"I Blame the Wine"

Tim Duy takes a wrong turn:

I Blame The Wine, by Tim Duy: Tonight I am ensconced in my preferred Portland hotel in anticipation of an early morning presentation. A good opportunity to work in the holiday-decorated lobby bar, listening to Christmas music while logging some quiet work hours throughout the evening.

How quickly, however, a quiet evening can become unsettled. A second glass of wine and an inadvertent click on a link brought me to Larry Kudlow’s webpage. Drawn in, not recognizing the danger, I clicked again and again, and landed in the Wall Street Journal’s op-ed section. The horror of a Peggy Noonan column greeted me:

One of the weirdest, most perceptually jarring things about the economic crisis is that everything looks the same. We are told every day and in every news venue that we are in Great Depression II, that we are in a crisis, a cataclysm, a meltdown, the credit crunch from hell, that we will lose millions of jobs, and that the great abundance is over and may never return. Three great investment banks have fallen while a fourth totters, and the Dow Jones Industrial Average has fallen 31% in six months. And yet when you free yourself from media and go outside for a walk, everything looks . . . the same.

Everyone is dressed the same. Everyone looks as comfortable as they did three years ago, at the height of prosperity. The mall is still there, and people are still walking into the stores and daydreaming with half-full carts in aisle 3. Everyone's still overweight... Nothing looks different.

It won’t be a real recession until we are all covered in nothing but rags. Still, look at the bright side – we will have finally cured the obesity epidemic. We may be poor, but at least we will be thin.

I hear this kind of commentary frequently: “Of course we are not in a real recession – look at all the cars at the mall!” Yes, people continue to shop – they shopped during the Great Depression as well. They even went to movies. Economies generally don’t spiral into oblivion. And on any given day, we generally don’t see “everyone.” Mall traffic is the worst of the anecdotal evidence. It tells you nothing about the composition of spending. Does Noonan know if the shopper has downgraded from Nordstrum’s to the Gap? Or if they purchased only one shirt when they normally would have purchased three? And what exactly does a sale of only one shirt imply for the firm’s business model?

It is simply much more complex than the number of cars at the mall. Noonan forges on:

In the Depression people sold apples on the street. They sold pencils. Angels with dirty faces wore coats too thin and short and shivered in line at the government surplus warehouse. There was the Dust Bowl, and the want of the cities. Captains of industry are said to have jumped from the skyscrapers of Wall Street. (Yes, those were the good old days. Just kidding!) People didn't have enough food.

Suicide is funny, right? And again with the food. Perhaps Noonan, so convinced that people are still eating, should have stopped by the Eugene Register Guard website this weekend:

Given the widespread and escalating economic hardship throughout Oregon and the nation, it’s no surprise to see it trickling down to schools.

The most easily quantifiable measure is the number of students signing up for free and reduced-price meals through the National School Lunch program. Though statewide numbers aren’t yet available, the number of children receiving subsidized meals in the Eugene district is up 8 percent over this time last year. In Bethel, Fern Ridge, Creswell and Springfield, it’s up by at least 10 percent.

“I think the biggest thing we noticed during registration this time was a lot more families moving in together to lower living expenses,” said Jim Crist, principal at Springfield’s Ridgeview Elementary School, which saw the percentage of students signed up for free or reduced meals swell from 31 percent last October to 43 percent this October.

Cafeteria manager Sharon Gregory said the change has been especially dramatic at breakfast, served before school for 95 cents for kids who pay in full.

Apparently more people don’t have enough food compared to this time last year. Just not the people Noonan associates with.

Noonan continues:

I asked an economic expert a few weeks ago if a second Great Depression would come to look at all like that, like a catastrophe, and he said no, not at all. In 1930 we had no safety net. Unemployment benefits, food stamps, welfare, an interlocking system of city, state and federal services—these things will keep it from being so bad.

Not a bad answer. But after acknowledging the benefits of a social safety net, Noonan then laments the potential widening of that same net:

But in tough times we will surely expand unemployment benefits, and welfare, and food stamps and housing assistance, which will mean more and greatly accelerated spending, which will mean bigger and steeper deficits, and higher taxes, with the one feeding on the other, which may mean an economic death spiral comparable to, say, Britain in the decades after World War II, its economy mired and held down by government control and demands. It continued more than a quarter century, until the change of economic thinking encapsulated in the phrase "the Thatcher years." Is that what this will be?

The safety net has so far prevented economic calamity but will cause an economic calamity if expanded. No thought given to the possibility that a safety net designed for a typical postwar business may be, and is likely, insufficient to cushion the blow from a deeper and longer recession. Just a quick leap from a 26 week extension of unemployment benefits to the crushing weight of socialism.

Noonan concludes that the recession is all in our heads:

So where is GDII happening? Right now mostly in conversations between wives and husbands, in families and among friends, about selling, about digging in, about layoffs, and not taking chances, and reduced income, and fear.

So the 11.8% of the workforce unemployed by the U-6 measure, or the 500k+ filing for unemployment insurance each week are not having conversations with their families about where the next rent payment or trip to the grocery store is coming from? Would Noonan be happier is that number was 15%?

You get the idea….

Comments

[esb]

The Heathman, no doubt.

Watch out for the honey traps.

Or ... watch out for them.

[wjd123]

The financial community needs to reassure itself that there won't be too much change. Noonans' piece is a comfort blanket it can lie down with while it sucks its thumb.

A few months back Summers wrote a piece in the Financial Times questioning the legitimacy of free trade and the social responsibility of multinational corporations which play one nation off against another in order to avoid taxes.

That's thinking anew. Just what Obama called for, right? Not if you belong to the financial media. It doesn't want fresh thinking it wants to be reassured. In Summers' case it dose so by fixating on Summers' credentials as a free trader. Why let Summers' thinking get in the way of stereotyping when examining Obama's economic team.

Instead of economic news from the media, the costomer is getting the economic communities need to reassure itself.

[Lafayette]

Just a thought

TD: It won’t be a real recession until we are all covered in nothing but rags.

Well, Tim, that statement is about as ludicrous as the Noonan column.

Of course we won't be thin or in rags unless, of course, we get into a foolish nuclear war with Outer Tasmania. Then we can wonder if the problem is not truly systemic ... perhaps, permanently.

The truth of the matter is that our economy has evolved. We are living a recession, not a depression, despite wild stock market volatility and high unemployment rates. No long lines at the soup kitchens across the nation, that hallmark of a True Depression. The historical paradigm has changed since the 1930s. Thank God.

Besides, Peggy is trotting the streets of Manhattan. She should go a bit further afield before coming up with her mindless tidbits of observational myopia. Some people ARE hurting.

Should we not ask of our Blog Pundits to put to themselves a simple but highly erudite question? It is this: If I have really nothing of true value-added to offer (to the General Blather), should I add anything at all? May I not be missing an Excellent Opportunity to say absolutely nothing?

Just a thought ...

[Sarah]

It's always the same. The comfortably off refuse to recognize their own good fortune and prefer to think of themselves as particularly deserving. My father remembers his parents and grandparents discussing with contempt all the 'lazy' people who 'didn't want to work' during the Great Depression. Apparently the unlikelihood of a quarter of the workforce suddenly deciding that they preferred to go hungry rather than get a job didn't strike them.

Sadly, it often takes personal experience to stimulate the imaginations into the channels of compassion.

[reason]

She would have written the same thing in 1930.

[reason]

http://www.ritholtz.com/blog/2008/11/mega-bear-quartet/

[reason]

But she is not correct it is all in our heads. There IS a huge real balance sheet problem, the result of years of big trade deficits, negative savings rates and a credit boom. Economists need to look at stocks, not just flows and prices.

[One Salient Oversight]

Britain post WW2 is always a good place to look to see how dumb policies managed to fail and show how dumb they were. But to use Britain as the only example and not use others is short-sighted.

Perhaps the best post-WW2 European economy was that of Germany. Despite not getting as much Marshall Plan money as France and Britain and others, they managed to become the dominant economy in Western Europe.

The reason, however, was not a strict ideological adherence to free market principles. Nor was it the result of hard work or entrepreneurship by the Germans that somehow exceeded those of its neighbours. Nor was it due to the presence of allied troops spending their cash.

The reason why Germany succeeded while Britain failed was because Germany practiced Ordoliberalism - a free market nonetheless limited by enforced regulations operating with a generous social safety net. Up until the 1970s, Germany and Western Europe were outperforming the US in per capita economic output and unemployment.

Ordoliberalism is a centrist economic position - it values the power of the free market while acknowledging its failures and providing for society when these failures occur. It is neither a planned socialist/communist economic system nor a free-market utopia.

Certainly Germany has its problems... but it became Europe's economic and industrial powerhouse not by following a laissez-faire model, but a model which takes a realistic view of markets and societal needs.

[Beezer]

The truth of the matter is that our economy has evolved. We are living a recession, not a depression--Lafayette

Tire shipments to New England are down 25% YTD--they were actually up YTD as of June. There's been no real income growth for the working class the past five years. For these folks, there's been a recession for quite a while.

The fab plants are all built. Hollywood and Ballywood are percolating right along. People still get sick and the legitimate drug business seems fine. Government workers and, apparently, academia, trundle along in their preferred positions.

It's just that there's no major innovation to trigger growth. The world has enjoyed a century and a half of startling innovation, but we are in a maintenance economy at the moment. It feels like a recession because, without innovation of some major kind, it is. We're not growing.

It is time to "tidy up." Infrastructure improvements are needed. Idle industrial capacity needs to be re-fired to produce the engines of renewable energy and transportation.
Fisheries need to be protected and re-charged.

The natural enabler for these things is government. With strong government commitment and direction, private wealth can be eased out of its fetal position into the effort.

Jobs are created. Income is created. Savings is created. Confidence is created. Innovation soon follows. Deficits can, and do disappear.

[stunney]

Ah, the good old Thatcher years!

Simply marvelous, so they were. Unemployment tripled. So did poverty rates and homelessness.

Oh, and inflation was running at 10.3 percent and falling when Thatcher took office in 1979. When she left in 1990, it was running at 10.6 percent and rising. So much for union-busting and deregulatory zeal 'curing' Britain's post-war inflation proneness.

Her party never got even 45 percent of the vote in any of her three general election victories. Thatcher is easily the most hated British PM in modern times. She was finally brought down by the sight of massive rioting on the streets of London in protest at the Thatcher government's highly regressive Poll Tax.

She was a disgusting rancid-brained bitch. A bit like Peggy Noonan, in fact, only worse.

[Lafayette]

Theory of Economic Cupidity

reason: Economists need to look at stocks, not just flows and prices.

Agreed, especially since, clever little bunnies that we are, we listened to the Siren Song of the Stock Pundits singing "Why save at a measly 3/4/5% when you can get annual long-term gains of 10/12/13%, if not more? Hey, get with it, bank savings accounts are stupid!"

And so we poured our savings into the equities; which the Fed thought perfectly logical, exempting themselves from the insight that Risk Management is quite a different animal from Savings Management. It's got teeth.

During the dot.com boom, we were taught that "Technology is the way to go!" So, anybody with a backyard garage opened a Dot.com Company and invited the press to explain their Business Paean -- no not Plan but Paean (as in, "paean - a song of praise, joy, or triumph"). We bought in with mindless euphoria.

Many got rich over night, many more lost their shirts. However, it wasn't suppose to happen that way -- after all, the "stock market investing is for the long-term" we were told, isn't it?

So what are economists to do when a stock market appears like a sucker's market ? What theorem are they to base their value judgments and therefore thinking/conclusions upon? Ricardian equivalence? Veblen's Conspicuous Consumption (after all, everybody's doin' it)? Uh, uh -- no way, José.

The fact of the matter, I suggest, is that we have no integrated theory of Risk Management and how it affects economic variables, especially Consumption. People bought stocks because they thought that the longish Dot.com Bubble was, in effect, like having a personal printing press in the cellar.

We have a pet theorem about how Savings generate funds that are placed back into the economic mechanism as Investments by banks -- the latter making their profit margins from the returns. But, that's a bit antiquated, smelling of mould, does it not?

Hey, if we can refinance a mortgage and "print-money", why not manipulate those savings as represented by mortgage payments? Made sense for a long-time, didn't it?

All of which brings us to where? Here, I suggest: The old theorems about Savings are totally out-of-date within present economic discourse. People are still saving for a rainy day. It's just that the Credit Union is not the target of preference. They are hooked on even higher returns.

Frankly, that is perfectly normal reasoning. What is abnormal is to place all your eggs in one basket and that basket is highly risk volatile. Equities, OK. But, realty prices are volatile? Yes, when they went up so sprightly and have come down in such a free-fall fashion ... that's volatile.

There is a new set of economic phenomena working their wonders. And, we need to get a good hold on it, which we do not presently possess. Because it is not behaving to the general benefit of all, which is always dangerous territory.

I'd call it the Theory of Economic Cupidity. We are no longer a society willing to accept long-term accumulation of wealth, which is transfered inevitably to the next generation. We want more nowadays from our savings/investments and we want it sooner to enhance present consumption. Meaning that we are quite willing to the Risk Premium inherent in equities. And, evidently, in Realty as well.

But meaning also, perhaps, that we are mortgaging the future?

[bakho]

Does anyone worry about the run on food pantries? A lot of people are using food pantries based on volunteers and donations. Food pantries are part of a barter economy that detract from retail business. Wouldn't it be more countercyclical to provide more food stamps and circulate money through paid jobs at retail groceries?

This is not a knock on food pantries that do a fantastic job, but their resources are being over taxed.

[ken melvin]

Lafayette - 'tis all best seen as a transfer of wealth, methinks.

[oops]

"It won’t be a real recession until we are all covered in nothing but rags."

perfect.

[For Some Time]

Dear Sarah,

Your note above really stuck me. My father talked about how his father had three years of zero income during the Depression.

Imagine going three years without an income. Making do with growing your own food, barter, etc.

It certainly made my father more realistic about hardships.

[Noni Mausa]

Our Lafayette said: No long lines at the soup kitchens across the nation, that hallmark of a True Depression. The historical paradigm has changed since the 1930s. Thank God.

Hmm. I would say the social environment has changed since the 30s. So the same level of economic trouble and unemployment will bear a different face.

Elizabeth Warren, who works in bankruptcy law, says that there are as many or more families in bankruptcy as are divorced -- "The difference is, you can't hide a divorce, but you can sure hide bankruptcy." The great majority of people do, hiding it from their friends and families and even their own children.

As for Noonan's babble about things looking the same, what did she think -- that people would throw away their pre-recession clothes and cars for older shabbier ones? Sheesh. I have clothes that are 5, 10, even a treasured 15 year old sweater, my clothes look the same from decade to decade but my bankbook? Not so much.

In a way it is reassuring that things "look the same", but not the way Noonan thinks. Financial collapses in a household can either show up as a slow leak -- dialing down the price of groceries, clothes, vacations -- or as stairstep drops in the big stuff -- moving from home ownership to an apartment, from university to a trade school or to a job that doesn't require a piece of paper, from the freedom of a car to the isolation and loss of choices that public transit generally implies.

Intuitively I think the "slow leak" part of the family budget has flattened about as much as it can. We are, or will be, seeing the pancake-style collapses begin to gather speed now, and the difference is that these sorts of collapses are very difficult for a family to recover from.

Noni

~splitting her infinitives since 1958~

[Dunc]

by "stocks", I think he meant inventories, not papers.

[Real Person from the Real World]

The problem is that people with money live in a bubble populated by other wealthy people. They look at themselves, and think things certainly aren't that bad, because their lives and buying/saving/blue chip health care go on and on. Maybe some deadbeat relative gets laid off, but he had it coming! This is why you get bloggers on new articles about the crisis, complaining about the mortgage buyers not reading the contract, and how it is their fault, not the mortgage brokers with their fees and corner cutting, and certainly not the banks, with their derivatives and usurious credit fees, and not the corporations that have outsourced our jobs and imported h1bs to compete for jobs in tech.

says...

The lesson we should take away is---- don't read the Wall Street Journal editorial page for anything other than amusement.

[save_the_rustbelt]

Noonan should stick to speech writing, well no, maybe retirement.

On the other hand, Robert Rubin and his home boys worked to destroy manufacturing jobs to improve profits on Wall Street, and the home boys are now the Obama economic team.

How does that go?

"Blue collar workers don't need good jobs, we can give them the Earned Income Tax Credit!"

This is ugly and will get much worse before it gets any better.

[save_the_rustbelt]

From the Boston Globe..........

"Big Business transfers its loyalty, money to the Democrats"

That didn't take long.

[Holly W.]

STR: I saw that headline in my Globe this morning, too. Do you think we can encourage the Democrats to "just say no"?

[Lonesome Moderate]

It won’t be a real recession until we are all covered in nothing but rags.

This is not an honest characterization of what Noonan is saying here, which she summed up in the final paragraphs:

As for what we see, in economic stories there's always a lag. New York in 1990 did not know it was in the midst of coming levels of affluence unseen in all of human history. The storefronts in my neighborhood at that time were tatty, tired. At some point in the next 10 years everything in the neighborhood was updated and started to gleam.[...] I suppose as months and years pass it will all gleam less, with a steady falling off from perfection. It will roughen.

[howard]

to pick up on stunney's point, since noonan is unsurprisingly vague about the horrors of socialist england, i used 1945 - 1980. real gdp growth per cap in england during that time grew 1.92X. real gdp growth per in the us during that time grew 1.77.

the horrors of socialism!

more seriously, what got thatcher elected wasn't a widespread belief that the state was oppressing capital but a widespread belief that the unions within the nationalized industries had grown too powerful (see the inflationary cycle in england in the '70s).

more data along these lines available here: ttp://www.measuringworth.com/index.html

[Organic George]

During the Great Depression Republicans stood in the well of the Senate and declared there was no depression, nor was there a dust blow. (I was doing research on Pare Lorentz, the film maker who produced "The Plow the Broke the Plains" and "The River") These Republicans were voting to end the federal support for the film maker since they saw him as a New Deal Propagandist so they passed a law against "Domestic Propaganda" and stopped his production of a film on the need for Universal Health Care. Yes this argument has been going on since the 30's. (I was trying to find the rough cuts of the film at the Library of Congress with no luck)
So a little perspective, all the domestic propaganda that the Bush administration has funded, is illegal due the "domestic propaganda law passed by Republicans.
Denying reality has been the hallmark of the Bush team. They create their own reality and then are surprised when everything they touch blows up in their face.
The issue is not about which economic school of though is better, it's about the total lack of competence in the Bush administration to make coherent policy, which enviably crashes and burns.
As Krugman said, it will be nice to have a competent authority with the new administration.

[Holly W.]

Peggy Noonan may be able to write speeches, but maybe she should quit the commentary business.

I still have a job, thank goodness, which means that I'm able to continue to spend roughly the same amount of money I always have for roughly the same amount of goods, so long as inflation isn't running too wild. So of course things still look the same on the surface. But I work in construction, which is doing very badly in this economic climate. Projects are being halted all over Boston, and the fear regarding the state of the industry over the next several years is palpable at every site that's still in progress. What Noonan seems to be missing is that maybe things in general aren't terrible right now -- but everyone seems to be sure the economy is going to get worse before it gets better.

Well, luckily I've got stacks of tee-shirts I can wear for the next several years if I have to, and if I lose my job, maybe I'll also lose those 30 pesky pounds I seem unable to drop while I can still afford to eat. ;-)

[Gus]

Kind of reminds me of Pauline Kael's shock at Nixon's election. Supposedly she said something like "no one I know voted for him." I've been lucky to this point, still have my job expect to get my modest end of year bonus, but my wife's job (in the newspaper business) is looking less and less secure every day. I expect some serious belt-tightening going forward.

[donna]

My neighbor was making similar comments yesterday. I pointed out that even in the depression most people still had jobs, took care of their families, bought things, etc....

But I am truly tired of paying my laid off friend's car loan, trying to keep my mentally disabled nephew with a roof over his head, worrying about where my older mentally disabled sister is going to live if she has to leave her assisted living facility, worrying about hubby's older parents living with my sister-in-law, and my son there with them getting a cheap room to go to college so we can afford to pay his out of state tuition since Arnie so kindly cut all of California's school budgets, etc, etc, etc.....

Hey, and We're one of the top five percenters in family income. We're the lucky one in all this.

Peggy needs to get out more, seriously.

[donna]

Oh, and today I'm having my trees trimmed for the second time this year, even though they don't really need it, so the tree trimmer friend has income. Gotta help out where we can....

[Patricia Shannon]

bakho says...

Does anyone worry about the run on food pantries? A lot of people are using food pantries based on volunteers and donations. Food pantries are part of a barter economy that detract from retail business. Wouldn't it be more countercyclical to provide more food stamps and circulate money through paid jobs at retail groceries?

This is not a knock on food pantries that do a fantastic job, but their resources are being over taxed.

Good idea. Especially since there has been such an increase in the number of people needing to use food pantries, and decrease in contributions, including from businesses, that they are running out of food.

[Patricia Shannon]

People don't seem to have any idea of reality in their own communities. In many (maybe most) places, it would be against the law to sell pencils or apples on the street w/o a business license. Also, there are few places to do so. Most people do their shopping in malls, which are private property and would not allow such activity. The response to the increase in people begging has been to make it illegal, and arrest people for doing so.

[RW]

What Reason, Noni and Donna said: I've spoken enough with my parents who lived through it and read sufficient history to know the worst of the Great Depression was played out in hidden places, in families that no longer went out much, hiding their new-found poverty in shame, in back streets masking heavy foot traffic to the soup kitchens and missions that were located nowhere else ...

and in the hobo jungle through the woods, down by the river or railroad tracks where my father, 16 years old but strong and fleet of foot, could always find a family willing to pluck and cook the chicken he had stolen for a share of the meal which included two cans of beans provided to the family by the town fathers on the condition they not linger but keep moving on.

If the liquidity trap opens wider and the deflationary spiral continues our experience will be different than then but this part will be the same: The worst will occur in separation from each other and those with a sustainable and sufficient income will mostly read about it later while those with limited imagination, insufficient sympathy for their fellow human, or a specific ideological axe to grind will doubt any of it was really that serious or even happened at all.

The latter is the audience for the piece Noonan wrote; she does what she is paid to do, it's nothing personal, just business.

[Patricia Shannon]

http://american.redcross.org/site/PageServer?pagename=ntld_main

The American Red Cross is actively seeking donations to raise $100 million for the Disaster Relief Fund, which is depleted as a result of an active year of disasters.

[cm]

Occasionally when discussing "marginal" variations in anything, economic or not, somebody will say "10% is unsubstantial" (or some other such number), and my canned response is always "so, you wouldn't mind a 10% pay cut?". The point has always come across.

[cm]

One Salient Oversight: Germany has drifted away from the postwar safety net paradigm, embracing most aspects of the US way of running things. I suspect that's where many of the problems are coming from, including a noticeable trend towards the formation of an underclass.

[Crhis]

If my computer led me by chance to Noonan or Krudlow, I'd simply click them away and go about my business. Both are species of Idiotus Americanus and don't deserve the time of day. Noonan, I suppose, has been drinking in the wisdom of Phil Graham, not the cracker.

[cm]

Real Person: It's true, there is always incidental and deliberate social stratification (birds of a feather). But some people in the local tech sector are quite well aware how tenuous whatever living standard they now have are.

[save_the_rustbelt]

I just received a panicked phone call from a relative in another state. This is interesting.

Apparently the county allowed numerous case workers to take extended time off last week, so as to use up vacation time before the end of the year.

Since there were not enough employees covering the office, some food stamp re-certifications were not forwarded to the state.

The state computer, being tightly programmed, is immediately cutting off food stamps for anyone not properly recertified.

Merry Christmas!

We are sending cash to cover for this, but this is all so unnecessary. But the bureaucrats do not care, their jobs are secure.

[Lafayette]

Robert Rubin and his home boys worked to destroy manufacturing jobs to improve profits on Wall Street, and the home boys are now the Obama economic team.

True enough. Some on the Left thought they had elected a left-of-center PotUS. Now he's supposedly a centrist, a "pragmatist" who has put together a "rubber hits the road" Cabinet. Economic remedy first, change later.

We'll see. The bit that gives him credibility is the sense of control that he exudes. He seems to be "in control". That's goodness, compared to the Bunker Mentality of the outgoing nerds.

Maybe he refused. Maybe he was not even in the running. But, neither is Rubin in the present line-up. Perhaps BO is saving him for the end-game (second term)?

says...

The comments above are truly moving. How could anyone with a heart not be moved to respond after reading Peggy Noonan's 2008 Potemkin Village vision of Economic Sugar Plum Fairies given actual economic evidence to the contrary?

Noonan writes...Everyone is dressed the same. Everyone looks as comfortable as they did three years ago, at the height of prosperity. The mall is still there, and people are still walking into the stores and daydreaming with half-full carts in aisle 3. Everyone's still overweight... Nothing looks different."

Yesterday FedChairman Bernanke gave a speech at some public forum and afterwards he was asked by a journalist in attendance whether this economic recession was as bad as the Great Depression. He replied emphatically that the 2008 recession is nothing like the Great Depression, it is not even close and added it won't become like it.

The reasons he gave were the safety nets in place today that were not in place in 1930, including what has been mentioned in posts above and the activity and knowledge of a proactive FedRes itself to do everything in its power to prevent that from occurring.

[The above account was given voice by a CNBC reporter on air but not in attendance shortly after Bernanke's speech]

Maybe Peggy Noonan talked to old Ben and gleaned her economic insights -- that today there cannot be a repeat of the Great Depression -- from him?

If that is the case Peggy's source is a shaky source at best imho, given that even though Ben Bernanke is a renowned Great Depression economic expert his Chairmanship at the FedRes, EXACTLY like the Herbert Hoover appointed FedRes of 1929, has repeatedly issued erroneous and flat out bogus economic information, advice, predictions and then withheld or gave economic stimulus that in turn exacerbated economic conditions.

Normally guys like that are replaced. However, #43 is too loyal a lame duck to request Chairman Bernanke's resignation, so we are stuck with a failed Republican Ideologue who daily drinks #43's Flavor-Aid as the head of the FedRes.

In short, Ben Bernanke's view of the economy despite his academic credentials and lofty position has been close to 100% wrong.

Therefore, Peggy Noonan could have and should have spoken with Economists with contrasting views who accurately predicted what is happening today such as Noureil Roubini, Paul Krugman or our own Barkley Rosser.

That Peggy Noonan did not tells me and us all we need to know about her mindset and perspective. Her crude and cruel editorial is one-sided and fatally handicapped by its/her inherent blindness. Her failure reflects that of George W. Bush, each only looks and or sees only information that supports their preconceptions.

Her editorial is pig sop for the her fellow Conservatives.

Or, as I perfer to think of it, GIGO.

[im1dc]

Oops, forgot to login for the above post.

[im1dc]

Oops, forgot to login for the above post.

[Julio]

"Still, look at the bright side – we will have finally cured the obesity epidemic. We may be poor, but at least we will be thin."

Well, not if they eat cake.

" It continued more than a quarter century, until the change of economic thinking encapsulated in the phrase "the Thatcher years.""

Determined to get something useful even from this drivel, I resolved to live every day to the full, as if tomorrow could be a Thatcher day. Very bracing.

By the way: it is a peculiarity of US cities that you can usually walk 15 minutes from any rich enclave and get a look at the real world. If you're a journalist and don't see it, you must really, really not want to see it at all.

[Uncle Billy Misses Tanta]

This is like a few years ago when we were trying to explain to people that their world was going to change. This is just the beginning. Hang on to your diapies, babies, we're goin' in.

[Barry]

More and more I understand the French revolutionary love of the guillotine.

[save_the_rustbelt]

Oh, this is really ugly.......

Drudge headlines

FORD Nov. sales drop 30 pct., TOYOTA falls 34 pct....

CHRYSLER sales drop 47 pct...

[im1dc]

Link to news article in support of the 11:33 am post above.

Bernanke says crisis 'no comparison' to Great Depression

Dec 1 05:33 PM US/Eastern

http://www.breitbart.com/article.php?id=081201213246.v50zx9ik&show_article=1

[im1dc]

Uncle Billy Misses Tanta

Me too.

[im1dc]

STR...its worse than even your post indicates.

US manufacturing hits 26-year low: ISM

Dec 1 03:11 PM US/Eastern

"US manufacturing slumped to a 26-year low in November, highlighting the abrupt downturn in the world's biggest economy, a survey showed Monday.

The Institute of Supply Management said its manufacturing index slumped 2.7 points to 36.2 percent, far below the 50 percent level that separates expansion and contraction. The level was the lowest since May 1982."

[im1dc]

STR On the bright side energy costs per barrel of oil are down.

Reuters

Oil retreats below $49 as brief rally fades

Tuesday December 2, 11:17 am ET

By Christopher Johnson

"LONDON (Reuters) - Oil fell below $49 a barrel on Tuesday, after reversing early losses in response to a rally in U.S. and European shares.

"It had earlier fallen to a new 3-1/2-year low below $48, weighed down by gloom over the ailing world economy and its impact on fuel demand."

http://biz.yahoo.com/rb/081202/business_us_markets_oil.html

[Lafayette]

Barry: More and more I understand the French revolutionary love of the guillotine.

Not if you've had most of your family and friends lose their head beneath that instrument of death - as I have. ;^)

The interpretation of history is (almost always) conditioned by one's perspective ...

[Patricia Shannon]

im1dc

Also, today's edition of the Atlanta Journal-Constitution, in the article about the manufacturing index dropping to a 26-year low, it also noted "new orders dropped for the 12th consecutive month".

Golly, do you really think we're in a recession?

On a recent thread, somebody said what was needed was to allow accelerated depreciation, that it would cause business to buy equipment right away. (I can't find the comment now, so I'm relying on my memory). If you owned a business that was losing customers, so you couldn't afford to pay your creditors and employees, would accelerated depreciation really cause you to go out and spend money (probably have to borrow it) to buy more equipment? I guess if you thought you could get a taxpayer bailout.

[Trig Palin]

The fact that Noonan and her ilk are pooh-poohing the idea that we're facing an economic disaster is all the proof I need that we are.

[ken melvin]

Trade you three Noonans and a sugar plum fairy for one Evagrius. Maybe if the Peggies of the world volunteered or worked in SF's Mission Dist., China Town, or Hunters Point Area, West Oakland, East Oakland, Oakland's Fruitvale, ..., or rode public transit she'd have some concept of reality.

[H]

I blame the preparation H. Effective even in cases of long standing.

Unfortunately, the preparation H soothed the mind a tad too much, rendering the output somewhat indelicate, and lowly.

[kthomas]

EN VINO VERITAS!

[CathyG]

Peggy and her think-alike Phil "nation of whiners" Gramm ought to spend an hour or two reading history - yeah, I know, not high on the list of Republican favorite past times. Many things in the US looked a lot the same in 1930, also, but serious deterioration was visible in both cities and rural areas by 1932 and 1933. Given that Alt-A really ugly mortgages rife with fraud and toxic conditions aren't going to flush through the system until 2011, I think it's just a bit early and more than a bit naive to label this fiasco a non-starter.

Like then, much of the pain that is already occurring today is not out in front of the hoi-poloi's faces. Peggy doesn't know that my husband and his siblings had to pull together the money for his father's hernia surgery last month. Peggy doesn't see that I have been buying and cooking double servings every week since food prices jumped last summer just to ensure that my working poor in-laws have meat to feed their growing children. Nobody knows that. Not my neighbors or my friends. Not my government.

My husband and I are lucky to have low debt and good jobs that, so far, don't appear to be at risk. But if we lose our jobs, people and local charities who depend on us for help will also be hurting. Peggy won't see the ripple effects, either.

Call it a down-turn, recession, depression, purple hued miasma - it doesn't matter. Real people are going to suffer increased rates of hunger, joblessness, homelessness, bankruptcy, foreclosure, divorce, domestic violence, addiction, juvenile delinquency and death. Peggy won't see it because it won't be her friends suffering. So she won't understand many average Americans' burning desire to have the kleptocratic economic terrorists who caused this debacle lose their wealth and find their butts slapped into the worst prisons in the US. And, yes, Phil, Wendy, Robert, Alan, Charles, Angelo, I'm talking about you.

The day my boy goes to bed hungry, I'm going to get really grumpy.

[Deficit Hawk]

What a travesty! Girls can talk and think about economics, too!

[Lonesome Moderate]

CathyG:Peggy and her think-alike Phil "nation of whiners" Gramm ought to spend an hour or two reading history - yeah, I know, not high on the list of Republican favorite past times. Many things in the US looked a lot the same in 1930, also, but serious deterioration was visible in both cities and rural areas by 1932 and 1933.

This appears to me to be the same point that Noonan herself made at the end of her piece.

[Lafayette]

Corporate Sharks

km: Maybe if the Peggies of the world volunteered or worked in SF's Mission Dist., China Town, or Hunters Point Area, West Oakland, East Oakland, Oakland's Fruitvale, ..., or rode public transit she'd have some concept of reality.

Good suggestion, also merited by a good number of our Congressmen. On Planet Washington they seem oblivious to the pain or suffering that is evident elsewhere. After all, "We're OK, aren't we?"

Automotive execs take their Corporate Jets to testify before Congress that they need a bailout, then after the press maelstrom, they now concede, (plan in hand) that they will work for $1 a year? And, we are supposed to be suitably impressed, after they've been earning in the tens of millions whilst getting themselves into this Present Mess?

No way, José.

I maintain that the ONLY WAY to do away with both Corporate Cupidity (and its Wall Street variety) is a confiscatory tax above a certain annual total compensation. Pick a number between 1 and 10 megabucks. Then claw-back the rest in confiscatory taxation at marginal rates of 95% -- and spend it where it can be better employed. (For example, on a decent world-class National Health System for all.)

How can any one person spend all that money in a lifetime, whilst fellow citizens are shopping for victuals at a local charity? How?

Please, someone, elucidate my dulled brain and explain the Moral Imperative of having that sort of motivational bonus scheme. What is the value of such bonuses? For an edifying scientific experiment in the subject, read here. Such bonuses perhaps therefore matter not at all to effective Executive Performance motivation.

So, there goes out the window yet another Replicant argument for Free Markets. Free for who ... the greedy?

Have we/they no shame? Apparently not. We've made idols of these Corporate Sharks indulging in what, as boys, was the vulgar pleasure of a Pissing Contest -- meaning this in case that appellation is too nuanced for some.

[Real Person from the Real World]

I have no dislike of H1bs. Many are nice people, including those that are just fishing to see what's out there and when you work to set up a midmorning interview, they want to blow it off because they are going out to party the night before and don't want to get up that early. There are a lot of Americans that would not easily blow off a job interview, even if they already have a job. And there are certainly plenty of H1b commodity bodies that are on bench, with little or nothing coming in, while their vendors push the star performers and more salable types.

Visas were supposed to be for hard to fill jobs, but somewhere along the line we ended up with these body shops, and so you have an army of guys that pack up and move from one temp residence to another every couple of months for a pittance, waiting to get the magic green card and free agent status and maybe wives from back home, if they last it out. If they get sick, they can always go home to the family to visit and get medical care, since the US doesn't have socialized medical care, or return home with a financial leg up and improved skills, from working in the ol' US of A.

The Visa program is abused. It's big sin is that it is one way, to the US. The jobs just are NOT out there, over 'there', for most Americans. The jobs are here and we are competing for work on our own turf.

Contract work can be feast or famine, and is not conducive to a real life and family. A few thrive, but a career misstep with prolonged down time can wipe out gains, and where do you park your bootle with the financial system in chaos? No wonder you have the financial system gaming going on. It's tough to start or maintain a family.

Everyone, including the financial system would be better off with a professional (local) work force, employed for decent wages and able to maintain a family in the local economy.... not just in the US, but overseas as well. As a US citizen living here, I can't live on what amounts to a wage geared toward a 3rd world economy, and why should we in the US subsidize outsized fortunes for persons in the other direction?

[reason]

im1dc
Yes that will help some people. But it will also slow down the recovery as the effect goes into reverse. Be careful what you wish for.

[reason]

I read the whole piece again. Lonesome Moderate has a point, it is not exactly clear what she is saying. (It reads like the worst kind of religious fatalism. Help!) But what I find perhaps most disturbing, is the tendency to blame the problems Britain faced in the 60's and early 70's exclusively on policy. It ignores what might be called the Wile E. Coyote effect - Britian suffered a delayed terms of trade adjustment that turned into a crisis. The same will happen to the US. Blaming policy (which has at most a marginal effect on the whole macro economy) is missing the point. The US has been living beyond its means and must tighten its belt. There will be a nasty fight about how the hit is distributed.

[RW]

I re-read the Noonan piece also and saw no reason to change my mind regarding its intended audience or central trope: It's not fatalism, it's the stoicism of the well-off; a kind of weltschmerz willing to endure anything as long as the real pain is experienced by someone else. Ultimately it can only be cynical, fundamentally insincere in a way perhaps that even an experienced propagandist such as Noonan does not entirely have access to.

[Lafayette]

At a snail's pace

RPfRW: A few thrive, but a career misstep with prolonged down time can wipe out gains, and where do you park your bootle with the financial system in chaos? No wonder you have the financial system gaming going on. It's tough to start or maintain a family.

More than a few. It is a matter of having the inherent ability to cope with volatile income. Not all are capable. So, such a career is not for everybody. But for those with the moral stamina, it's not a bad way to go.

It is certainly better than contending with both official and officious internal company policy at some places. I don't know many who can write a purely linear Chronological Résumé and defend the gaps in it. Which is why the Competence Résumé, which focuses on the type of work within different categories, is perhaps more important. But, the Personnel Nerds still want to see your age, which can give them a pretense for reading no further and binning the résumé.

Besides, more experience in more areas is just as good as having spent all your life programming in C++. Or, why do plumbers have such good work longevity? Because plumbing is a profession that does not change a whole lot. There is no quantum jump in the technology employed for which a quantum jump in skill is necessary. Ditto electricians. Ditto hairdressers.

But, for other professions, and certainly the higher-paying one, then breadth will surely be as important as depth in the art. The future is showing that sort of career outline already, especially as one goes further up the ladder.

I've heard many stupid stories about being refused a job because the person "skipped around too much", which supposedly demonstrated an "unsettled temperament". What mindless nonsense is that?

These sorts of antiquated attitudes must change. But, they are heavily ingrained. It will take another generation that takes the place of the present one to bring it about.

As evolution goes, that is what we call "a snail's pace".