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by
Tom Blumer

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June 5, 2014 - 7:23 am
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At West Point last week, President Barack Obama went to a variant of an economic theme he’ll probably reprise until the day he leaves the Oval Office once and for all (we hope) 31-plus months from now.

Obama told the assembled graduating Army cadets and their families:

When I first spoke at West Point in (December) 2009 … our nation was just beginning a long climb out of the worst economic crisis since the Great Depression.

What if I told you that nearly five years into the nation’s “long climb” out of the recession, the relative size of the economy compared to its prerecession peak is not all that different from the result achieved in the same amount of time after the Great Depression of 1928-1933 officially ended? The case for this claim is surprisingly, or maybe I should say “unexpectedly,” strong.

I’m certainly not contending that the level of human suffering in 2014 is anywhere near what it was during the 1930s. That said, readers should know, if they don’t already, that the press has been mostly ignoring significant increases in homelessness in New York City, which “has more homeless than it has in decades,” and elsewhere. Minor reductions in the number of people literally living on the streets and in shelters are being more than offset by the hordes of American individuals and families living in cheap weekly motels because they can’t even scrape together the money for a security deposit on an apartment. When the press does deign to ever so briefly open its eyes, unlike during Republican administrations, they don’t tie the situation to economic policies coming out of Washington, and certainly not to our country’s president.

I should also note that the government presented only annual economic growth statistics until 1947, but that the Depression itself and the recession of 1937-1938 officially began and ended at various times during the years involved. This necessarily required some estimation when attempting to compare that era to the current one.

Let’s start with where we are after the dismal news on May 29 that the economy contracted at an annual rate of 1.0 percent in this year’s first quarter:

GrowthSince2008to2009Recession

The full post-recession history shows that the economy finally returned to its pre-recession peak in the second quarter of 2011, the eighth quarter after the recession’s official end. No other post-World War II economy took longer than three quarters to accomplish this.

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Top Rated Comments   
Of course.

Just as will happen when the Feckless Fed stops the influx of $85 billion of borrowed a month - funny money has a way of temporarily plugging the holes and inflating the market but not fixing the dam. And when the holes quit being plugged, you better start swimming, chemist.

Which leads our next paradox and the clear failure of Keynesian economics. As government has invested more of itself trying to steer the ship, two immutable events have happened:

Middle class wages have continued to drop; work force participation rates have continued to drop.

Like I said. Obama is an even greater failure than most realize. Yes We Can!

24 weeks ago
24 weeks ago Link To Comment
Precisely, Tex.

Bush didn't cause the downturn, Barney Frank/Dodd and ACORN planted those seeds.

And the Job Robber "recovery" from the Fannie/Freddie cooked books implosion, is the Woodstock Weathermen "transforming" capitalism into small c communism.

The reason the Job Robber "recovery" is anemic, is because the traitors at the wheel don't want it to get back on track. They want it on an entirely different track. To them, "recovery" isn't giving the economy a boost back into a stronger position, it is permanently making "dependents" out of the victim class. Pushing entitlements down the throats of people who want to work and handouts in the the palms of those who don't....while stealing accumulated wealth from those who EARNED it.
24 weeks ago
24 weeks ago Link To Comment
Hard to argue Tom, but I take a different perspective - and even more cynical one.

In fact, I think I cold make a good case that the recession of '81/82' was worse than what Obama inherited and in fact, much of what George Bush was blamed for was a ruse, sold to a gullible public to shift the blame from where it really belonged: Lending practices pushed for years in the name of 'diversity' and bailouts to large, predominately Democratic connected, passing the buck to the millions of average schmoes for a bailout.

What drove the supposed 2nd Depression was as much marketing ploy by a corrupt media and the herd mentality as anything. I think there were some corrupt but shrewd players behind the scenes that pushed fear of a financial collapse and with irrational fear, the gullible American public followed.

The scenario was set for Barack Obama to look the savior - a pipe dream since at least the Jimmy Carter days to end the perception that Republican policies were better for business.

But these well heeled, well connected players didn't count on something. Keynesian economics doesn't work. Never has. Never worked while FDR President either. The American economy really only recovered after WWII. Why? America dominated the world for at least 30 years after that with little global competition. Europe was in disarray; Japan an ash heap, China still 3rd world, American petroleum, the lifeblood of our economy cheap and abundant.

These experts incorrectly believed Keynesian economics had created the good times. But that wasn't the solution. It was the simple fact the world quickly became dependent on the winner of the war - us.

Which leads to my real point.

Barack Obama and his band of merry thieves have been an even more epic failure than most people even dream. And if we don't set a correct path soon, the damage to American economics may become irreparable.
24 weeks ago
24 weeks ago Link To Comment
All Comments   (16)
All Comments   (16)
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We are in Great Depression 2.0 with no end in sight. It's just like the deflationary depression being experienced by Japan for the last 2.5 decades, and for the same reason, excessive debt. This shrinks the money supply, which according to the only Law of Economics "Supply and Demand", forces the value of money up creating deflation, and making the excessive debt both more valuable and harder to pay off.

The effects of deflation are:
1. High Unemployment
2. High Bankruptcy rate
3. High Debt levels resulting in unwillingness to take on more debt
4. Low interest rates
5. High foreclosures
6. Falling Wages
7. Low inflation despite the Fed's printing of Trillions of Dollars. What inflation there is, is created by Government bottlenecks like the alcohol in gasoline subsidy, which drives up gas and food prices and costs the taxpayer as well.
8. Banks are willing to lend only to the most credit worthy, and they raise credit standards to insure they will be paid back.
9. When Banks don't lend our fractionated banking system (look it up you can’t understand capitalism without an understanding of it) doesn't increase the money supply, as the monetary measure M3 money supply hasn't grown in 5 years despite Trillions in Fed printing proves.
24 weeks ago
24 weeks ago Link To Comment
Recovery? Yes the stock market is at an all time high, but that's artificial. Unemployment is still awful and shows no sign of getting better - the Obamacare employer mandate will make sure that a whole lot more people will be without jobs. College students are graduating with staggering debt and can't find jobs. Record numbers of people have simply left the job market and joined the plantation. The Fed keeps grinding out money to prop the whole Ponzi scheme up. Double digit inflation is just around the corner. Then things will start to get REALLY ugly.
24 weeks ago
24 weeks ago Link To Comment
great recovery started with ww2 , rise of germany,italy,japan, FDR . what are we in for . WAKE UP !
24 weeks ago
24 weeks ago Link To Comment
The core of the problem is huge governmental involvement in capitalism. Get government out of the market and everything's fine.
24 weeks ago
24 weeks ago Link To Comment
Great job Tom, you've discovered that the Great Recessions is the nation's worst recession since the Great Depression. More amazing work.
24 weeks ago
24 weeks ago Link To Comment
And isn't it interesting that these two historic economic events were both exacerbated by governmental "Stimulus" efforts.

"We have tried spending money. We are spending more than we have ever spent before and it does not work."

-- Henry Morgenthau, Jr., Secretary of the Treasury under FDR, in deposition to Congress, 1937.
24 weeks ago
24 weeks ago Link To Comment
After those statement by Mr. Morgenthau (and others) Congress severely cut back spending in 1937. This was, as I'm sure you are aware, with an immediate contraction in the conomy and the recession of 1938.

History... its more than just excised quotes!
24 weeks ago
24 weeks ago Link To Comment
Certainly. The economy had become dependent on government handouts, rather than a robust economic clime in which to perform on their own.

No, I do not make "cut and paste" quoytes for your benefit.
24 weeks ago
24 weeks ago Link To Comment
The other reason was that they cut spending - but didn't chop up all of the FDR "recovery" programs that stifled private investment.

This is why the people fixated on "balanced budget" are idiots - it is only one small part of the problem (albeit a necessary one).
24 weeks ago
24 weeks ago Link To Comment
Of course.

Just as will happen when the Feckless Fed stops the influx of $85 billion of borrowed a month - funny money has a way of temporarily plugging the holes and inflating the market but not fixing the dam. And when the holes quit being plugged, you better start swimming, chemist.

Which leads our next paradox and the clear failure of Keynesian economics. As government has invested more of itself trying to steer the ship, two immutable events have happened:

Middle class wages have continued to drop; work force participation rates have continued to drop.

Like I said. Obama is an even greater failure than most realize. Yes We Can!

24 weeks ago
24 weeks ago Link To Comment
Tex, I applaud your trying to use reason with NYChemist.

Though NYChemist has time and time again proven to be but another lifelong public sector union, more than likely tenured ahem 'academic' where REAL budget constraints/ checks & balances 'take place' with rising college costs, government interventionism sold under 'fairness' reasons..

Iow 'Chemist' lives in illiberal economic lala land.
24 weeks ago
24 weeks ago Link To Comment
Hard to argue Tom, but I take a different perspective - and even more cynical one.

In fact, I think I cold make a good case that the recession of '81/82' was worse than what Obama inherited and in fact, much of what George Bush was blamed for was a ruse, sold to a gullible public to shift the blame from where it really belonged: Lending practices pushed for years in the name of 'diversity' and bailouts to large, predominately Democratic connected, passing the buck to the millions of average schmoes for a bailout.

What drove the supposed 2nd Depression was as much marketing ploy by a corrupt media and the herd mentality as anything. I think there were some corrupt but shrewd players behind the scenes that pushed fear of a financial collapse and with irrational fear, the gullible American public followed.

The scenario was set for Barack Obama to look the savior - a pipe dream since at least the Jimmy Carter days to end the perception that Republican policies were better for business.

But these well heeled, well connected players didn't count on something. Keynesian economics doesn't work. Never has. Never worked while FDR President either. The American economy really only recovered after WWII. Why? America dominated the world for at least 30 years after that with little global competition. Europe was in disarray; Japan an ash heap, China still 3rd world, American petroleum, the lifeblood of our economy cheap and abundant.

These experts incorrectly believed Keynesian economics had created the good times. But that wasn't the solution. It was the simple fact the world quickly became dependent on the winner of the war - us.

Which leads to my real point.

Barack Obama and his band of merry thieves have been an even more epic failure than most people even dream. And if we don't set a correct path soon, the damage to American economics may become irreparable.
24 weeks ago
24 weeks ago Link To Comment
It's the POR economy and not the Bush economy which drove us into the recession, and made it worse:

http://pjmedia.com/blog/our-recession-began-in-earnest-after-obamas-election/
24 weeks ago
24 weeks ago Link To Comment
LOL. I had to look what POR economy was, but I shouldn't have.

I'm so used to equating Obama = poor, I couldn't get that out of my mind.
24 weeks ago
24 weeks ago Link To Comment
Precisely, Tex.

Bush didn't cause the downturn, Barney Frank/Dodd and ACORN planted those seeds.

And the Job Robber "recovery" from the Fannie/Freddie cooked books implosion, is the Woodstock Weathermen "transforming" capitalism into small c communism.

The reason the Job Robber "recovery" is anemic, is because the traitors at the wheel don't want it to get back on track. They want it on an entirely different track. To them, "recovery" isn't giving the economy a boost back into a stronger position, it is permanently making "dependents" out of the victim class. Pushing entitlements down the throats of people who want to work and handouts in the the palms of those who don't....while stealing accumulated wealth from those who EARNED it.
24 weeks ago
24 weeks ago Link To Comment
This is a Fed-caused mess that has been 100 years in the making. Obama's idiotic policies have increased the rate of deterioration, but the Fed financing of USG deficits has put the US (and the world) on a course towards a financial failure of epic proportions. Our debt and unfunded liabilities are so huge that they can never be paid off--only deflated away (i.e., defaulted) or inflated away. No politician is ever going to speak the truth and no public school-educated citizen would grasp the problem and solution even if they did.

Face it: we're f*cked and it's just a matter of time before TSHTF.
24 weeks ago
24 weeks ago Link To Comment
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