Tuesday, November 18, 2008

Current Day Great Depression: What Would the Depression of 2008, 2009 and Beyond Look Like?

Mr Drake Bennett of the Boston Globe writes a beautiful / believable article on what the Depression of 2009 could look like if policy makers don’t take appropriate mitigating actions. The article does not state what the Federal government should do but details with exceptional detail what the depression would look like. Excerpts from Mr Bennett’s article include:

(1.) “Unlike the 1930s, when food and clothing were far more expensive, today we spend much of our money on healthcare, child care, and education, and we'd see uncomfortable changes in those parts of our lives.”

(2.) “The lines wouldn't be outside soup kitchens but at emergency rooms, and rather than itinerant farmers we could see waves of laid-off office workers leaving homes to foreclosure and heading for areas of the country where there's more work - or just a relative with a free room over the garage.”

(3.) “Already hollowed-out manufacturing cities could be all but deserted, and suburban neighborhoods left checkerboarded, with abandoned houses next to overcrowded ones.”

(4.) “And above all, a depression circa 2009 might be a less visible and more isolating experience... Instead of dusty farm families, the icon of a modern-day depression might be something as subtle as the flickering glow of millions of televisions glimpsed through living room windows… the cheapest form of distraction available.”

(5.) “To be worthy of the name, a depression needs to be more than a few years long - far longer than the eight-month average of our recent recessions - and it needs to put a lot of people out of work.”

(6.) “The Great Depression lasted a decade by some measures, and at its worst, one in four American workers was out of a job. (By comparison, unemployment now is at a 14-year high of 6.5 percent.)”

(7.) “In a modern depression, the swelling ranks of the unemployed would likely change the landscape of the country, uprooting people who would rather stay where they are and trapping people who want to move.”

(8.) “Renting an apartment - perhaps in a city, where commuting costs are lower - might be more tempting.”

(9.) “Many suburban areas have already seen upticks in crime in recent years, which would only get worse as tax-poor towns spent less money on policing and public services.”

(10.) “young families moving back to their hometowns to live with the grandparents when they can no longer afford to live on their own, parents moving in with their adult children when their postretirement fixed incomes can no longer support them.”

(11.) “Lean times might kill off much of the taboo around buying hand-me-downs, and with modern distribution networks - and a push from the reduce-reuse-recycle mind-set of environmentalism - we might see the development of nationwide used-clothing chains.”

(12.) “New technology would grow less seductive, basic reliability more important… The neighborhood appliance shop could reappear in a new form - unlicensed, with hacked cellphones and rebuilt computers.”

(13.) “specialty and organic food - which drove the success of chains like Whole Foods - would seem pointlessly expensive.”

(14.) “Among the green lawns of suburbia, kitchen gardens would spring up. And it might go well beyond just growing your own tomatoes: early last month, the English bookstore chain Waterstone's reported a 200 percent increase in the sales of books on keeping chickens.”

(15.) There will be more demand for “meals like packaged macaroni and cheese and drive-through fast food.” Basically, “cheaper, easier calories.”

(16.) “Dropping health insurance would be an immediate way for families to save hundreds of dollars per month.” Emergency rooms will see increased demand and longer waits at least in part from the increasing numbers of uninsured as well as consolidation of ERs.

(17.) “In their place people could rely more on federally-funded health centers, or the growing number of drugstore clinics, like the MinuteClinics in CVS branches, for vaccines, physicals, strep throat tests, and other basic medical care.”

(18.) “Students unable to afford private universities would opt for public universities, students unable to afford four-year colleges would opt for community colleges, and students unable to afford community college wouldn't go at all. With fewer applicants, admissions standards would drop, with spots that once would have been filled by more qualified, poorer students going instead to wealthier applicants who before would not have made the cut.”

(19.) “A depression would last too long for unemployed college graduates to ride out the downturn in business or law school, so people would have to change career plans entirely.”

(20.) There will be an “uptick in applications and interest is government work”

(21.) “The Depression was, famously, a boom time for movies - people flocked to cheap double features to escape the dreariness of their everyday poverty. Today, however, movies are no longer cheap. Nor is a day at the ballpark.”

(22.) “Much of a modern depression would unfold in the domestic sphere: people driving less, shopping less, and eating in their houses more. They would watch television at home; unemployed parents would watch over their own kids instead of taking them to day care. With online banking, it would even be possible to have a bank run in which no one leaves the comfort of their home.”

(23.) “Depression, unsurprisingly, is higher in economically distressed households; so is domestic violence. Suicide rates go up in tough times, marriage rates and birthrates go down. And while divorce rates usually rise in recessions, they dropped during the Great Depression, in part because unhappy couples found they simply couldn't afford separation.”

Here is Mr Bennett’s full article.

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