by Washington Blog
“The Prevailing Debate Among Economists and Historians is Whether the World Economy Faces the ‘Great’ Depression of the 1930s or the ‘Long’ Depression of the 1870s”
You know it’s grim when the prevailing debate among economists and historians is whether the world economy faces the “Great” depression of the 1930s or the “Long” depression of the 1870s.
Harvard professor and economic historian Niall Ferguson, a fan of the British government’s austerity drive and skeptic of further stimulus, reckons the world is facing a “slight depression” and favors comparison with the late 19th century rather than 1930s.
Long-term market bear Albert Edwards at Societe Generale has talked more apocalyptically for years of an economic “Ice Age” dominated by household deleveraging, low growth and deflation.
But now “depression” is very much back in the mainstream lexicon as the small economic bounce from the deep global recession of 2008/09 fades rapidly after little more than two years and Europe’s bank and sovereign debt crisis intensifies.
Economist and doomsayer Nouriel Roubini now says there’s a “huge” risk of 1930s-style depression ….
HSBC chief economist Stephen King, who wrote earlier this year of a “new economic permafrost”, warned last week that the systemic financial threat of a euro zone collapse and breakup risked another “Great Depression”.
As I’ve noted for 3 years, we are in a depression, and – because the government has done all of the wrong things – we’re stuck in it.
It Could Be WORSE Than the Great Depression
Indeed, contrary to Reuters’ saying that economists are split on whether it’s a repeat of the Great Depression or a lesser depression, many economists say it could be worse than the Great Depression, including:
- Fed Chairman Ben Bernanke
- Former Fed Chairman Paul Volcker
- Economics scholar and former Federal Reserve Governor Frederic Mishkin
- The head of the Bank of England Mervyn King
- Nobel prize winning economist Joseph Stiglitz
- Nobel prize winning economist Paul Krugman
- Former Goldman Sachs chairman John Whitehead
- Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb
- Well-known PhD economist Marc Faber
- Morgan Stanley’s UK equity strategist Graham Secker
- Former chief credit officer at Fannie Mae Edward J. Pinto
- Billionaire investor George Soros
- Senior British minister Ed Balls
Bad Government Policy Has Us Stuck
We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.
- An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”
- Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud
- All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger
- Excessive leverage helped cause the Great Depression and the current crisis, but the government has encouraged more leverage
- The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.
This isn’t an issue of left versus right … it’s corruption and bad policies which help the top .1% but are causing a depression for the vast majority of the American people.