The Robber Barons Are Back -- Hide Your Money!
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The BLS' official unemployment rate is another clever example of economic and terminological manipulation. Its favored U3 does not count the U4, U5 or U6 contingent, which ranges from "discouraged workers" and "marginally attached workers" to part-timers, which is a very large hedge.
If they were all mashed into a more faithful rendering of the employment landscape, the resultant percentage would be closer to 20 percent than 10 percent. The economic recovery would be summarily stripped of its clothes.
"There's a very strong case for saying that we're already in a depression," Palley concluded. "Lawrence Summers, [Treasury Secretary] Timothy Geithner and the Federal Reserve have been much more subdued and even gloomy. I think something is registering."
Perhaps that could be the fault of the other categorical imperatives for economic depression, which are being fulfilled as you read.
They include not just surprising increases in unemployment but also decreases in credit availability and investment (check), rising bankruptcies and bank failures (done), cratering trade and commerce (sure), volatile fluctuations (yup) and currency devaluation. And trust me on that last one: You don't want to know. It's not pretty.
The only serious holdout in this nasty bit of game theory is duration, and that's a safety net. Because you have no choice but to wait a long while before you can confirm whether calling this mess the Great Recession was shifty legerdemain designed to keep the stock market alive, or prudent financial wisdom.
And the waiting, so far, sucks.
The scary part is that it could get much worse. According to legendary foreign correspondent Robert Fisk, up-and-coming BRIC nations like Brazil, Russia and China, as well as Middle East fossil-fuel peddlers who used to be our pals, have recently conspired to dominate oil outside of the dollar.
It's not just Middle East countries that have been considering a regional currency rethink: In September, seven South American nations, led by oil-rich Venezuela, announced their intent to create an international bank of their own, outside the reach of the United States and the International Monetary Fund.
Meanwhile, disastrously costly wars in Iraq and Afghanistan haven't helped do anything other than suck trillions out of American taxpayer pockets. Even World Bank President Robert Zoellick, a former Goldman Sachs player and George W. Bush's appointed replacement for disgraced neocon Paul Wolfowitz, argued that the "United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency."
And that's just the trouble abroad. At home, Social Security could enter the red next year. We're still shedding a couple hundred thousand jobs a month. Commercial real estate loans are about to go belly up. Consumer credit keeps falling through the floor. Pensions are evaporating. Home prices are still tanking, and few expect the situation to seriously stabilize before 2020.
Bank of America argues that around 40 percent of junk bonds are set to default by 2013, throwing ever more billions down the black hole. Powerhouse states like California are possibly deteriorating into failed states. The economic terrorism watch list goes on (and on).
2013 and 2020 are years from now, of course, meaning that by the time we get there, we'll probably look back on this talk of a Great Recession and have a hearty laugh. Even the optimists, including Frankel, will probably feel let down.
"As bad as the recession of 2007-09 has been, it has been nowhere near as bad as the Great Depression, or the Long Depression," he explained. "Even though the labor market is still very bad, there are many signs that the economy hit bottom sometime during the summer. The advance estimate of third-quarter GDP that the Commerce Department will announce at the end of this month will almost certainly show positive growth. If that holds up, even though we will probably be in for a slow recovery, we have dodged the bullet of depression."