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2008â¦1929â¦1873 â What do they all have in common?
They were all the start of world economic depressions.
Even the politicians admit that the world is in a recession. Recessions are a part of the normal business cycle of growth and conciliation. Does this feel like a normal cyclical recession? If it doesn't feel like one, it probably isn't one.
'Is it recession or depression', is the question on everyone's lips, especially the millions without a job. The politicians avoid the recession or depression question because they want to avoid the extra pressure they would come under.
The attitude is to avoid asking the question, lest asking it makes it happen, like a child really who does not want to admit to knowing about Santa in case the presents stop coming. Asking the recession or depression question will not affect the future either way.
The definition of the term recession is imprecise at best. A depression is usually just described as a particularly severe recession.
Other sources answer the recession or depression question for most people with their depression definition. By checking our current economic state with their definition we can make up our own minds on this recession or depression question.
- A depression is more severe than the normal cyclical downturn in the economy.
- A depression crosses borders; it affects every country at the same time. Recessions follow the separate national economic cycles
- A depression causes worse unemployment than a recession
- A depression causes high unemployment to persist for an extended length of time
- In a depression credit availability falls
- Depressions in the past have been initiated by banking crises
- In a depression nations default or come close to defaulting on their international debts
- Bankruptcies are worse in a depression than in a recession
- International trade falls during a depression
- Currencies are devalued in depressions
- Consumer prices fall during a depression
You could show this list of features of a depression to any 100 people and ask them whether we were in a recession or a depression. 99 out of 100 would say we were in a depression.
Every single one of these characteristics of a depression is true today. The question should not be 'Are we in recession or depression', but 'What are the politicians doing to get us out of this depression?'
If politicians can stop us asking the recession or depression question then the question goes away until they are out of office. That seems to be the attitude, stick their heads in the sand and pretend it is a recession rather than a depression that might last for 10 years or more.
Most economists believe that the previous two depressions, which started in 1873 and 1929 were made worse by the decisions and policies of the governments of the time. It was only the preparations for war in the late 1930s that pulled the world out of depression. Will it take another major war to pull us out of the 2008 depression?
It is time everyone stopped asking whether we are in a depression and realized that we have been for nearly two years. Maybe we can force the politicians to act, rather than prevaricate