The Hungry Writer

An unemployed writer keeping sane during The Depression II.

Good News For People Who Like Bad News

Posted by The eDater on January 25, 2009

(with apologies to Modest Mouse…)

Donuts vs. pancakes - I'm not sure which I'd choose.

Donuts vs. pancakes - I'm not sure which I'd choose.

One of the curious things about the freshly unemployed is the muscle memory of certain habits. For instance, I’m no longer a business writer – perhaps I’ll do some freelancing on that front, perhaps another job will go that direction, but I’m more interested in travel anyway.

Yet, every day, I’m still checking the financial news. I’d say it has something to do with morbid curiosity, but it’s more than that. I’ve been reading the financial news for a couple years now, first thing in the morning, and until I change my set and setting (next week), I expect that’ll continue.

Anyway, in my perusals of the news of business, I came across this lovely gloomy summary of our current earnings season. There are still plenty of people out there who think this is just a particularly nasty recession. Maybe it’s my love of drama, my quest for grandeur in all aspects of life, but I don’t see that.

As you can tell from this page, I think we’re in the early part of a full-blown depression. In the 30s, the depression was in high gear for 4 years, and then the economy sorta limped along for another eight or so before it got moving again (with WWII). I think we’re looking at something more like that, than the dot-com bubble bursting. The scale is too big this time, with too many aspects that cut to the core of the economy.

Basically, although it wasn’t set off by this (but by the credit crunch), the underlying problem is we’ve got too much debt. And now, with everyone either laid off or scared of being laid off, no one’s going to spend anything until they’ve eliminated that debt (the average American cardholder carries between $6,600 and $9,900 in credit card debt (the median is much lower, and the mode much higher) – never mind other kinds of debt, like car payments and upside down mortgages).

The problem here is, of course, when people don’t spend their money but instead pay off old debt or save for rainy days, then companies don’t sell as many products. When companies don’t sell as many products, they lay off workers. Those people spend even less than before, hurting profits, causing more layoffs, and on and on.

It’s an awful cycle – one which has deflation as a symptom (though deflation itself is not the problem, not at the core). And once you really get into the cycle, it’s tough to break. Last time we really got into it, we had to have a world war break us out.

Well, I think we’re now locked into the cycle. We tampered with the free market and pushed our natural recessions back too many times, until the wave became so big no levee could hold it. Layoffs are accelerating. New jobs are nearly non-existent. The unemployment rate is officially 7.2% – although that’s a doctored number, dropping out many groups, like the chronically unemployed or the underemployed. If measured the way unemployment used to be measured – so you can compare apples to apples looking back at the depression-era – then unemployment is just under 14%, and going up fast.

In the worst of the 30s, unemployment hit 25%. We could – unofficially – hit that by the end of a bad 2009.

Occasionally I’ll talk about this good ol’ depression – it’s momentous, and momentous things are always interesting. Besides, my business-writing muscle memory remains, so I need to exercise now and again.


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