First world wide depression?

[APEXi240]

A little sensationalized I know (the thread title), but I'm watching the news...

-Iceland just seized it's second largest bank.-Barclay's stock is down 30%.-Great Britian is putting together a bailout plan for it's banks.-Saudi Arabia's stock market dropped 9%-China and other Asian markets are taking big hits in their markets.-Even with an approved bailout plan, the Dow Jones, S&P, and Nasdaq all close at 5 year low.

Are we experiencing the first truly worldwide economic recession/depression?

[Jesda]

Don't worry, the bailout fixed everything.

I'd call it an impending international recession, but not a depression.

[rmezz13]

ANARCHY!... J/K.I heard on the radio that Germany just did a bail out.... The American Market affects the entire world. And i bet the ones who laughed at us are going to be hurting too. Just think what would happen if we quit buying oil and started using our own... The world would feel it, but we would benefit from it!

Sorry i strayed a little further, i need to stay out of this forum. bye.

[smockers83]

First one world wide? Nah, remember that thing called the Great Depression? We fell and a lot of the world fell with us then. Same thing now, but this one could be felt by more countries given the fact that the world economy is much more complex and intertwined than it was during the Depression. But that could also mean that the risk of depression is spread out among more countries, which could lessen the impact of a depression as compared to the 30s or make it that much more worse.

[HashiriyaS14]

This is incomparable to the Great Depression, and people need to stop invoking it. During that time, people got foreclosed on when they only had borrowed TEN PERCENT of their homes' value. It was an outright cratering of the US economy, which this most certainly is not.

Anyway, yeah, I think things are going to get nasty internationally, but that's no surprise. Look at the Euro and how high it is. What goes up must come down, some of these other economies have more or less hit apex. Some of it is because we're failing, but some of it is just because they're failing "organically" for the same reasons we did. Bubbles burst, that's what they do.

[audtatious]

On other political forums I've been involved with, which included a large number of members from other countries, I had noticed one thing, they all hoped the US economy would "tank" to prove that the US is not as important to the world economy as we think it is.

Guess we are proving them wrong?

[HashiriyaS14]

On other political forums I've been involved with, which included a large number of members from other countries, I had noticed one thing, they all hoped the US economy would "tank" to prove that the US is not as important to the world economy as we think it is.

Guess we are proving them wrong?

LOL, yeah. Anyone who says they WANT the US Economy to tank doesn't know very much about economics. Even if we aren't the largest economy in the world (I think it's the EU now), we're still hugely important. Furthermore, I think that an American collapse still has greater world implications than a European collapse, despite them being slightly larger than us.

[hannibal]

The world economy is much more interdependent than 80 yrs ago. Our current crisis has and will continue to negatively affect other economies. Wanting our economy to stall is just retarded.

The EU is the worlds largest economy with a thrid of the worlds output. And theyre growing. I'm not sure, but I think our economy is more influential on the world, as more foreigners have interests in our economy than the EU's.

[Cold_Zero]

-Iceland just seized it's second largest bank.

You didnt mention that the Russians have extended a loan off to Iceland 4 billion Euros and now Sweden and the UK are stepping in to extend emergency loans to keep Iceland's banks afloat.

http://www.npr.org/templates/s...01984

[smockers83]

I wasn't comparing this to the Depression, I was just stating that we've had world wide depressions before. There have been others before the Depression as well.

[APEXi240]

First one world wide? Nah, remember that thing called the Great Depression?

I know I made an obscure qualification, but I did state that is was the first recession/depression that is TRULY worldwide. As we can see we are affecting many more areas of the globe than we would have in the 30s.

This is incomparable to the Great Depression, and people need to stop invoking it.

I don't believe anyone has hinted at that in this thread. I used the term depression, as in "economic depression", not "The Great Depression".

In economics, a depression is a term commonly used for a sustained downturn in one or more national economies. It is more severe than a recession (which is seen as a normal downturn in the business cycle). Considered a rare but extreme form of recession, a depression is characterized by "unusual" increases in unemployment, restriction of credit, shrinking output and investment, price deflation or hyperinflation, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile/erratic relative currency value fluctuations, mostly devaluations.

http://en.wikipedia.org/wiki/Economic_depression

Again, maybe the title to this thread was a little sensationalized, but it seems that we may soon be walking the tightrope between recession and depression.

[ishkabibble]

I think we'll have an American depression and correlating worldwide recession.

People keep calling a bottom to the bear market, and I don't see anything that shows we've reached a halfway point yet. There is still quite a bit of cleansing to be done in this economic cycle.

[Jesda]

There is depression and recession. The two are different.

[hsckris]

Last figures I saw we had a 3% growth last quarter. Recession is a period without growth.

[ishkabibble]

A recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

A depression is an economic downturn where real GDP declines by more than 10 percent.

[ishkabibble]

Last figures I saw we had a 3% growth last quarter. Recession is a period without growth.

You're talking about the past, before the doo doo hit the fan.

[Cold_Zero]

I bet you what is coming next is a Global Bailout plan, I just hope that the US won't have to pick up the bill.

[smockers83]

Last figures I saw we had a 3% growth last quarter. Recession is a period without growth.

Nominally, yes that is true. GDP is measured in dollar amounts. US consumers did spend more dollars during the 2nd quarter. However, if you look at all the facts, people bought less goods and services but paid more for them due to inflation. So with that in mind, spending actually fell in real terms.

A recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

A depression is an economic downturn where real GDP declines by more than 10 percent.

Common and simple definitions, but neither of them are true. Both of them are ultimately determined by institutions like the BEA by looking at all of the facts as it is much more complicated than that. A depression isn't classified as a 10% drop, that's too simple again. If that were the case, the Great Depression only occured in 1932.

[Jesda]

Nominally, yes that is true. GDP is measured in dollar amounts. US consumers did spend more dollars during the 2nd quarter. However, if you look at all the facts, people bought less goods and services but paid more for them due to inflation. So with that in mind, spending actually fell in real terms.

That 2.8% is already adjusted GDP.

" The acceleration in real GDP growth in the second quarter primarily reflected a larger decrease inimports than in the first quarter, an acceleration in exports, a smaller decrease in residential fixed investment,an acceleration in nonresidential structures, an upturn in state and local government spending, and an accelerationin PCE that were partly offset by larger decreases in inventory investment and in equipment and software."

http://www.bea.gov/newsrelease...e.htm

Regardless, I doubt we'll see significant growth for a while.

[ishkabibble]

Common and simple definitions, but neither of them are true. Both of them are ultimately determined by institutions like the BEA by looking at all of the facts as it is much more complicated than that. A depression isn't classified as a 10% drop, that's too simple again. If that were the case, the Great Depression only occured in 1932.

I'm fine with the simple, common definitions unless you're going to take the effort to show us the inner workings of the BEA black box.

[smockers83]

That 2.8% is already adjusted GDP.

" The acceleration in real GDP growth in the second quarter primarily reflected a larger decrease inimports than in the first quarter, an acceleration in exports, a smaller decrease in residential fixed investment,an acceleration in nonresidential structures, an upturn in state and local government spending, and an accelerationin PCE that were partly offset by larger decreases in inventory investment and in equipment and software."

http://www.bea.gov/newsrelease...e.htm

Regardless, I doubt we'll see significant growth for a while.

Sorry, forgot to mention the tax rebates that were figured in a different analysis, which this doesn't measure. In the same report though, it also goes onto say that real gross domestic purchases fell during the 2nd quarter.

I'm fine with the simple, common definitions unless you're going to take the effort to show us the inner workings of the BEA black box.

If it works for you that's fine, its just that those definitions aren't necessarily true and become quite misleading at times. Not only do you have to look at GDP, but figure in employment, inflation/deflation, wages, and other indicators also. You have to look at the whole economy and not just one aspect of it. GDP can fall yet people are buying more than before due to deflation with "full" employment and the country running full tilt, hypothetically speaking, meaning that deflation is outpacing the growth in purchases. Would you consider that a recession or a depression if the definitions you're using became true?

[ishkabibble]

Nope. But in the US, don't they all tend to be related?

The Dow hit the ~8500 level way sooner then I expected it to. I guess we'll see a dead cat bounce, and then things will get pretty ugly.

[APEXi240]

Dow drops 679 today.

http://ap.google.com/article/A...9O8G0

Nikkei drops 11 percent

http://www.bloomberg.com/apps/...=asia

Two large Japanese companies, New Life Residence, and Yamato Life Insurance filed for bankruptcy.

http://www.bloomberg.com/apps/...=home

I saw a couple of highlights on the news tonight where they had some economic analysts calling today's trading a crash.

Definitely going to be an interesting year coming up.

[Encryptshun]

I bet you what is coming next is a Global Bailout plan, I just hope that the US won't have to pick up the bill.

I had hoped that our first real encounter with extra-terrestrial life forms would be something other than them buying controlling interest in our planet for $0.20 on the dollar...

[smockers83]

Nope. But in the US, don't they all tend to be related

Not necessarily. Unemployment has been rising yet we're still seeing GDP rise. That's because employment statistics are lagging indicators. For example, the last recession in the early 2000s, unemployment peaked 2 years after the bottom of the recession.

In the 70s we had stagflation. During the GD, we had our depression with deflation. Economists are looking at the possibility of stagflation during the 21st century, but its still too early to tell.