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Depression

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August 24, 2010 – Comments (11)

The latest declaration:

http://www.cnbc.com/id/38831550

Not sure that I buy all that hype though. Anyone out there think we are in a full blown depression? I mean I understand there are people hurting, but from the stories I have heard regarding The Depression, things were a LOT bleaker than what we are witnessing now.

Something else to note is that Rosenburg is using his "fiduciary duty" to declare this, so it isn't exactly like he is just making waves for an article. This is stuff he is telling his investors.

This snippet is pretty interesting:

"The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent, sending the stock market to a 50 percent rally in early 1930 as investors thought the worst had passed."

And he closes with this:

"How's that for a reality check," Rosenberg said. "It's not too late, by the way, to shift course if you have stayed long this market."

Pretty crazy...

Fool it on down the line,

Jason

11 Comments – Post Your Own

#1) On August 24, 2010 at 2:59 PM, lctycoon (< 20) wrote:

While there is no official definition of a depression, the most generally accepted one is this:

 "Generally, periods labeled depressions are marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced using current resources and technology (potential output).[2] Another proposed definition of depression includes two general rules: 1) a decline in real GDP exceeding 10%, or 2) a recession lasting 2 or more years." - from Wikipedia

By that definition, we are not in a depression, and I don't believe we are either.  At the risk of sounding crazy, for most of us who never got caught up in the hype surrounding the boom of the past few years (Back in 2005, I called for a large recession caused by an overexpansion of credit - but of course, people thought I was nuts), this recession hasn't even felt like one.

I will say, though, I don't expect "good times" to return the same way that they always have.  Americans may have to reduce their expectations about what "a good life" actually is, and abandon the entitlement epidemic that is so common in this country, particularly among the youth.  So, if you want to call that a depression, then perhaps it is - but smart people will still do fine.

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#2) On August 24, 2010 at 3:06 PM, RonChapmanJr (96.91) wrote:

This should have been labeled a depression a while back and its only going to get worse. 

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#3) On August 24, 2010 at 3:20 PM, Jbay76 (< 20) wrote:

I agree with RonChapmanJr.  We just left a depression that was called a "great recession" solely to minimize the physcological effect of the truth.  So, people talked about a great recession without knowing what they're talking about, and now they think we'll be ina double dip receission, but that's impossible beucase we we never in a recession to begin with, but rather a factual depression that NBER never truly called for some reason.  Maybe it was political, you never can tell, but the numbers don't lie, people can, and poiticians do daily, but numbers don't.  So, it will get worse, New Zealand looks better daily, and those tht are preparred (settle down there Alstry not talking about you're type of nebulous preparred), will be OK.....I think.

 

Chris G, what do you think of moving to New Zealand? 

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#4) On August 24, 2010 at 3:42 PM, Pick1es (23.97) wrote:

When I was in New Zealand, it seemed that all the Europeans and Americans that were permanently living there were trying to run away from something...

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#5) On August 24, 2010 at 4:00 PM, leohaas (34.99) wrote:

What depression? Have you guys got any idea at all what life was alike in the 1930s? I heard the stories from my parents and grandparents, and what they experienced back then WAS IN A DIFFERENT LEAGUE compared to what we are experiencing now.

Stop making these nonsensical comparisons.

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#6) On August 24, 2010 at 4:42 PM, oridinaryaverage (< 20) wrote:

Remove all the defecit spending from the GDP and where would we be? 

leohass, you are correct, not in the same league.  Breadlines have been replaced with unlimited unemployment benefits along with vacations from paying one's mortgage for periods up to a year in some cases.  The pain has for sure been blunted by our government.  Can't last forever though.  

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#7) On August 24, 2010 at 4:55 PM, outoffocus (23.68) wrote:

Anyone out there think we are in a full blown depression? I mean I understand there are people hurting, but from the stories I have heard regarding The Depression, things were a LOT bleaker than what we are witnessing now.

Thats because back then there was no unemployment insurance, food stamps, medicare, medicaid, social security, FDIC, [insert government program here].  If all those programs were suddenly taken away, the data would actually be bleaker than the Great Depression.  Half the freaking country is living off the government.

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#8) On August 24, 2010 at 5:23 PM, cbwang888 (25.91) wrote:

outoffocus:

Right on. People are quite happy without jobs nowaday.

For those who are still working in order to make ends meet, depression has just begun. It can only get worse when taxes are going up and inflation heats up (including food, gas and energy expenses, of course) as USD keeps going down south. (15Yr low against Yen)

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#9) On August 24, 2010 at 9:18 PM, OneLegged (< 20) wrote:

My retirement account is down 72%  My business is down 98.4%  I am earning 1/3 of what I was in 2007.  My savings are gone and I have sold everything that isn't bolted down.   I only know seven people who are working full-time.  Exactly seven.  Without the government spending the equivalent of 11% of GDP the GDP is securely in negative territory and has been for some time.  Depression?  From where I stand, most definitely.  This is old news.

 

Not to highjack this thread, but what do you Fools see as the industry that will pull us out of this mess? 

 

 

 

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#10) On August 25, 2010 at 1:34 AM, QualityPicks (56.54) wrote:

Wether we are or not, is relative. Lets just say we are in a masked depression. That is, the government is overspending more than a trillion dollars a year just so we do not see the depression. Instead what we see is a mixed economy, I would even say that looking around me, we have normal/decent economy, but I know that if you adjust government spending to be 1 trillion less a year, you would not be "doubting" that much :)

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#11) On August 25, 2010 at 2:12 AM, simplemts (< 20) wrote:

"What depression? Have you guys got any idea at all what life was alike in the 1930s? I heard the stories from my parents and grandparents, and what they experienced back then WAS IN A DIFFERENT LEAGUE compared to what we are experiencing now.

Stop making these nonsensical comparisons"

 You must also be aware that the depression started in September 1929 and unemployment was still 15% in 1940.  In other words... the depression lasted 10+ years by many metrics.

 We are only in year 3... who is to say this thing does not get worse, a lot worse, and THEN compare to your view of the 1930s depression. 

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