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Friday, December 05, 2008

Is the US Witnessing the Start of Another Depression?

Hello Papamoka Bloggers - I went to Wikipedia, one of my favorite places, and looked up the definition of a depression.

Their definition is: "a rare but extreme form of recession, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression."

So, let's see, the US Commerce Dept. reports today that US companies axed 533,000 jobs in November, 183,000 more than was expected. It represents the 11th MONTH IN A ROW OF LOSSES!

Most economists today are calling it the worst slump in employment since 1974. The federal unemployment rate stands at 6.7%, but most economists believe the number is MUCH HIGHER because it doesn't account for people who fell off the rolls or who are underemployed. No matter what, they say that it's evidence that the country is in a recession.

Yea, right, I think it's more likely an early depression. I know many say that you need 10% or 20% unemployment to claim a real depression, but I think that's beginning now. Construction, finance, telecommunications, entertainment, auto and retail are all starting to announce HUGE LAYOFFS. If Congress allows the auto companies to collapse, in my humble opinion, we are witnessing the start of another depression.

The last one lasted about twenty years. How deep will this one go we all need to ask? I think it's beginning NOW! I could be wrong - I do read lots of different opinions about it. So, what do you think? Let's discuss it if you're willing.

Michael Boh
Papamoka's Left Coast Contributor
from Our Rants & Raves Blog

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Anonymous Anonymous said...

I think you hit this one right on the bullseye! And if the congress does not bailout the big three automakers, the domino effect through the supply chains in America will be deafening. If the big three go down then so does the company that supplies the tires, the radio, the carpets, the electronic chip makers, rubber hoses, and every single company that counts any of the big three for more than 1/2 of thier business. Then you have all those car dealerships in every single town, where over one million people work for a descent wage.

1:08 PM  
Blogger B.J. said...

Anon: My friend Shari is employed by Delphi, which retools machinery for GM. Most of Delphi's business is with GM, so her job is on the line. Two days ago my longtime friend Bill, a reporter for a Gannett Newspaper for the past nine years, was laid off. Gannett is cutting newsroom and online staffs across the country. So, it's hitting close to home, huh, Papamoka? Wait until the December figures come out. Michael, I think you are right - sadly. We don't know where this is going to end, or how bad it will get before it gets better. We are a spoiled people. BJ

3:58 PM  

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