This economic crisis has just begun. It has a long way to run and no one can be sure of either timing or the full extent of the changes that will come about. My opinion has always been that history will look at this period as either Great Depression II of the beginning of The Economic Dark Ages.
Bill Bonner of The Daily Reckoning has a similar opinion. He believes we are in the early stages of whatever is happening and wherever we are headed. Here are a few of his thoughts:
So, what’s this correction aiming for?
…will it correct the housing bubble that began in 1997…and stop there?
…will it correct the stock market boom since ’01…or since ’82…and be done with it?
…will it correct the bull market in bonds that goes back to ’83…or the bull market in bonds that goes back to 1971?
…how about the post-1971 dollar-based monetary system?
…will it correct the credit expansion/consumer spending boom that began in ’49?
…or maybe it will correct the boom in US economic and military power that dates back to 1917?
…Who knows? Maybe it is going to take out the entire industrial revolution boom going back to the 18th century…
…or even the boom in the human species that goes back to the 17th century?
We don’t know where this correction is going…but we want to make sure we’re somewhere safe when we finally find out.
Perhaps Mr. Bonner has used some hyperbole in his ranges, but perhaps not. Outcomes are going to be bad. You ain’t seen nothing yet!
There has been no recovery despite what government wants you to believe. A “declared” recovery was announced as a part of the massive government propaganda campaign to convince the public that matters are under control. They are not and no recovery is underway.
We are arguably now in worse shape than in 2008 before the crisis became apparent. The financial system is weaker and poised for the next freeze-up, currency run or whatever trigger might occur.
Governments around the world are more insolvent and less liquid than they were in 2008. They have exhausted their intellectual (nonsensical Keynesian economics) and fiscal resources (the largest stimuli the world has ever seen). Massive wastes of funds has not produced a recovery. We are still in recession or what I believe is a Depression.
Michael Panzner provides interesting data that supports the no recovery interpretation. After reading his Still Unrecovering, you may wonder on what grounds the government (actually the NBER) declared that a recovery had begun:
In “Our Sputtering Economy by Numbers: Poverty Edition,”ProPublica highlights statistics derived from the Census Bureau’s lncome, Poverty, and Health Insurance Coverage in the United States: 2010, which lend further weight to the notion that what we’ve experienced since the recession “ended” back in 2009 could best be described as an “unrecovery.” Here are just a few examples
Official U.S. poverty rate in 2007, before the recession: 12.5 percent
Poverty rate in 2009: 14.3 percent
Poverty rate in 2010: 15.1 percent
Decline in median household income since 2009: 2.3 percent
Decline in median household income since before the recession: 6.4 percent
The last time median household incomes have been this low: 1996
In both cases, the statistics that are supposed to improve when a recession ends have actually gotten worse. Maybe I’m a little slow on the uptake, but isn’t this the wrong way around?
Regardless, the fact that Americans are in worse shape financially than they were before financial Armageddon erupted suggests the economy’s next leg down is going to be an ugly one.
From an intellectual standpoint, I hope to live to see the end of this crisis. From a living standpoint, I’m not looking forward to it.