Depression?

When it comes to the economy I’ve had the feeling for some time that a number of chickens may be simultaneously coming home to roost.  This piece by the excellent Steve Fraser articulates the scenario far better than I can.  When you add it all up, I get the following factors potentially coming together to mess us up:

• Housing crisis
• The dismantling of regulatory structures put in place to prevent abuses like Enron and the Savings and Loan scandal (for example, the Glass-Steagal Act mentioned by Fraser)
• A collapse in the consumption economy based on free credit to already overextended consumers
• Oil price increases (possibly extreme, if peak oil kicks in)
• The US budget deficit (remember that?  Nobody talks about it anymore; when Reagan and GHW Bush ran it up it is was a huge topic of conversation, but now we’ve seemingly become inured.  Perhaps that’s how decadence and decline take place happen -- the first time it's a transgression and the second time it's no big deal.  In any case, the effect of the big deficits is to eat up the budget with interest payments and greatly reduce policymakers' room to pursue a Keynesian recovery strategy.)
• Growing economic inequality. One interpretation of the Great Depression is that too much of the nation's money ended up too concentrated at the top, among people who did not need to spend it, reducing the velocity of its circulation throughout the economy.
• Eco-economic disruptions caused by accelerating global warming
• The weak dollar.  I have no idea if a weak dollar is bad or not -- and I suspect economists don't either despite all their theories -- but it does scream "instability"
• Remember there's always the possibility of another terrorist attack messing things up as well, or a disease pandemic or other apocalyptic scenarios

We haven't had anything called a "depression" since the 1930s, and that naturally leads people to think they are a thing of the past.  But like any good economic historian, Fraser has the perspective to be keenly aware just how often in history similar complacency has been shattered by a quick slap in the face.

Comments

[cheap fluoxetine online]

Problem that exist from our history are really terrible. Those who care about are those who felt depression, hope that the problem and issue will not be arise in the future.