Deflation Sources

Indeed a very scary bottom line Roy, its like driving on a high way on the wrong side  in the wrong direction, - against the traffic, called ghost drivers in Europe, don't know the expression in the US.

I think that should be applied to B&B for not changing the course.

Your points make sense for the US situation, but it isn't applying to Europe. In the UK, the economy is going just fine and has not changed markedly at all during the recession. I see nothing but full shops, restaurants and bars. If anything, there is inflation, not deflation. In London, house prices have not gone down, and are now going back up again. Unemployment is low. The US is hurting, yes, but the rest of the world is already coming out of recession.

I really think much of your analysis is flawed, it's because your reading doom and gloom pointers in their worst case scenario's.  Yes the US economy is bad but that was mainly due to the initial problem being completely over hyped, which caused panic selling and total distrust of the market place not just in USA but world wide.

If nothing had been done its my opinion that the problem would have eventually sorted it self out even though more banks and businesses went bust. There would of course been a declared depression as the GDP would have been more than 9%. The Stimulant was really a means to eradicate much of the recession hype and it would have never been enough money or policies to cure, it was never meant to be.  It was used to inject confidence and attract and install and regain confidence in the market place. Attract the bigger investor to once again invest and then later the smaller investors to follow suit.

The Bailouts where to companies that had a big history of employing large volumes of employee's was of course to keep down the unemployment queues. Not a very good idea really as such policy normally just delay's the problem.

The bail out principles concerning banks where in my mind outlandish as the many of the larger banks did not need such stimulation it was the smaller ones that needed the attention. Insuring savers money at the banks was however a good part of the plan.

Looking at the stimulus as "Oh they thought it would save the world" is the total wrong path to take. Notice that the world stocks markets have a long history of recovering that started two months after the media hype started to ease off, due to the recession being a well wrung out story. The charts have only slid when somebody in political circles had re-hyped the problem.   

The total answer has been that people like to make money and those that have money invest money to make money. That's how recessions actual recover and governments can only upset the apple cart by their tinkering and also help by doing something right at the same time, lol

It really does not help if people really want to see this recession over if they hype a recession into making it seem a depression especial when there is constant signs that recovery is taking place.

What is really the problem concerning governments is they are normal puppets to the business world and that's where most advice concerning economics perambulates from of course corruption is rampant.

Prior to calling a recession a depression there should be no upswing of improving markets all down swing or the markets in a low limbo for 3 years or more. It's also thought that if the GPD is plus 9% for more than a few quarters one can declare a recession an economical depression.

So technical you could be seen as hyping doom and gloom on just that techicality.

For those not sure of the difference seemingly the Wiki definition is spot on with modern day understanding of economic's  http://en.wikipedia.org/wiki/Economic_depression   

Thanks BF, your view is from a different angle as mine. That won't mean you are right and I'm wrong on the subject or visa versa. What I applied is the math which don't add up, what you apply is lightning out the bright spots. In the end it are apples and pears that can't be added together.

Amazingly you write: "The Bailouts where to companies that had a big history of employing large volumes of employee's was of course to keep down the unemployment queues. Not a very good idea really as such policy normally just delay's the problem. you write: "The Bailouts where to companies that had a big history of employing large volumes of employee's was of course to keep down the unemployment queues. Not a very good idea really as such policy normally just delay's the problem."

Which is very much correct the bailouts shouldn't have been spent in such places. As the world has too much of everything, as a result of the easy money policy from Greenspan and Bernanke the world production capacity has grown with 30 - 40% under fake economic conditions. This has got to be reduced, which in economic terms is called Creative Destruction. When that process is finished new growth can be created and expected. But unfortunately what have grown out of proportion during a period of about 50 years is not re-addressed in a short period of time.

The problem is no one trusts the US anymore. It is not a depression, nor a recession. Those conditions exists when people do trust the government, and work to get it back up to speed. The present situation is more than that. We had an attack on the USA...and people do not believe the 911 government version of lies...especially when they deliberately shut down investigations...and to make matters worse...they lied about the wars....and killed over a million innocent people. You think people are dumb...and just forget that? You'd be better to show an earth balloon picture with bullet holes in it, and blood flowing everywhere.

The US government thinks we just simply forget those things.....and have great admiration and trust in the US government? Hell no.........In Fact the people are purposely working their way out of the USA. Many are seeking banking and jobs outside the USA...to keep the money out of the hands of the criminals who took control of the US government.

There will be no good news for the economy...no matter who is voted in....when they purposely refuse to bring those responsible for doing the terror on 911...namely the inside secret US government. We aren't dumb....and I said it before....There is no trust anymore in the nimwits who run the country in the USA. That is no Depression, and no Recession...it is entirely different... Mark my word PIM... You got it wrong.

The Rev

Djermano partly I do agree with you, the Government is lying and will continue to do so, until the electorate - the American people - get awake and vote against these unprecedented manipulations. If the government continues on this course, bad will come to worse. All the trust once given will be definitely spoiled for a very long time to come. Thanks for yr opinion.

PIM, much impressed with this article.

I am curious about the effects of several millions - perhaps up to 10-20 million - of immigrants leaving the US because of the economy.

That would decrease the labor pool, cut down on money leaving the country (the money sent home to families), but it would also reduce the consumer market.

Net loss or gain?  Any ideas?

A very good point you make HA. Logic thinking brings me to the following analysis: 10 - 20 millions immigrants leaving the US certainly has its impact. But these immigrants probably are jobless and don't have -sufficient- income otherwise they wouldn't leave. So they aren't consumers that contribute to an eventual economic stimulus and growth. The present economic situation requires creative destruction, because there is 30 - 40% overcapacity that should be reduced and only their departure accelerates this necessary process, which has a positive contributing effect on the domestic economy as a whole. Further their skills learned in the US will be applied in their native country and stimulate development and growth on their home turf. In the end this will be beneficial for both. Concluding there is no loss or gain.

I would disagree with you PIM.... It means more blue collar jobs lost....and no expansionism goals by white collar bosses..who can't now make their profits from the cheap immigrant worker pay. No workers..means no product...and that boils down to no profit to them. It means contraction...and America falls into a  system of reform. US citizen workers refuse to work for the peanuts and they will not fill in those jobs....left by immigrants. They are always fighting for the increase of minimum wage....that illegals never cared about.

Why immigrants and illegals are leaving? Because of the Wall Street Scams and the failed banks. The expansionist goals of the elite fell through when the lies they sowed finally reaped at harvest time. They also realize that if American's can't find jobs...it will be doubly more difficult for them to survive in hostile watching communities.. America being the gun culture, illegals are finding that it's probably safer in their own countries..than in the US. Besides that..many foreign countries are more free to do things, than in the US. Those people recognize that the American media has been lying all a long....as I found out with real China...verses the American interpretation of China....So this misinterpretation; spread as truth in America finds its way into other countries as well. Certainly Mexico is learning that lesson.

http://news.yahoo.com/s/ap/us_madoff_associate_death

Immigrants who come to work in the US make peanuts compared to white collar jobs..but those peanuts are a big profit in comparison to their home country currency values. This is how China made big bucks, with its exporting, although they had no massive immigration exodus to the US......

So is this good or bad?  It is bad news for the Elites....and I say bravo to that... It is bad for economic growth..but that is good in the eyes of Climate Change..and Global Warming.....

The trick or treats in this is that the winners will be the environmental concious people, while the tricksters in the Private Government of the USA continue on the War path...... Afterall real Americans don't pick cabbages and lettuce....they join the Army and Airforce to kill those damn foreigners...who are against the American way.

The Rev.

Another way of looking at this question djermano, thanks for yr opinion and contribution. However one fact remains as you correctly pointed out; there is contraction and reform is going to be essential. In Spain for example the immigrants left, because the Spaniards wanted there -temporarily - jobs, for which in the good days they had no interest, likely the same change may occur in the US. Everyone has to work for a living, since the free lunches from the government won't last forever.

Exactly PIM....everyone has the right to have a job... I think that should be first on the agenda, that being can give America it's badly needed healthcare plan for Americans.

The Rev