financial predictions I made in the past. I suggest these may be more relevant to the subject at hand than any amount of kookiness regarding things such as the correct location of the presidential manger.

4:02 AM, April 26, 2010  
Blogger Francis W. Porretto said...

"...the value of keeping one's head when everyone else is losing theirs applies as well to the field of economics as it does to the field of battle."

Yes, indeed -- but if we all "keep our heads," where will the crisis-loving politicians be? They need a reason to feel important, don't they? Are we to just sit tight and ride out the storm while our beloved statists' spines shrivel up from lack of stroking?

The original Great Depression was the trigger for "Great Engineer" Herbert Hoover, first of the 20th Century corporatists, to spring into action. He was going to save America the way he'd saved Belgium. We all know how that turned out -- but in crippling the American economy still further, he paved the way for the New Deal and the tide of social-welfare fascism that's swept the nation since then.

SO: America may have suffered near-irremediable damage to its freedom and its prosperity, but the suicide-from-despair-of-irrelevance rate among politicians and associated power-mongers plummeted and has remained low ever since!

4:58 AM, April 26, 2010  
Blogger Slow Joe said...

I want to say that $2 is a really good price point. Maybe a bit more than that, but in this area, it's an impulse purchase, almost like a free book.

I hope great but less famous authors keep pushing these trends. Now that you don't even need to physically print a book for me to read it, these low prices simply help everyone out.

7:14 AM, April 26, 2010  
Blogger TMink said...

I don't know that this author is distracted by birtherism, just that he works for an institution that is. For me, that is enough to read his work with a slightly to moderately more skeptical eye.

Bitherism may have nothing to do with econ, I suspect it has very little influence. But I would be a more careful reader because of the association, which was fred's point.

The book may be completely accurate, though I hope not.

Trey

8:14 AM, April 26, 2010  
Blogger Chuck Pelto said...

TO: All the 'Birthers' and 'Anti-Birthers
RE: [OT] Birtherism

None of that has anything to do with Vox's latest literary effort. He's said as much himself. And I'll take him at his word on that....until proven otherwise.

And THEREIN lies the problem with 'birtherism'. PROOF!

Where is it? One way or the other?

I judge high school debate in my state. Indeed. I was part of the panel that judged the state finals for cross-x this year. In ALL the competitions I judge, I want to have the 'proof' of the arguments being presented. That applies to real life as well as to the 'end-of-the-world-as-we-know-it' args presented by some debaters desperately grasping at straws.

Neither camp in the 'birthed' debate has provided compelling proof as to whether or not Obama is a Kenyan or an American, let alone allowed by the Constitution of the United States to be President thereof.

As for Vox's participation on WND as evidence that he's a 'birther', i.e., guilt-by-association....that's a bogus claim as well.

I know homosexuals. I know gangsters. That doesn't make me a homosexual gangster. And I'll wager that others here know people of ill-repute as well. Does that make THEM that sort? Not unless they practice the same behaviors.

Even Christ associated with prostitutes, tax-collectors and others of unsavory nature. Neverthless, He remained unblemished in the eyes of God. Not necessarily in the eyes of the powers-that-be of that era. Hence they're murdering Him.

Hope that helps....but I have some doubts with some of the people here....

Regards,

Chuck(le)
[Life is full of quirks. Try not to be one of them.]]

8:45 AM, April 26, 2010  
Blogger Chuck Pelto said...

P.S. Addendum....

Personally?

I suspect that the reason Obama has been unwilling to allow his birth certificate from Hawaii to be displayed in public as evidence of his being born in the United States is likely because it would show his legal bastardy.

That's ONE legit reason why we haven't seen the document in it's original form. I'm sure there are other reasons, aside from the idea that the document doesn't exist in the first place.

8:53 AM, April 26, 2010  
Blogger David said...

The future of the economy is dependent on many factors in addition to specific economic issues like excessive debt. Some of the factors that I think are likely to inhibit long-term growth include:

--the Democrats' war on all practical forms of energy production

--the proposed overregulation of venture capital and angel investing

--overregulation in general, as demonstrated in the awful "Consumer Product Safety Improvement Act," which is devastating many small businesses

--the continued dysfunctionality of so many K-12 public schools

--continued political power of the tort lawyers, leading to excessive litigation

--decreasing class mobility due to rising credentialism

These are not headwinds that it is easy..or maybe even possible..for an economy to overcome.

11:00 AM, April 26, 2010  
Blogger Slow Joe said...

Chuck, there's a reason you've been drawn to a shrink's blog. Follow that feeling a little bit further.

"But I would be a more careful reader because of the association, which was fred's point."

I didn't even see evidence he posted at WND. What a lame criticism. People's articles show up all over the place. Link me his article at WND if you want to say it shows he's a kook. If you can't, then your 'association' has utterly died. WND people have been on CNN and CNN people have been on WaPo, and they wrote your encyclopedia.

That kind of argument is simply stupid. You're implying he's a kook without any evidence at all. You folks tried to pin him as a birther, which obviously was incorrect. Now it's just vague darkness?

I do agree that I hope he's wrong. That would be lovely.

Pony up the $2 and read the actual book, and if you have the brains, debate the book's argument. If you don't have the integrity to do that, why are you here at all? To bash WND? To attempt to refute something you won't bother to read?

I realize this is pretty standard stuff if you say something that might threaten the Obama world view. I have read some WND articles. Does that make me a kook? Oh wait: apparently you read a bunch of them too, enough to catalogue their authors. You probably read it all the time, the way I read Democratic Underground.

Instead of warning people that this one might challenge the liberal bubble: read the book and come up with an actual criticism. Stop polarizing people.

11:21 AM, April 26, 2010  
Blogger Chuck Pelto said...

TO: Slow Joe
RE: How Apropos

That kind of argument is simply stupid. You're implying he's a kook without any evidence at all. -- Slow Joe

I never said any such think.

Regards,

Chuck(le)
P.S. Maybe you should take your own advice about reading things more carefully.

11:44 AM, April 26, 2010  
Blogger Slow Joe said...

Chuck, I didn't say you did, but you do come across as a nut. Sincerely saying this as a non-nut. You sound like a fruitloop.

I was responding, obviously, to the quotation I quoted. That's pretty easy to see, right? You're defensive for a good reason, though.

12:00 PM, April 26, 2010  
Blogger Chuck Pelto said...

TO: Slow Joe
RE: You're....

....'projecting', Joey.

'nuff said.

Regards,

Chuck(le)
[Wisdom and penetration are the fruit of experience, not the lessons of retirement and leisure. Great necessities call out great virtues. -- Abigail Adams]

12:15 PM, April 26, 2010  
Blogger TMink said...

I am not implying that the author is a kook, just that he hangs with some kooks and that I would look a little more closely to see if he indeed is a kook.

Honestly, I do not understand economics well enough to be an informed reader, so I am not the person to evaluate the book.

I moved my practice from a mental health center to a private, Christian run business. My new business cards had Christian fish symbols on them.

I had more than a handful of patients ask me about the change and what it meant, and a couple said that they were glad that they knew me as a person before they saw the fish. I said something like "Because you did not want to come see some person who would call you a sinner and say your problem is that you are not a good Christian."

They both said "exactly" and smiled. I accept that they were right to be prudent because I was associating myself with Christians in an obvious manner, this was not something that they knew about me, and they had reasons in their history to be leary of Christians.

Makes perfect sense to me, just like it makes sense to check someone out who has been hanging with birthers.

And the problem with Obama's birth certificate is not that it says Kenya, it is that has a "W" for race. His mom put down that he was white, and that completely goes against the narrative, so it is hidden.

Trey

2:04 PM, April 26, 2010  
Blogger Chuck Pelto said...

TO: TMink
RE: Heh

And the problem with Obama's birth certificate is not that it says Kenya, it is that has a "W" for race. His mom put down that he was white, and that completely goes against the narrative, so it is hidden. -- TMink

Hadn't heard THAT one before. But it DOES reinforce my suspicion of bastardy.

Regards,

Chuck(le)
[The Truth will out....]

3:25 PM, April 26, 2010  
Blogger TMink said...

Well, his dad was black, his mom was white, dad left before he was born, maybe mom was a little embarassed or whatever. It was the early 60s. So she put down white. It was a free country back then.

Trey

4:03 PM, April 26, 2010  
Blogger Chuck Pelto said...

TO: TMink
RE: Yeah....But....

It was a free country back then. -- TMink

....there's something about being a pathological liar. And there IS something about genetics, too.

This would go FAR in explaining his comportment as a politician.

Regards,

Chuck(le)
[Freedom is just a hallucination created by a pathological lack of paranoia.]

5:12 PM, April 26, 2010  
Blogger Art Deco said...

The real issue is that the US economy has finally reached the outer limits of its debt-inflated demand after sixty years of near-unchecked expansion.

Meanwhile, debt service ratios and financial obligation ratios have fallen to their lowest level in 10 years.

http://www.federalreserve.gov/releases/housedebt/default.htm

Dr. Helen, suggest when studying macroeconomics and economic history you read books by...economists.

11:27 PM, April 26, 2010  
Blogger Chuck Pelto said...

TO: Art Deco, et al.
RE: Reading Stuff

....read books by...economists. -- Art Deco

I'm reminded of a comment by a famous economist.....

Practical men who believe themselves to be quite exempt from any intellectual influence are usually slaves of some defunct economist. -- Lord Keynes

See the whole think HERE!

Regards,

Chuck(le)
[The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. -- F.A. Hayek, The Fatal Concept]

6:35 AM, April 27, 2010  
Blogger Vox said...

Meanwhile, debt service ratios and financial obligation ratios have fallen to their lowest level in 10 years.

You don't understand the issue, Art Deco. First, those lower debt service ratios are merely an artifact of the historically low interest rates that have been maintained since 2009-01. The Q1-2008 debt service peak to which you refer coincided with a prime interest rate of 7 percent; the prime rate is now at 3.25 percent so debt service is relatively easier even though the debt level remains high.

Second, you apparently don't understand what debt-deflation is or that the chart I provided above showed household and financial sector debt declining. To date, federal debt has increased enough to make up for those declines; the problem is that it cannot do so indefinitely.

Anyhow, if you wish to prefer listening to economists who did not see the crisis coming, still don't understand why it happened, and insist it is all behind us now, you are certainly welcome to do so.

8:00 AM, April 27, 2010  
Blogger ken in sc said...

Chuck, I agree with you about the birth certificate. I think it shows something embarrassing, such as that his name is not Obama, or his race is listed as Caucasian. His school records might show something similar, or maybe he applied for financial aid as a foreign student. Whatever it is, it’s more embarrassing than admitting that he used cocaine.

10:19 AM, April 27, 2010  
Blogger TMink said...

Heck, a lot of us were stupid enough to use cocaine. Having to discuss how you were not raised in a black family, how your people were primarily white, and you are the first black President is a puzzler.

It makes you wonder who is blacker, our current President or our last Democratic President.

Trey - who enjoys the show but cares not

2:55 PM, April 27, 2010  
Blogger Art Deco said...

You don't understand the issue, Art Deco. First, those lower debt service ratios are merely an artifact of the historically low interest rates that have been maintained since 2009-01.

Courtesy the Federal Reserve:

The household debt service ratio (DSR) is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.
The financial obligations ratio (FOR) adds automobile lease payments, rental payments on tenant-occupied property, homeowners' insurance, and property tax payments to the debt service ratio.


Which is to say a compound of interest payments and retirement of principal.

That aside, if you examine the Federal Reserve's statistics, you see that the nominal value of outstanding consumer and mortgage debt is declining.

What has occurred to the Federal Funds rate and such has only a faint echo in the rates charged on consumer and mortgage debt. The only component of interest charges on consumer debt that has seen much of a decline is the mean rate on auto loans charged by finance companies.

Nominal mortgage rates (at 5.08%) are the lowest they have been in a generation. That is unsurprising as we had a year-over-year decline in prices, something not seen since about 1954. Real rates are not abnormally low. One might also note that the financial obligation ratios of renters, who do not directly benefit from flux in mortgage interest rates, are at 15-year lows.

Second, you apparently don't understand what debt-deflation is or that the chart I provided above showed household and financial sector debt declining.

You got me there. My education in macroeconomics was at the hands of Paul Samuelson, who did not traffic in exotic theories of the business cycle.

Anyhow, if you wish to prefer listening to economists who did not see the crisis coming, still don't understand why it happened, and insist it is all behind us now, you are certainly welcome to do so.

They tend to be more cogent and impressive than autodidacts with a wretched excess of self-confidence.

6:37 PM, April 27, 2010  
Blogger Master Doh-San said...

They tend to be more cogent and impressive than autodidacts with a wretched excess of self-confidence.

So is that why they "did not see the crisis coming, still don't understand why it happened, and insist it is all behind us now"?

9:46 PM, April 27, 2010  
Blogger Vox said...

That aside, if you examine the Federal Reserve's statistics, you see that the nominal value of outstanding consumer and mortgage debt is declining.

Art Deco, you have repeatedly failed to understand that the decline to which you are referring is contained with the Household Sector aspect of the chart I linked in my first comment here.

You got me there. My education in macroeconomics was at the hands of Paul Samuelson, who did not traffic in exotic theories of the business cycle.

So was mine. That's why there are 7 references to Samuelson in the index of RGD. But because you know nothing about Austrian economics, Irving Fisher's Debt-Deflation theory of great depressions, or the Minsky Instability Hypothesis, you are not equipped to engage in an informed discourse on the subject.

They [economists] tend to be more cogent and impressive than autodidacts with a wretched excess of self-confidence.

It all depends upon what you find impressive. They have their credentials, their talk of recovery, and expectations of a weak dollar. On the other hand, I told my blog readers to go long dollar when the EUR/USD was at 1.45 a few months ago.

Seen what it's at today, Art Deco?

10:31 AM, April 28, 2010  
Blogger Chuck Pelto said...

TO: Art Deco
RE: You Obviously....

They tend to be more cogent and impressive than autodidacts with a wretched excess of self-confidence. -- Art Deco

....missed the irony of my quotation from Keynes, in which he warns people about following his own advice when he said....

Practical men who believe themselves to be quite exempt from any intellectual influence are usually slaves of some defunct economist.

Regards,

Chuck(le)
[History repeats itself. That's one of the problems with history.]

11:40 AM, April 28, 2010  

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