Not-So-Great Depression vs. Great Recession

Alan Abelson offers the phrase “Not-So-Great Depression” to describe the current economic syndrome — but I much I prefer Doug Kass‘ phrase — the “Great Recession.”

Hey, if we are going to be in the crapper, can’t it at least be a for an enormo clusterfuck? Wouldn’t we want to be in a really bad recession over a merely mediocre depression?

The Not-So-Great Depression moniker is a backhanded jab at the remnants of the now departed Bush administration. Its as if Barron’s is saying that the most fitting legacy for one of the nation’s least popular presidents was that even his greatest screw up was only mediocre at best.


“With jobs vanishing at an alarming rate, consumer confidence is dwindling apace. The latest Conference Board reading sank to 25, the poorest showing in the four decades since the survey was started. Moreover, as Goldman Sachs’ Seamus Smyth points out, the real shocker in the dismal data is consumer’s expectations, which are as close to nil as we hope and pray they’ll every get: an unprecedented 27.5, sharply below the previous low of 45.2 set back in December 1973, when the economy and the stock market were going big-time into the tank.

If nothing else, the consumer’s sour, even forlorn, sentiment makes a mockery of the notion that the good old boy will come riding to the rescue, brandishing his wand of plastic. Not a chance; the poor guy lacks both the will and, more important, the wherewithal, to go charging off on a spending binge.

As MacroMaven’s savvy Stephanie Pomboy puts it in her usual understated style: “The U.S. consumer’s legendary lust for credit died with the housing bust. As he vows to live within his means — or even (children, cover your ears) reduce his debt — all of Ben’s horses and Nancy’s men cannot get consumers to borrow and spend.”

Stephanie goes on to warn that if, as she suspects, households attempt to live the way they did before assets were confused with income, consumer spending is destined to be restrained for a long, long stretch. That means, she logically infers, that corporate profits “will be depressed for years (not just quarters) to come.” A dire prospect, she allows, that has not exactly gone unnoticed by investors, as evident in the pathetic performance of equities.

In sum, nothing in the cruel hard data or the more ephemeral mood of the citizenry persuades us that we’ve seen even the beginnings of the end of the Not-So-Great Depression. So do yourself a favor: In viewing the stock market, no matter how tempting the occasional upticks, stay skeptical.”


The Not-So-Great Depression
FEBRUARY 28, 2009

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