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ummagumma.co:

Congratulations; It's a Depression

This is within President Obama's power to prevent. If he lets it happen, he will have proven once and for all that he is not the 11-dimensional chess player we desperately hope he really is, but is actually a pathetically naive and corporate-owned appeaser.

And he will richly deserve the overwhelmingly repug Congress resulting from his inaction, and the baseless impeachment they will impose.

We, however, do not and will not deserve the decades of Depression his failures are ensuring.

Paul Krugman:

Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

SNIP

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

SNIP

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.
And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

Plant vegetables.

Economic Quacking

Yesterday, Rook called for an end to the "recesssion" euphemism.

The same day, Steve Benen posted the latest economic numbers showing it's far worse than we thought.

FALLING OFF A CLIFF.... About a month ago, initial estimates showed that the U.S. economy shrank by 3.8% in the fourth quarter of 2008. One analyst, at the time, described it as an economic "train wreck."

If 3.8% was a train wreck, we're going to need a whole new list of adjectives to describe the new numbers.

The fourth-quarter estimate was revised this morning, and as it turns out, the economy shrank by 6.2%. This graph, by way of the Washington Post, helps drive the point home nicely.

It was the worst economic showing in a quarter-century.

If it quacks like a depression, it's a depression.

And So It Begins

Chrysler is closing every single one of its 30 manufacturing plants until at least January 19.

GM, Toyota and Honda are also cutting production.

Is this how it seemed, those first months after Black Friday in September '29? A roller-coaster of bad-news panic, alleviated by reassurances from Those In Charge, followed by more bad news, followed by promises of a quick fix, followed by more bad news .... each short rise out of each ever-deeper trough accompanied by hope that this time, really, somebody will do something?

If Obama really does sign a massive emergency economic recovery bill at one minute after noon on January 20, will it be too late?