I’m moving the blog to my own host, livinginwartime.com. Please join me there.
In California many state workers have been put on “furlough”. These forced days “off” are accompanied by a reduction in pay. Though temporary, they are particularly difficult for those with lots of obligations. It’s a relative, right? Someone pulling down $600,000 a year with multiple mortgages, loans, and college tuition for several kids might find it hard to deal with a 10 or 20 percent cut. Although it is difficult to imagine that such a scenario trumps the lower wage worker who also suffers a 10 percent cut. read more…
Over at The Atlantic, Megan McArdle had this to say about the analogy between the current recession and the Great Depression.
I don’t want to push the Great Depression analogy too far, but what’s surprising when you go back to primary sources from 1930 is the optimism. I don’t mean to imply that everyone thinks things are just swell. But while you know that they are facing the worst economic decade of the twentieth century, they don’t. They’re expecting something more like the recession that followed World War I. People are cutting back, but they’re still spending, particularly because companies are slashing prices to move inventory. It was the long grind of the years that followed, and the catastrophe of the second banking crisis, that scarred them permanently. And this shows up in the economics stats and the stock market, which did not, as we like to imagine, simply decline in a straight line.
No inaugural bash as usual for University of North Carolina at Greensboro.
Harvard Economic professor Robert Barro on lessons from the Great Depression. He’s interviewed by the website, The Browser.
B: I thought that the Great Depression was the ultimate cautionary tale on the dangers of protectionism. That’s not the case?
RB: No I think what is much clearer is the role of the financial system and the credit implosion, both in the 1930s and today. The rest of the stuff may just be a sideshow, it may not be that important. There’s a strong tendency for the economy to recover on its own, as long as it’s not subject to further new shocks, so a likely scenario is that that is what will happen today as well. And then the Obama administration will say that it’s because of our policy that things recovered, and there won’t be any way to prove whether that’s right or wrong.
Even though the topic isn’t always pleasant, this blog has helped me to learn more about the past srtuggles and economic conflicts. The Haymarket Srike is one example.
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Mort Zuckerman suggests ways for avoid a “deep” recession. The article is from October 2008. I wonder what his views are now.
The inescapable bad news is that a serious recession is inevitable given the damage to the financial sector and the degree to which business and the public have been traumatized. But this does not mean we must spiral to depths rivaling the ’30s. The risks are there, all right, in unexploded financial land mines (those toxic assets) and the unprecedented debt of American families and businesses, though so far, we’ve avoided some of the mistakes of 1929. But much more must be done.
Tips from Bankrate.com from bailing yourself out on groceries, health care, mortgages, utilities bills and more.
And not a moment too soon it seems.
“It’s huge,” said Martha Olney, an economics professor at the University of California, Berkeley, who specializes in the Great Depression, consumerism and indebtedness. The rapid reversal is even more remarkable, she said, because in recessions consumers usually save less money. Not this time. “It implies a re-emergence of thrift as a value,” she said.
I’m so glad to see MIT and other universities opening up their courses. Free. Sweet.
