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This is NOT the second Great Depression, and no amount of made up figures and false information can change that

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September 09, 2009 – Comments (22)

Alsty's recent post stating that the current terrible recession is much worse than the Great Depression was is long on false, misleading statements and short on facts.

9.09 MUCH WORSE than The Great Depression

Where on Earth does he get his historical information from?  Do he just make it up?  He certainly never cites his sources.  Let's pick apart his post, piece by piece:

He said:

In The Great Depression...government was a very small percentage of GDP.  Not only that, our government operated surpluses

Wrong

He said:

Just two years into the downturn and we are seeing declines NEVER seen at the worst of The Great Depression such as new home sales down 80% and land values down over 80% in many areas.

Wrong

Let's start by saying that this is taking data from the absolutely worst hit sections of the country and projecting it nationally, which is dead wrong.  However, even if this outlandish statement was correct, such a drop would not be worse than the housing downturn that our nation faced during the Great Depression.

http://www.usnews.com/articles/money/personal-finance/2008/02/28/comparing-todays-housing-crisis-with-the-1930s.html

Hard numbers on exactly how far home prices fell nationwide aren't known. (Government records go back only to the 1950s, and even then they're a bit sketchy.) Yet the government has kept statistics on the number of new homes built since the 1920s. At its peak in 1925, the roaring economy—the same one that helped George Bailey put scores of poor families into new subdivisions in the movie It's a Wonderful Life—produced about 900,000 new homes a year. By 1933, around the time Old Man Potter tried to get his hands on Bailey's cash-strapped Building & Loan in Bedford Falls, that number had fallen to about 100,000 new homes, a 90 percent drop.

That's about twice the size of the percentage decline in home building seen so far in the current downturn. And although some economists still expect things to get worse, "I certainly don't think we're in for another Great Depression," says economist Edward Leamer, whose UCLA Anderson Forecast has been predicting a real-estate swoon for the past two years.

I'm swamped with work today so that's all of the time that I have for now, but perhaps if I have a few spare seconds later I will continue destroying his misleading post.

BTW, today is MOAP Armageddon day, 9/9/09.  AAAAAAAAAAAHHHHHHHHHH.

Deej

22 Comments – Post Your Own

#1) On September 09, 2009 at 8:20 AM, kaskoosek (46.58) wrote:

Alstry is a fool. Don't feed him.

 

Anyway I still think that the US economy is going to crumble on the weight of its own government. Maybe not this year, but in the coming few. 

 

Your analysis is not very forward looking. Answer me this question. Is the US government bankrupt? Taking this for granted is choosing to be blind. 

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#2) On September 09, 2009 at 8:47 AM, rofgile (99.44) wrote:

kaskoosek:

 No, the US government isn't bankrupt.

 While our currency could lose its value - our country itself is backed by land, assets, and a strong military. 

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#3) On September 09, 2009 at 8:51 AM, russiangambit (29.34) wrote:

If your prove that an object is not a square, it doesn't yet mean it is a cricle. Let's agree it is not a Great Depression.

What is it? The collapse of a great empire, the unbubbling of all bubbles, a start of an even bigger bubble?

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#4) On September 09, 2009 at 8:51 AM, alstry (35.93) wrote:

Deej,

You were born a Fool.  Are a Fool.  And likely always be a Fool.

In The Great Depression...government was a very small percentage of GDP.  Not only that, our government operated surpluses

YOUR CHART DEALS WITH NATIONAL DEBT AS A PERCENTAGE OF THE GDP AFTER THE GREAT DEPRESSION STARTING WITH WW2.  IT HAS NOTHING TO DO WITH THE SIZE OF GOVERNMENT DURING THE GREAT DEPRESSION...which as approximately 10% of GDP.

BUT IF YOU WANT TO DEAL WITH DEBT ON A NATIONAL BASIS, YOU MUST ADD IN THE DEBT OF CITIES, STATES, COUNTIES, HOSPITALS, SCHOOLS, FAMILIES, AND BUSINESSES....

RIGHT NOW, AMERICA HAS OVER $40 TRILLION DOLLARS OF DEBT....OR ABOUT $125,000 FOR EVERY MAN WOMAN AND CHILD....AND SINCE ONLY HALF OF OUR POPULATION PAY TAXES.....THAT WOULD BE $250,000 FOR EVERY TAX PAYING MAN WOMAN AND CHILD.....AND IF YOU INCLUDE ENTITLEMENTS, IT WOULD BE OVER $1,000,000 FOR EVERY MAN WOMAN AND CHILD....

BY THE WAY, RIGHT NOW OUR GDP IS BEING GOOSED BY $2 TRILLION OF DEFICIT SPENDING AGAINST A COLLAPSING TAX BASE....IF THAT BORROWING WASN'T OCCURING, OUR GDP WOULD BE COLLAPSING......

IN THE GREAT DEPRESSION, GOVERNMENT WAS MUCH MORE RESPONSIBLE WHICH ALLOWED US TO BORROW OUT OF IT LATER WHEN THE WAR STARTED.

NOW YOU ARE RESPONSIBLE FOR THIS  DEBT....SOON YOU WILL UNDERSTAND....AND YOU WILL UNDERSTAND THAT THIS IS MUCH WORSE THAN THE GREAT DEPRESSION AS THE DEBT IS MUCH GREATER

MAY I SUGGEST YOU PURCHASE NEW UNDERWEAR A COUPLE SIZES LARGER SO YOU CAN THINK A BIT MORE CREATIVELY.

Sorry about the all caps, not ment to scream but simply distinguish my content from yours.

ps:  as far as land values go, go talk to any experienced shoppoing center, condo, or office developer around the nation and ask him what undeveloped land is worth....you will be shock and awed.

 

 

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#5) On September 09, 2009 at 9:00 AM, alstry (35.93) wrote:

ps.... my little deej:

In 9.09 you will realize we are simply at the beginning......we still have a long long long way to go.....did I say long?????

We have only seen sub prime defaults....now we begin ARMs, option ARMs, interest only, CRE, Municipal, prime, mass layoffs, mass wage cuts, mass bankruptcies, mass foreclosures....etc.....

So far Alstrynomics has been dealing with what is leading up to what is really coming.....that is what 9.09 is all about.

Now you are prepared...why you are trying to compare the beginning of The Greatest Depression in History to the entire Great Depression??........

The September Slasher is just sharpening his knife and hitting the pavement

you need a bit more patience my friend....but you have made it to 9.09..........get ready for the ride of your life.

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#6) On September 09, 2009 at 9:09 AM, kaskoosek (46.58) wrote:

rofgile

could?

 

or will? 

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#7) On September 09, 2009 at 9:19 AM, JakilaTheHun (99.94) wrote:

My favorite new perma-bear trick is that they cite 17% unemployment and then say, the Feds exaggerate unemployment downward so that it looks better, meaning the real rate of unemployment must be 30%+.  

It is true that the Fed's official unemployment rate probably low-balls the actual number.  The problem comes with the fact that 17% isn't the "official unemployment figure"!  9.7% is the "official unemployment" number.

If you count underemployed and uncounted people in the official number, the unemployment number jumps to around 16% - 17%. So basically, the permabears take the most pessimistic view of the unemployment numbers, then declare it optimistic Fed manipulation, and then extrapolate that the *real* unemployment (ya know ... the one that counts unemployed chickens, ducks, and cows) must be 30%+!

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#8) On September 09, 2009 at 9:23 AM, alstry (35.93) wrote:

And if you count umemployed college graduates living at home and independent contractors not making a dime, the number is closer to 20%...

and if you use the definition of The Great Depression....anyone over 16 not working, the number is over 30%.

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#9) On September 09, 2009 at 9:43 AM, checklist34 (99.72) wrote:

but alstry, in the great depression a typical education was 8th grade.  100% of my great aunts/uncles (kids in that era) have 8th grade, 1 room school house educations.  They were legitimately part of the workforce by 14 or 15 or 16.  My grandfather wrote several patents on that 8th grade education, btw, something i've always been amazed by. 

And alstry, you aren't at your best when you go on the personal attack thing.  I saw this one other time, was that also at Deej?

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#10) On September 09, 2009 at 9:45 AM, abitare (51.94) wrote:

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#11) On September 09, 2009 at 9:49 AM, alstry (35.93) wrote:

Is it a personal attack to call someone a Fool?

Isn't this a collection of Motley Fools?????

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#12) On September 09, 2009 at 9:49 AM, goldminingXpert (29.51) wrote:

Didn't you post this yesterday? Loudly repeating that we aren't in a great depression does not an economic recovery make! How'd you like the consumer credit (or lack thereof) report yesterday? The economy shall recover, though consumers have no money and no access left to more debt. Yeah. It will. 

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#13) On September 09, 2009 at 9:50 AM, bigpeach (26.79) wrote:

You just knew this would happen. 9/9 would arrive, and Alstry would simply declare that he was right, despite all evidence to the contrary. Not to mention changing his story to "this is just the beginning," thereby allowing him to continue peddling his nonsense despite promises to quit.

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#14) On September 09, 2009 at 9:55 AM, TMFDeej (99.27) wrote:

You were born a Fool.  Are a Fool.  And likely always be a Fool.

MAY I SUGGEST YOU PURCHASE NEW UNDERWEAR A COUPLE SIZES LARGER SO YOU CAN THINK A BIT MORE CREATIVELY.

Hahahahahahaha.  Typical Alsty.  No time now, but thanks for giving me a good laugh.

Gold, how is that all-in short working out for you?  I think that the market is overvalued at this level as well, but I certainly would not be willing to make a large financing bet to that effect.  It's much easier to buy dividend paying bonds and stocks and let the money roll in every quarter. 

Deej

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#15) On September 09, 2009 at 10:09 AM, skeptic86 (88.88) wrote:

article for thought

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#16) On September 09, 2009 at 11:20 AM, davejh23 (< 20) wrote:

Deej,

Okay, you have a right to laugh at Alstry's personal attacks, but how about responding to his actual response?  Your chart doesn't include the 1930's.  It shows a huge rise in national debt to GDP during WWII, but doesn't prove anything.  Our GDP is being supported by the largest budget deficit ever.  Take away this temporary "stimulus", and consider the recent additions to our national debt, and you have to admit that we're probably closer to that 120% WWII level...probably more than double the level during the Great Depression?  Add in unfunded obligations and we're probably closer to 500%.  Also, you quote Alstry as saying "...land values down over 80% in many areas.", and then claim he's taking data from the worst hit areas and projecting it nationally.  The quote says "many areas".  I would say that this is a verifiable fact, and doesn't imply that things are this bad everywhere.  I'm not saying that you don't have valid arguments, but if you wanted to refute Alsty's claims, you could do better than this.

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#17) On September 09, 2009 at 12:40 PM, jddubya (< 20) wrote:

I haven't lived through the great depression, but I can see with my own eyes that we are not in the middle of anything like it.  That's something every single person using this website can attest to.

If this were worse than the great depression, it's not likely we'd be blogging much longer.  To even have the perception that we are seeing something worse than the great depression is soooo alarmist.

When me and my son are going hungry, then I'll know this is worse than the great depression.  Until then, the US is still the place to be.

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#18) On September 09, 2009 at 1:00 PM, davejh23 (< 20) wrote:

jddubya,

Do you understand that not everyone suffered through the Great Depression?  For some, life went on...a majority stayed employed.  Do you need to lose your job and starve to recognize that many people are struggling through difficult times today?  Your comments make it sounds like the world would end if we had another depression.  Without welfare and extended unemployment benefits, millions of families would be in a much more difficult situation than they are currently in.  One it nine families receives foodstamps, tens of millions receive welfare checks, and millions more have had their unemployment benefits extended.  Without these benefits that didn't exist during the Great Depression, don't you think we would see soup lines wrapping around the block?  I agree that this will never look like the Great Depression (unless the federal gov't cuts all welfare, etc...), but by most measures, the US is in far worse fiscal shape...because we're spending trillions to support our citizens...can this last forever?...or long enough for tax receipts to nearly double?  If so, then this might work itself out.  If not, things will get much worse.

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#19) On September 09, 2009 at 1:09 PM, davejh23 (< 20) wrote:

By the way, I don't wish for things to get worse.  I just know than many are struggling through very difficult times right now, and I think it shows a lack of compassion to say that all is well until it affects me.  For some families that have had their world turned upside down, and are struggling to feed children, this may feel like a depression now.

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#20) On September 09, 2009 at 1:48 PM, jddubya (< 20) wrote:

"I agree that this will never look like the Great Depression (unless the federal gov't cuts all welfare, etc...)"

Thanks for making my point more eloquently than I did.  And again, my wording has obviously given you the wrong impression of me.  Lack of compassion?  Whatever.  Don't misquote me.

"Do you need to lose your job and starve to recognize that many people are struggling through difficult times today?" 

Not sure where you conclude that I'm not recogizing what's going on right now.  Despite what anyone recogizes, my conclusion is still that the US is the place to be.  If you don't agree, then what country would you suggest?

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#21) On September 09, 2009 at 3:00 PM, RonChapmanJr (56.65) wrote:

-1 rec

The initial graph is useless as it does not cover the period being discussed.

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#22) On September 09, 2009 at 5:49 PM, Nainara (< 20) wrote:

Deej, I have great respect for your analysis of companies, sectors, and especially the automotive industry.

But your feeding of the trolls- not so much. 

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