Worst economy since Great Depression - not even close

[Crookshanks]

Obama's Rhetoric Is the Real 'Catastrophe'
By BRADLEY R. SCHILLER

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82.

This was reflected in unemployment rates. The latest survey pegs U.S. unemployment at 7.6%. That's more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can't equate 7.6% unemployment with the Great Depression.

Other economic statistics also dispel any analogy between today's economic woes and the Great Depression. Real gross domestic product (GDP) rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That's comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.

Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%. The failure of a couple of dozen banks in 2008 just doesn't compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88. Stockholders can take some solace from the fact that the recent stock market debacle doesn't come close to the 90% devaluation of the early 1930's.

Mr. Obama's analogies to the Great Depression are not only historically inaccurate, they're also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a "recovery" package that delivers a lot less than it promises. A more cool-headed assessment of the economy's woes might produce better policies.

Mr. Schiller, an economics professor at the University of Nevada, Reno, is the author of "The Economy Today" (McGraw-Hill, 2007).

[George Gervin's Afro]

Obama's Rhetoric Is the Real 'Catastrophe'
By BRADLEY R. SCHILLER

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82.

This was reflected in unemployment rates. The latest survey pegs U.S. unemployment at 7.6%. That's more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can't equate 7.6% unemployment with the Great Depression.

Other economic statistics also dispel any analogy between today's economic woes and the Great Depression. Real gross domestic product (GDP) rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That's comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.

Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%. The failure of a couple of dozen banks in 2008 just doesn't compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88. Stockholders can take some solace from the fact that the recent stock market debacle doesn't come close to the 90% devaluation of the early 1930's.

Mr. Obama's analogies to the Great Depression are not only historically inaccurate, they're also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a "recovery" package that delivers a lot less than it promises. A more cool-headed assessment of the economy's woes might produce better policies.

Mr. Schiller, an economics professor at the University of Nevada, Reno, is the author of "The Economy Today" (McGraw-Hill, 2007).

Are you for or against fear mongering? I guess we can surmise that you are against fear mongering.

[Gino]

Obama's put himself in a tough position.

1) He's been screaming about how if we dont pass Pelosi's bill, its the end of the economic world as we know it.

2) Now that its passed, he has to convince everyone that its working.

[DarrinS]

Obama's put himself in a tough position.

1) He's been screaming about how if we dont pass Pelosi's bill, its the end of the economic world as we know it.

2) Now that its passed, he has to convince everyone that its working.


Maybe he's trying to make it appear extremely bad so that ANY improvement, no matter how insignificant, looks all that much better.


I just remember people paying double-digit interest rates on mortgages during the Jimmy Carter era.

[Extra Stout]

You simply can't equate 7.6% unemployment with the Great Depression.

You simply can't equate 8.1% unemployment with the Great Depression.

You simply can't equate 8.7% unemployment with the Great Depression.

You simply can't equate 9.3% unemployment with the Great Depression.

You simply can't equate 9.9% unemployment with the Great Depression.

You simply can't equate 10.4% unemployment with the Great Depression.

You simply can't equate 10.9% unemployment with the Great Depression.

You simply can't equate 11.3% unemployment with the Great Depression.

You simply can't equate 11.6% unemployment with the Great Depression.

You simply can't equate 11.9% unemployment with the Great Depression.

OK, so maybe it's starting to look like the Great Depression, but it's all Obama's fault.

[Gino]

Keep going. Wasnt unemployment in the 30s during the great depression?

[ChumpDumper]

27%, I believe.

If Schiller thinks unemployment has already peaked, he'd have a point.

[DarkReign]

With obvious partisanship aside, I believe the "stimulus" package amounts to shit on a stick.

There is nothing that can be done to float this economy through the serious beatdown it is about to take. You can write checks on the backs of future generations all youd like, youre only mortgaging your future in some fatalist attempt to live through the present.

All in all, it is my opinion that the least effective course of action for government is the path it will most likely take. Its just like the POTUS said...."doing nothing is not an option" when doing nothing is exactly what should be happening. Let the banks fail, let credit fall through the floor.

Government should be there to protect the citizens and their interests, not the debt collevtion of banks underwriting faulty/falsified loans. Sure, our economy will go into the Almighty Shitter of Shitters, but really....is that even unavoidable now as it is?

IMO, this is what happens when money is privatized. Our economy, our way of life, in the hands of bankers. That was a great fucking idea....the guy who thought of that grand fucking strategy should have his descendants euthanized.

I havent posting lately for one sole reason....I cant fucking believe this is actually happening. I mean, it obviously is so I am not in denial. But the first domino was pushed over a long time ago, its just that the track has split 13x since and its hard to keep track of where it is going and which track is next.

Stop one, you still have 12 more picking up speed. Im shocked, plain and simple. I never thought, in all my wildest dreams I would actually see the day our country collapsed (economically speaking, which is about as bad as it gets).

I dont know if I am saddened by it or not. My personal worth has....well, lets just say its about as bad as yours. What I had is now meaningless to what remains. Here I thought I had a good thing going and that my great-grandchildren would be going to college on my dime....HA!

Not anymore. Never again. Im not terribly upset by it, but watching politicians preach the Word about economic recovery is about as revolting and immeasurably upsetting as I can stand. These criminals are responsible for all of this.

I refuse to emulate our police force and only blame/prosecute the users of this drug. I blame the cartels, I blame the importers. Our political leadership. Those fucking pricks on Capitol Hill.

Aaaaannnnnnyway, thats my therapy for the day. Enjoy our destruction, we're fucking paying for it.

[FreeMason]

What doesn't' kill you makes you stronger..

Time for this generation to grow some brains.

[boutons_]

"our current economic woes don't come close to those of the 1930s."

"current" is the key word. This shit only started seriously when arch-villain Paulsen killed Lehman Bros, although financial insiders knew where we were going as far back as 2007.

It will take a LONG time for highest-ever household debt to be paid down.

Employment isn't up to where it was in '82. Just wait.

[FreeMason]

I love how this bill got pushed through the system so quickly then all of our glorious leaders went on nice vacations :lmao

[Winehole23]

I love how this bill got pushed through the system so quickly then all of our glorious leaders went on nice vacations :lmaoPer Mr. Obama's request. If the GOP hadn't received a pants down spanking at the polls last November, there's no way it could have been done this quickly.

[boutons_]

Repugs, at their most repugnant, are doing everything to fuck up Obama and fuckup America, so they have some chance in '10 and '12.

[Wild Cobra]

What doesn't' kill you makes you stronger..

Time for this generation to grow some brains.

Problem is, this C.R.A.P. may kill us!

[RandomGuy]

Originally Posted by Oogity Boogity, February
You simply can't equate 7.6% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, March
You simply can't equate 8.1% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, April
You simply can't equate 8.7% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, May
You simply can't equate 9.3% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, June
You simply can't equate 9.9% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, July
You simply can't equate 10.4% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, August
You simply can't equate 10.9% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, September
You simply can't equate 11.3% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, October
You simply can't equate 11.6% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, November
You simply can't equate 11.9% unemployment with the Great Depression.

Originally Posted by Oogity Boogity, December
OK, so maybe it's starting to look like the Great Depression, but it's all Obama's fault.

This would be funny if it weren't so sadly true about the way it will be viewed by many on the right.

[RandomGuy]

Repugs, at their most repugnant, are doing everything to fuck up Obama and fuckup America, so they have some chance in '10 and '12.

There is more truth to this than most on the right would be willing to admit.

I have always tried to take a sober, comprehensive view of the economy.

For years I have been saying that things weren't 100% as ducky as the Bush administration said they were.

For years, I have been accused of "wanting the US to fail" because I didn't blindly parrot the talking points distributed to us through the unofficial GOP propaganda machine.

Things are bad, they are going to get worse, and for once we have someone treating us like grown-ups and admitting that things aren't all rosy.

Everybody knows, but no one on the right will admit to it, that they are secretly hoping for things to get really bad, just so they can blame Obama and jump up and down like jackaninnies screaming "I told you so".

If things don't get quite so bad, it will, of course, be the tax cuts. If things do get bad, it will be because we didn't do enough tax cuts.

I really truly wish that there weren't any tax cuts in the stimulus bill. Either it would fail or not, and there would be no ambiguity.

[George Gervin's Afro]

What's bad for America is good for Republicans!

[Supergirl]

However, there are certain things that are different now that will make the Great Depression never happen now, not the least of which is that stockbrokers have learned not to panic and all pull out at once, causing a panic and ripple effect.

That doesn't change the fact that this *IS* still the biggest economic disaster since that time. Just because it won't ever BECOME the Great Depression doesn't mean it isn't a disaster, and doesn't mean government intervention from becoming a bigger disaster. That's what I hear Obama saying, and I agree with him.

[Crookshanks]

I have a suspicion that most of the posters on this forum were either born after 1981 or are too young to remember the Carter Presidency. This economy isn't even as bad as it was during Carter's administration!

[ChumpDumper]

I have a suspicion that most of the posters on this forum were either born after 1981 or are too young to remember the Carter Presidency. This economy isn't even as bad as it was during Carter's administration!You should thank Carter for taking the right steps (hiring the right man) to end the stagflation. If only things were so easy this time around.

[Crookshanks]

Riiight - Carter took the right steps - he screwed up sooo badly he was a one-term President! The only good thing to come from the Carter administration is Ronald Reagan!

[spurster]

Here's an interesting story. No doubt it exaggerates, but it's certainly not good.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html

Failure to save East Europe will lead to worldwide meltdown

The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.

By Ambrose Evans-Pritchard
Last Updated: 2:05AM GMT 15 Feb 2009

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

...

[ChumpDumper]

Riiight - Carter took the right steps - he screwed up sooo badly he was a one-term President! The only good thing to come from the Carter administration is Ronald Reagan!Paul Volcker.

[Wild Cobra]

Worst economy since Great Depression

Not now, but it will become that if the democrats get their way with legislation!

[RandomGuy]

However, there are certain things that are different now that will make the Great Depression never happen now, not the least of which is that stockbrokers have learned not to panic and all pull out at once, causing a panic and ripple effect.

That doesn't change the fact that this *IS* still the biggest economic disaster since that time. Just because it won't ever BECOME the Great Depression doesn't mean it isn't a disaster, and doesn't mean government intervention from becoming a bigger disaster. That's what I hear Obama saying, and I agree with him.

World War One was called "The Great War" until World War Two.

Make of that what you will.

I don't think it will get quite as bad as the Great D, but I will admit to a great deal of uncertainty.

I DO think it will snap back faster than anybody expects at some point in a couple of years, and make all the people who have been investing in stocks on a regular basis over the course of the downturn quite a bit of money.

If you haven't ditched your gas-guzzler by then, you will in a hurry after that happens.

[RandomGuy]

Not now, but it will become that if the democrats get their way with legislation!

:rolleyes

Thanks, Gump.

[Extra Stout]

I have a suspicion that most of the posters on this forum were either born after 1981 or are too young to remember the Carter Presidency. This economy isn't even as bad as it was during Carter's administration!
You are making two wrong assumptions:

1) Texas is typical of what the rest of the country is experiencing.

2) This is the bottom.

[mogrovejo]

Well, of course, it'd be absurd, we'd need a nuclear war or something of that kind to have such a level of economic retraction and destruction of wealth.

The relative impact is still going to be massive. Things are not going to be as bad as they should because governments are going to buy some time by lending some more money from future generations though.

[Crookshanks]

Here's the Messiah's "help".

An examination of how the economic stimulus plan will affect Americans.

___

Taxes:

The recovery package has tax breaks for families that send a child to college, purchase a new car, buy a first home or make the ones they own more energy efficient.

Millions of workers can expect to see about $13 extra in their weekly paychecks, starting around June, from a new $400 tax credit to be doled out through the rest of the year. Couples would get up to $800. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year. Whoop-de-freakin-do! Don't spend it all at once!

The $1,000 child tax credit would be extended to more low-income families that don't make enough money to pay income taxes, and poor families with three or more children will get an expanded Earned Income Tax Credit. This is NOT a tax credit - this is WELFARE!

Middle-income and wealthy taxpayers will be spared from paying the Alternative Minimum Tax, which was designed 40 years ago to make sure wealthy taxpayers pay at least some tax, but was never indexed for inflation. Congress fixes it each year, usually in the fall.

First-time homebuyers who purchase their homes before Dec. 1 would be eligible for an $8,000 tax credit, and people who buy new cars before the end of the year can write off the sales taxes. There was supposed to be a much bigger credit for car buyers, but they took it out and instead used the money to fund the high-speed rail from California to Nevada. Hmmm, whose states does that help?

Homeowners who add energy-efficient windows, furnaces and air conditioners can get a tax credit to cover 30 percent of the costs, up to a total of $1,500. Of course, they wont' have the money to do these energy upgrades, but hey, Obama will give you back 30%College students — or their parents — are eligible for tax credits of up to $2,500 to help pay tuition and related expenses in 2009 and 2010.

Those receiving unemployment benefits this year wouldn't pay any federal income taxes on the first $2,400 they receive.

___

Health insurance:

Many workers who lose their health insurance when they lose their jobs will find it cheaper to keep that coverage while they look for work.

Right now, most people working for medium and large employers can continue their coverage for 18 months under the COBRA program when they lose their job. It's expensive, often over $1,000 a month, because they pay the share of premiums once covered by their employer as well as their own share from the old group plan.

Under the stimulus package, the government will pick up 65 percent of the total cost of that premium for the first nine months. More entitlements!

Lawmakers initially proposed to help workers from small companies, too, who don't generally qualify for COBRA coverage. But that fell through. The idea was to have Washington pay to extend Medicaid to them. But I thought Obama was for the little guy

COBRA applies to group plans at companies employing at least 20 people. The subsidies will be offered to those who lost their jobs from Sept. 1 to the end of this year.

Those who were put out of work after September but didn't elect to have COBRA coverage at the time will have 60 days to sign up.

The plan offers $87 billion to help states administer Medicaid. That could slow or reverse some of the steps states have taken to cut the program. More money for entitlements!


BOY - DON'T ALL OF YOU FEEL BETTER NOW?! :lmao

[ChumpDumper]

Yeah, that's not bad.

Frisbee golf!

[angrydude]

Making the hole (our debt) in the titantic bigger so that we have more deck chairs to move around isn't going to keep the boat from sinking forever.

[TDMVPDPOY]

Those receiving unemployment benefits this year wouldn't pay any federal income taxes on the first $2,400 they receive.


wtf u have to pay taxes on welfare income earn? i thought you only pay prorata tax if you are earning welfare either:

1. at some time during the financial year and working late in the year, or

2. working and claiming welfare, thats if your low income.....

.....welfare is tax free if you are earning it all year and not working....

[RandomGuy]

Under the stimulus package, the government will pick up 65 percent of the total cost of that premium for the first nine months. More entitlements!

Lawmakers initially proposed to help workers from small companies, too, who don't generally qualify for COBRA coverage. But that fell through. The idea was to have Washington pay to extend Medicaid to them. But I thought Obama was for the little guy

BOY - DON'T ALL OF YOU FEEL BETTER NOW?! :lmao

So let me see if I get this straight.

In the first paragraph, you are bitching about more entitlements for helping people who lost their jobs pay for health insurance, then in the second, when the provision was dropped at the insistance of the Republicans to get it passed, the president is somehow not for the little guys when the entitlement didn't go through.

Put more simply:

You don't like the entitlements, but then you criticize the president for not including an entitlement.

:lmao

http://www.trephination.net/gallery/macros/retard2.jpg

That is the dumbest, most hackish post I have seen in a good month or so. :toast

[Oh, Gee!!]

What doesn't' kill you makes you stronger.

unless it paralyzes you.

[DarkReign]

unless it paralyzes you.

...or sucks you into a blackhole.

[101A]

You are making two wrong assumptions:

1) Texas is typical of what the rest of the country is experiencing.

2) This is the bottom.

I'm in Western Pa.

Not so bad here, either.

The areas that had the massive housing run-up are the ones suffering the most, and California being FAR AND AWAY the worst hit; being the biggest state, is having an effect on the entire scene.

Essentially, we're all paying for $300,000 houses selling for a million bucks.

[ratm1221]

I have a suspicion that most of the posters on this forum were either born after 1981 or are too young to remember the Carter Presidency. This economy isn't even as bad as it was during Carter's administration!

Have you taken the time to learn why, or is that just the little catch phrase you've memorized? Democrats had a majority at that time and Jimmy Carter could have gotten anything passed that he wanted. But when they tried to hide pork in his proposals, he flat out said no. He didn't understand the "you scratch my back I'll scratch yours" politics in Washington, and when he pissed off the dems, his hands were tied. Throw in the mess that Eisenhower made of Iran by removing their leader because he wanted a fair share of the oil money that was coming out of his country and put ruthless dictator in his place, and 4 years goes by in a flash without you being able to do anything you wanted.

So a republican doesn't like Jimmy Carter because he didn't let pork slip in with his proposals? Does that mean you would like him if he would have? I doubt it.

[Wild Cobra]

Anyone look at the current Misery Index? I haven't yet, but will it ever be as bad as when Carter was president?

http://i181.photobucket.com/albums/x262/Wild_Cobra/miseryindex.jpg

[ChumpDumper]

What's this internet stalker simpleton trying to sell today?

Same stupid shit.

[clambake]

What's this internet stalker simpleton trying to sell today?

Same stupid shit.

he's just trying to run us off..........like he did his wife.

[boutons_]

Schiller is well-known asshole on the right (not that he's the only asshole on the right)

The speed, depth, and span of this economic crisis, SO FAR, is scaring the shit out of anybody who bothers to look at it.

http://www.washingtonpost.com/wp-srv/images/homepage/logos/twp_logo_300.gif (http://www.washingtonpost.com/) [/URL]Swift, Steep Downturn Crosses Globe

Markets Are Hammered as Hope Fades for Quick Recovery

By Tomoeh Murakami Tse
Washington Post Staff Writer
Wednesday, February 18, 2009; A01

NEW YORK, Feb. 17 -- Markets around the world plunged Tuesday as evidence mounted that the global economic crisis is worsening.
Japan is suffering its worst downturn in 35 years. The British economy is facing its sharpest decline in almost 30 years. Germany is slumping at its worst pace in nearly 20 years. Meanwhile, the job market in the United States, at the epicenter of the global downturn, is the worst in decades. And emerging economies are contracting at a pace few had predicted just months ago. Even China, whose economy still is growing at a 6.8 percent annual pace, is grappling with vast numbers of the unemployed, raising fears of unrest.

The sharpness of the global slowdown has alarmed economists, who see no obvious engine for recovery.

"Most Western developed economies are going to see the deepest downturn they've seen in a number of decades, in some cases possibly since the Second World War," said Jonathan Loynes, chief European economist at Capital Economics, an independent consultancy in London. "If you go back six months or so . . . there was a hope that some parts of the world will escape the downturn from the U.S. economy and that would help to support the global economy as a whole. And that hope has now faded. We're seeing a downturn in virtually every area of the world."

The [URL="http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&symb=DJI&nav=el"]Dow Jones industrial average (http://www.washingtonpost.com/?nav=pf) declined nearly 300 points yesterday to finish close to its lowest level of the financial crisis. Fearful investors piled into safe-haven investments such as U.S. Treasurys and gold. Bank stocks plunged worldwide, reflecting waning faith in their ability to hold up in a deteriorating global economic landscape and growing concern over the lack of a coordinated plan to clear the financial system of toxic mortgage assets.

The sell-off came despite the signing of the $787 billion stimulus package by President Obama and as auto executives faced a deadline to submit restructuring plans to the federal government after receiving billions in bailout money.

After a three-day weekend, investors digested dire news Tuesday from countries that were supposed to help lift the world economy out of its downward spiral. The pace of decline in these countries exceeded expectations of even the gloomiest experts, illustrating the depth and breadth of this rare global swoon.

Japan's economy, the world's second-biggest, after only the United States, shrank at an annual rate of 12.7 percent during the last three months of 2008 -- the biggest contraction since the oil crisis of the mid-1970s. The British economy, damaged by the credit crisis, will contract at 3.3 percent, almost twice as much as predicted three months ago, according to the country's biggest business lobbying organization. Those two pieces of data, released Monday, came on the heels of a report Friday showing that the German economy, Europe's largest, shrank by 2.1 percent, the steepest drop since the country's reunification in 1990.

Some economists had argued that countries like Japan and Germany were better equipped to weather the downturn. Germany has little consumer debt, and Japan's banks are in better shape after the banking crisis of the 1990s. But their economies rely heavily on exports, and global demand for items such as Japanese and German cars has evaporated.

In Germany, the benchmark DAX index fell 3.4 percent Tuesday, while London's FTSE index declined 2.4 percent. In Japan, the Nikkei slid 1.4 percent.

Helping to drive European markets lower was a report from Moody's Investors Service (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=MCO&nav=el) warning that Western banks with exposure to Eastern Europe could face credit downgrades. The fear is that the emerging parts of Europe, which had grown rapidly by relying on capital flowing in from the West, are in for a hard landing. The euro fell, as did bank stocks.

Meanwhile, emerging markets, the world's fastest-growing economies, whose demand for goods and services is considered key to a global recovery, showed signs of intensifying weakness. Russia's state-owned news agency said Tuesday that lower commodity prices and the financial crisis are expected to cause the economy to shrink by more than 2 percent this year. In Brazil, where commodity exports have fallen sharply, retail sales in December fell for the third straight month, marking the longest period of declines in six years, a report released Tuesday showed.

Earlier this month, Taiwan said exports plunged by record levels. In Mexico, the government was forced to intervene in the foreign exchange market after the peso reached an all-time low against the dollar. In China, slumping demand for exports has trimmed the growth of its powerful economy to nearly half its 13 percent pace in 2007.

"Manufacturing, construction, financial services, non-financial, retail -- wherever you look, you see a complete collapse in demand," said Julian Callow, an economist at Barclays Capital in London. "It really is like the floor has come out of confidence in global economic demand."

On Tuesday, the head of the International Monetary Fund urged countries to coordinate their economic stimulus efforts, saying he was "not optimistic" about the world economy.

"Today, the house is burning . . . so we have to act as firefighters," Dominique Strauss-Kahn said on French radio, the Associated Press reported.

In the United States, the sobering news from abroad was coupled with worry about the viability of the auto and banking industry and doubt about just how much the $787 billion stimulus package would be able to revive the economy.

Financial stocks led U.S. markets lower Tuesday, with Bank of America (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=BAC&nav=el), Citigroup (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=C&nav=el) and J.P. Morgan Chase (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=JPM&nav=el) each declining by 12 percent. Also hurting were auto stocks, with executives at General Motors (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=GM&nav=el) and Chrysler facing deadlines to turn in restructuring plans to the federal government after receiving billions of dollars in bailout funds and seeking billions more. GM's stock was down almost 13 percent.

A report by the Federal Reserve Bank of New York (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=BK&nav=el) that its general business conditions index in that region fell to a new low of minus-34.7 also weighed down markets.

Also on Tuesday, the Treasury Department released data showing that lending at banks that received government funds had declined.
With all but one of its 30 components finishing in the red, the Dow closed down 297.81 points, or 3.8 percent, to 7552.60, within 300 points of the market bottom reached Oct. 9, 2002, after the bursting of the tech bubble. The lone bright spot was Wal-Mart, whose fourth-quarter profit fell less than expected.

The Standard & Poor's 500-stock index, a broader market measure, closed down 4.6 percent, below the psychologically important 800 mark, causing some traders to predict an avalanche of selling that could test new market lows. The tech-heavy Nasdaq composite index fell 4.2 percent, to 1470.66.

===============

Now Bernanke comes in today and said "deeper and longer", but these economist types never know shit about anything.


http://pix01.revsci.net/J05531/a3/0/0/0/0/0/0/0/0/0/noscript.gif

[Cry Havoc]

Anyone who thinks we've hit bottom and therefore are comparing this CURRENT economy to the Great Depression is an idiot and should never be taken seriously on an internet board again.

We aren't even CLOSE to rock bottom. Not in the realm of the vicinity of the how bad it's going to get yet.

[redskinfan]

So who is to blame for this mess we are in??

[Wild Cobra]

Anyone who thinks we've hit bottom and therefore are comparing this CURRENT economy to the Great Depression is an idiot and should never be taken seriously on an internet board again.

We aren't even CLOSE to rock bottom. Not in the realm of the vicinity of the how bad it's going to get yet.
I agree. What I don't understand is how people get duped into the actions that eventually burst bubbles. Gold is probably still on the rise for a while, but is congress going to bail out the gold investors when that bubble bursts too?

[Winehole23]

I agree. What I don't understand is how people get duped into the actions that eventually burst bubbles. Gold is probably still on the rise for a while, but is congress going to bail out the gold investors when that bubble bursts too?:blah

Think about this for a second, WC. Why does the smart money seek refuge in gold right now? Indeed, what accounts for the nine year bull market (http://66.38.218.33/scripts/hist_charts/yearly_graphs.plx) in gold?

Ok.

Now, what would it mean if this were no longer the case?

Answer that, and I believe you will have answered your own question.

The answer may surprise you.