Friday, May 2, 2008

Economy: Great Depression, The Sequel

An interesting thing has been happening lately: Sober people have begun using the phrase "since the Great Depression" with surprising frequency. As in, "X economic marker hasn't looked like this since the Great Depression."

Americans' personal savings? Lowest rate since the Great Depression.

Housing slump? Worst since the Great Depression.

Proposed overhaul of Wall Street practices? Most sweeping since the Great Depression.

This recession we're in? Predicted by some to be the worst since the Great Depression.

Mortgage crisis? Worst financial shock since the Great Depression.

Are we actually heading toward a sequel to the Great Depression? I'm obviously not qualified to say, but the possibility is at least being talked about in polite circles.

So what I've been wondering about is this: If we were to enter another depression, what would it look like? The world has changed a lot since the 1930s. Even people living in poverty tend to have big-screen TVs, iPods and decent computers. It's hard to imagine that a 21st-Century depression, in its physical particulars, would look much like the 1930s depression did.

We've been baking bread lately. No, not for purely economic reasons -- The Lovely Sophia can't get Jamaican hard dough bread out here in PA so we've been baking our own -- but it is much cheaper than buying store-bought bread. In a new depression, will people bake their own bread? Will restaurants fail? Will we begin seeing mostly older cars on the road as the depression wears on and people stop buying new ones? Will styles and fashions change to reflect the new economic reality?

I'm interested in your thoughts. Tell me what you would imagine a new great depression to look like.


Travis said...

Even in Manhattan, restaurants are failing now, and have been on the UWS for some time. I don't know if this is occuring more often than usual, but I can only speak anectdotally and say restaurants come and go at an alarming rate where I live, and this area is a prime area for restaurants.

As I become more aware of the environmental and personal cost of non-organic food I've all but stopped eating out, and I wonder what will happen in the short run as more people make healthier choices for themselves, their area and the planet by shopping local and organic.

Of course, this assumes that this trend will continue, or that this trend is actually substantial enough to make a dent in the restaurant business. More likely, if the depression deepens, many will save money by getting inferior food to cook at home. Eating out will become a luxury, probably as it should be.

A vacant space left by the restaurant will probably be replaced by another bank chain.

Travis said...

Google "Zeitgeist: The movie" and check out the 30 minute on the origin and history of the federal reserve. It will make you want to leave this country.

Virginia Burnett said...

Gardens. More of 'em. Everywhere. I'm hearing more and more people talk about putting in gardens, making their existing garden bigger, planting more edibles instead of decorative stuff all over the place. The chatter is on blogs that I read, forums that I visit and people I encounter at Church and at work and about town.

People all over the world are starving because food is too expensive because our distribution systems are amazingly corrupt. (Don't even let me get started.)

Our grandparents grew Victory Gardens to help win the war. I sense a growing movement among younger Americans to grow food to overcome the evils of consumerism. What shall we call them? Hunger Gardens? Charity Gardens? Global Good Gardens?

Whatever we call them, the tomatoes and lettuce I will grow in my bat poop enriched soil this summer will taste soooo much better than anyone can get in a supermarket. You all are invited over for a BLT - made with the free range pig we got off a neighbor. Bring Travis. We've still got his books and we owe him a good read.

Tim Somero said...

One of my uncles surprised me a couple of years ago with an insightful comment. The comment stopped me in my tracks. (And true to form in my family, the comment arrived a bit out of left field based on the conversation that we were having, anyway...)

"Tim. We'll never have a Great Depression as severe as the first one."

I blinked, curious, 'Uhm. How can you be so sure?'

"Social Security exists now so no matter what, the government will pump money into the economy and prior to the Great Depression, this didn't exist."

The comment, right or wrong, stays with me.

On a slightly different topic, several people in my family are starting to tighten their belts financially. When we talk about it now, the general sentiment is that it's good for the world at large because the generally lavish, materialistic lifestyle isn't going to help anyone in the long run.

For example, I learned how to use the grapes and crab apples around here to make jelly. I am going to grow my brood of chickens. I might expand my garden. I taught myself how to bake bread.

So I relate closely to what Virginia wrote. It's all good in my mind.

The other thing to keep in mind during this predictive, futuristic thinking is to try a 'green survey' on a world globe.

Slowly spin the globe and notice that the USA is the most green country in the world.

That indicates, to me anyway, that we have the best natural resources and climate for agriculture out of any nation. So in my mind that is the root of our strength.

As long as we can defend ourselves, we can sustain the country by turning back to agriculture unless of course, global weather climates change and our green turns brown.

The thing that troubles me is 'Made in China'. Think for how many decades have we shifted commercial profit overseas?

Have we mortgage ourselves to China?

Ari said...

Salon investigated the possibility of a Great Depression sequel last month. Facts and commentary there from someone who knows more about U.S. economic history than me.