The horror.....

Most of the people who say that don't know much about the great
depression. Pop quiz: what was the peak unemployment level in Oz and the
US during the great depression to the nearest 5% (1). After you've
googled that come back and tell me if you REALLY think we'll hit that
this time.

There are a number of parallels, I'm fairly confident the cycle will
match - it has so far (including the stock market upturn in march ) but
across the board the percentages have been smaller. Maybe just
"Depression" instead of "great depression"

Well if it really is going to be a depression greater than the last one
I think I'd be well advised to hang onto that bone !!

;-) Well that's consistent with the majority of Australia's population
then ...

JL
(1) the rounding number should be a clue

 

There there Moike, it's ok to be afraid of the awesomeness of Clem's
Ad-Power... Let's just cross our collective fingers that the REAL ad-men
never get hold of him, or we're all doomed! I reckon he could coin a slogan
that would have us all panting to buy a bridge/pyramid/igloo somewhere...

betty
(Gruen Transfer? I don't actually watch telly so I may well be immune
anyway...)

 

In aus.motorcycles on Thu, 02 Apr 2009 21:51:54 +1100

Measured how?

Unless you are sure they are measuring the same thing, it's hard to
match the stats.

For example, there is a definition of "Full time" work that is
something ridiculous like 5 hours a week. (I recall that being used
by the Howard Government to say how well they had got people into
work....)

Zebee

 

With a tape measure and a pair of scales ?

True enough - damn lies and statistics etc - however the raw
unemployment figures of the depression are scary enough without having
to worry about splitting hairs, particularlyy when considered in light
of the single male breadwinner model prevalent back then - two working
parents being cut down to one income has lesser real impact than 1 to zero

Yeah I know, but the huge difference between unemployment rates in the
20-30% range to the current 8% in the US predicted to go to 11% and 5%
to 9% (Oz) means that even if there's a fudge factor going on you're not
talking the same levels of impact

JL

 

In aus.motorcycles on Thu, 02 Apr 2009 23:09:02 +1100

Indeed. And add in the things we have such as most people having
access to cheap or free medical care...

Mum grew up in the depression and has an utter horror of throwing
anything away, especially food.

"You might not be able to get another one". Recycle and reuse and buy
2nd hand.

And her family was solid middle class with her father in work the
whole time. Considerably less of a struggle than many.

I seem to recall the suicide rate was shocking.

Zebee

 

I was going to suggest "lessor depression" yesterday but somehow I think
the "the sky's falling down" types won't go for that.

I actually think it's more accurate than something like "greater
recession" FWIW *shrug*.

But yeah... just plain old "Depression" would work.


G-S

 

Could you perhaps re-write that paragraph to be a little less
patronising, John? Thanks.

I already know that unemployment (as measured by the standards of the
day) approached 30% in Australia. As it happens, Australia was hit
much harder than the USA and Europe because we were primarily an
agricultural and resource exporting country, with relatively little
manufacturing. That looks quite similar to today's situation, and if
the vast majority of our trading partners (i.e. the ones who do our
manufacturing for us) are cutting back the numbers of widgets produced
this year by > 30% we certainly won't be selling them as much coal/
iron ore/aluminium.

The percentages have been smaller *so far* - we're still only at the
start of the process.

I should of course point out that I think both Murphy[1] and Hanrahan
[2] were relentlessly cheerful, sunny optimists.


BTH
[1] http://en.wikipedia.org/wiki/Murphy's_law
[2] http://www.middlemiss.org/lit/authors/obrienj/poetry/hanrahan.html

 

Good thing for the planet and your grand kids' future, I'd say...

=================

Onya bike

Gerry

 

No grand kids here, mate.


BTH

 

I said it that way becasue I _know_ I won't be having any grand kids,
but you I didn't know about...

=================

Onya bike

Gerry

 

I apologise for being patronising, however given you obviously are aware
of the statistics of the 30's please explain then how you think we can
get to the same point as we were then. There's huge differences in both
our economic makeup and the understanding by govts on how to address
these issues

Hmmm, well I'll have to go back to some historical documents to rebut
that with any surety, but my recollection of my Econ History lectures
differs to that - while massively impacted like most countries I thought
we were somewhat less hit.

While true that we're at the start of the process - we're about 12
months into the cycle where strong parallels are evident - and across
that entire length we've been a "lesser depression" as GS puts it - the
pattern is the same but across the board (both US and Oz) the scale of
the impact is smaller. There's a number of reasons for that, a key one
is that the US has reacted in a far more useful way this time, as has
our govt.

Also one of the key things that impacted countries like Oz was the
"beggar your neighbour" protectionist policies

Yes, well, we'll see I guess.

JL
(and yes I know who those pair are)

 

Do you mean that protectionist policies beggar your neighbour? If
so, could you explain why that is so?

=================

Onya bike

Gerry

 

The phrase "beggar your neighbour" means to act in a self interested way
to the detriment of another country, with a subtext of it not actually
being long term successful

http://tinyurl.com/cqndmh

Is the best explanation I could find at a quick google

The bit that says "Box 6.1 the spiderweb spiral"

Basically it's where countries do something that sounds like it will
protect them at the expense of their neighbours, but it actually makes
them (and everyone) worse off.

The classic example being the "buy american" policies implemented in the
'30s - which quickly lead to a spiral of protectionism which left
everyone worse off. Similar financial activity happened in the same time
period where countries revalued currencies to try and make their own
situations better which just led to an "arms race" in devaluation

Obama is on record as saying he's well aware this would be a mistake,
and specifically amended a recent bill which would have required US
state contractors to only buy US steel

JL

 

That sounds awfully familiar.


BTH

 

You know that old saying about how your pilot should always be 2
minutes ahead of where his plane is currently at? As in, being pro-
active not reactive?

I don't think that's happening. I also don't think that you can have
a soft landing when you're coming down from the biggest series of
bubbles ever. What I see our government doing right now is pumping up
our own home-grown version of US subprime mortgages, getting first
home buyers into mountains of debt at the peak of the market. A
median mortgage of $450k only makes sense if the median wage is
$150k. Clearly it's not. I think that this situation is not going to
end well.


BTH

 

OK, I get what the link is saying, but I find all of this very black
and white, very "X happened, and it was caused by Y" but without any
real proof that X was caused by Y.

Similarly your own response merely says X caused Y without showing
how/why Y caused X. If you read what I asked, I asked for an
explanation of how/why Y caysed X.

I fail to see why a country can't work towards maximum self
sufficiency (and that requires a degree of tariff protection) and
still engage actively in trade. i.e. to trade you create a surpup
production of something which you sell to someone who has a dificit of
that item but a surplus of something else which you need.

IOW, instead of breeding economic co-dependency, why not breed
economic independence?


=================

Onya bike

Gerry

 

I'm pretty certain convertibles come with a roof--that should keep the
sun off just fine.

Pat

 

The problem is quite simple, if you start jacking up tariffs, your
trading partners jack up tariffs and the whole thing spirals downwards.

Tariffs aren't the way you work towards self sufficiency. Govt
subsidised research is a far more effective way to achieve that - as you
become the most productive country in each key area then you can out
compete your neighbours and hence not need a tariff to protect
inefficiency (in fact you then lobby your neighbours to drop their
tariffs by offering to drop yours).

Of course if you want to be the number 1 most efficient country so that
no can out compete you, it's going to lead to an utterly deregulated job
market where those with poor skills sets get paid wages akin to Chinese
labourers, because there's a limited number of ways you can outcompete
labour intensive industries

Depends on how you define it, but it's either an unachievable utopia
(based on my assumptions on what parameters you'd find acceptable) or
going to lead to unintended consequences I doubt you'll like

If you were someone who was into tuning internal combustion engines for
performance I could draw analogies, but I gather you're not.

JL

 

Well that state is empirically not true in NSW. The housing market
across the board has tanked although the change has varied according to
location and house value. The peak of the market overall was about
18months ago, the first home buyers market in Sydney BOTTOMED about 12
months ago and is counter cyclical to much of what is going on, so
historically the increase in low end house prices in Sydney while
swinging upwards is still a LONG way short of peak.

In other states the above is also broadly true although there is some
differences (Perth for example is coming off the peak across the board
and the first home buyers has had much less impact apparently)

Perhaps you could explain that statement a little further - median by
state ? Median across all of Oz (in which case it's getting pushed up by
the higher house values and average wages in Syd and Melb), and further
why does 450 only make sense if you earn 150K ? I know a lot of people
on a lot less than that who are managing to service those sorts of loans

Perhaps I'm thick but your point isn't clear to me

<shrug> perhaps. I think you're overly pessimistic, all the modelling
I've seen says "ugly recession, possibly the worst since the 30's but
very unlikely to exceed it"

FWIW I predict a general slowish uptick in the AllOrds over the next 4-6
months with another downtick of 10-15% at that time (Aug -Oct). That
pattern should repeat itself over 2-3 years on a general upward trend
with a significant lift in late 2011, early 2012. Unemployment will peak
at about 11% in mid 2010 (noting I'm adding 2% to the most occuring
current prediction of 9% just because I'm a cynic as well).

Overall general impact will be greater than the technical recession of
01/02 and the real recession of 90-92 (I think that's the right years),
and may be greater on some scores but possibly not all than the '82-83
recession.

That's a synthesis of several models so it's a "most likely scenario".
Take it with a grain of salt of course.

JL
This is not financial advice, see your planner,historic performance may
not indicate future performance, everything I say is a lie, yada yada,

 

Why? How?

Well, that's a nice absolutist statement.

So it's all about out-competing, "efficiency", and productivity, is
it? And you cant's see where that must eventually end up?

I seriously reckon you should read that book I suggested before
Christmas. Then again, there's probably no point in that if you're
just going to dismiss it.

Yes, there's only a black or white outcome, eh?

Nice put-down.

=================

Onya bike

Gerry