Are We heading into our own 'Great Depression?'

[suburban george3]

Hearing the never ending flood of bad economic views and the "I don't believe it" attitude of our Commander-in-Chief", it has been said that we are in uncharted waters historically in terms of the economy. Look at some of the following points/impacts currently on our economy:

• We are still in a housing market crisis. Mortgage companies have gone belly up, banks are struggling, Investment funds are hurting, families have less wealth due to home value declines, builders are teetering on bankruptcy. We are nowhere near the bottom nationally.

• Energy prices are driving inflation up at rates not seen in 26 years.

• Credit is drying up as lending institutions/investors are reeling from losses and are tightening standards or just not lending at all.

• Consumers, who have massive amounts of debt, are reeling. Much of there debt has reset to higher interests rates due to poorly planned mortgages or the sudden inability to pay revolving credit accounts timely. Delinquincies/foreclosures/repossessions are at record levels. Utility disconnects are also reaching record high levels in many parts of the country.

• The banking industry is coming close to disaster. This weeks IndyMac closure by the government is case in point. Most of the branches of this bank had police presence to keep people from getting disorderly as they attempted to get what money they could out of this bank. Experts are saying many banks, such as Wachovia or Washington Mutual, could potentially fail as well. Many regional banks, such as Regions Financial, Fifth Third, or BB&T could all potentially fail as their charts all show potential devestation ahead. The FDIC's surplus fund was drained much more than expected by IndyMac and if there is a bank run (which could even be 'staged' by greedy investors wanting an institution to fail; all you'd need is 20-30 actors trying to run into a banks branch trying to withdraw legitimate accounts and get it on television) the funds may not be readily available to cover all deposits.

• The airlines are and will continue to struggle. Many smaller airports will lose passenger service and fewer people will travel. End result, thousands of jobs lost and revenue lost for many municipalities.

• Government, from local to national, are in tremendous amounts of debt. They have built infrastructure to accomodate our sprawling subdivisions from new 8 lane highways to school, libraries, etc. Now as tax revenues shrink due to lower sales and declining home values, many will have a hard time paying back this debt which will get their bond ratings lowered making future projects much more expensive.

• The automotive industry in the US is on the ropes. Chrsyler is clueless and in the hands of investors who probably will be restricted in raising additional capital. Ford's turn-around was stopped by the abandoment of the SUV and has little available cash to ride out a prolonged downturn. GM is in a similar situation, but probably can raise funds to stay afloat longer. The chances of all three going bankrupt are very high. Result: Tens of thousands of jobs lost in many communities across the nation.

• Retailers/Restaurants are hurting across the country. Many who cater to non-necessities are hurting as sales have declined and gas prices have curtailed many consumers eating-out habits. There have been big announcements in retail Bankruptcies/locations closing lately.. Steve and Barry's, Starbuck's, and Goody's are some that come to mind. Result: lower tax bases for cities and more job loss.

• We are in a protracted war in two countries on the other side of the globe that are devouring resources that we could use to circumvent a complete economic collapse.

Based with everything mentioned going against our economy, have we got ourselves into the "Perfect Economic Storm?" Will we be able to avoid something worse than a recession? If not, how bad can it get before we start recover? How bad will get in America? The rest of the world? Thoughts?

[erdogs]

We have a long ways to go before we can call this anything close to a "Great Depression". The best chance for that to have happened would have been right after 9/11, we made it through that and we will make it through this. During the Depression, unemployment was 25% and wages fell 42%. Total U.S. economic output fell from $103 to $55 billion and world trade plummeted 65% as measured in dollars. While I believe we are headed for a recession, a depression would be many times worse than what we saw in the early 90's. Lets hope it doesn't get that bad, but you never know.

[Lowerdeck]

From what I know about the Great Depression era, 2008 is looking awfully scary like 1929. The bank rushes are a real real troubling sign. I don't think we are exactly there yet, but we'll be floating near the abyss for a little while. There needs to be gigantic plummets in the stock market and a nationwide bank rush unseen since 1930. I think maybe the fact we have these signs of trouble before the sudden bubble burst might mean we'll stave off major problems. Perhaps the fact we've had increasing gas and energy costs for the past couple years means people are being smarter with their finances and how they spend in their lives.

I am horrified to picture what America could be like if we get into a situation where the 30s repeats now.

[Gard]

Well there was a little bit to relief today when it was found out that Fannie Mae and Freddie Mac are still sound and are unlikely to fail. Still yet, the Fed is throwing a bit of cash at them just to be on the safe side. The scary thing now though is Sallie Mae (the major education loans financier) could be in trouble and warned that there may not be enough money to disburse for student loans. THAT would be a very bad situation and drag higher education into the mess as students are left unable to finance their education.

[Cadeho]

At least Steve & Barry's is opening its first store in Richmond soon and Circuit City is opening a new store here although we worry about the company's troubles.

Scary stuff George. It has me worried too. I can't imagine our society in another depression. We need someone to do a documentary or mockumentary on what it may look like. But eh, I come from po folk, am po folk... so we'll be just fine.

[Raintree21]

I heard today that due to economic woes and energy prices (and potentially energy shortage), the government powers are beginning to expect civil unrest in the next year or so.

[dxartist]

I suppose our generation's depression would be relative if we actually get there. IMHO, we nowhere near a depression. If you really want to know, you need to ask our grandparents or people who lived in that era. They would be the best source since they experienced it first hand.

[Cadeho]

My grandmother was born in 1929 and she's been saying for years since Bush has been in office that we may repeat the 1930s. It may not be as bad as that but I don't think they knew it was going to be that bad. But, Richmond did fare a lot better than other places and we are still at the moment.

[Miesian Corners]

I think it's quite possible that an uncomfortable time is ahead of us. It's summertime and home heating oil is already $1.75 per gallon higher than it was in October. What will it be when winter comes around? Prices everywhere for everything are going up, but wages are either stagnant or declining. Scary times we live in.

[monsoon]

It's funny. Just a little over 5 years ago, the majority of American's were clamoring to go to war with Iraq, rename french fries, freedom fries, and follow our idiot of a president anywhere he wanted to take them. Now they see what that has brought on them. Bill Clinton's luxury economy, everyone working and low crime has all been lost. Elections have consequences and hopefully next time enough Americans will pay enough attention to not do this again. Then again maybe not.

[Lowerdeck]

It's funny. Just a little over 5 years ago, the majority of American's were clamoring to go to war with Iraq, rename french fries, freedom fries, and follow our idiot of a president anywhere he wanted to take them. Now they see what that has brought on them. Bill Clinton's luxury economy, everyone working and low crime has all been lost. Elections have consequences and hopefully next time enough Americans will pay enough attention to not do this again. Then again maybe not.

[Miesian Corners]

And the sad thing is there are people who believe that Clinton only benefited from Reagan's policies, and Bush is only getting a bad rap because he inherited the disaster Clinton's policies made.

[sean]

greed, graft, and usury... and lots of it... what goes around, comes around

[Spartan]

And the sad thing is there are people who believe that Clinton only benefited from Reagan's policies, and Bush is only getting a bad rap because he inherited the disaster Clinton's policies made.

[suburban george3]

Interesting Newsweek article contrasting and comparing what is going on now in the financial industry to what went on the 30's.

There are some concerning things in the report, about how now Washington and Wall Street are very intertwined where as in the 30's there wasn't much respect for the financial leaders by Washington. Also, some protections put in place decades ago have expired to help create our current mes..

Not to mention the spooky photo of a bank run in L.A. in the 30's with and IndyMac run.

[suburban george3]

Federal Regulators have taken over another bank, 1st National of Nevada with 28 branches (Also operating as First Heritage in Arizona and California.)

The FDIC said this was the cheapest and best solution for depositors in the bank. The banks will re-open Monday under the name 'Mutual of Omaha Bank.' All depositors, regardless of amount, will be able to access their funds.

Bill Uffelman of the Nevada Bankers Association said Friday the FDIC action "is a reflection of the times for the banks. It's a poor economy."

MSNBC Article about 1st National of Nev. Takeover

[monsoon]

According to the BBC this morning, China saw a big boost to it's economy in July mostly due the the USA taxpayer rebates that were passed out prior to that. Seems that most of that "economic stimulus package" ended up in Chinese hands. It stimulated the economy, the Chinese one.