More Depression Comparisons
July 05, 2010
– Comments (7)
I started to write something on this yesterday and the computer crashed in the middle. Yves has a post with a couple graphs from the depression and then today. I keep going on about the lack of foundation in the economy and it is the huge debt that prevents what I consider a foundation. I am going to requote:
The final debt-driven collapse, in which both wages and profitability plunge, gives the lie to the neoclassical perception that crises are caused by wages being too high, and the solution to the crisis is to reduce wages.
What their blinkered ignorance of the role of the finance sector obscures is that the essential class conflict in financial capitalism is not between workers and capitalists, but between financial and industrial capital. The rising level of debt directly leads to a falling worker share of GDP, while leaving industrial capital’s share unaffected until the final collapse drives it too into oblivion.
That reduced share of GDP is also that lower "consumer liquidity" I referred to earlier. Consumer's buying power is declining --> a falling share of GDP?
So, if that wasn't enough on my reading list, there was also 20 Questions with Robert Prechter. He's also predicting debt deflation coming up.
It will be interesting to see where the economy heads now that governments around the world and all thinking about controling debt at the same time. It seems to me that the "recovery" was more about massive government spending around the world then anything sustainable.
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