Some of you may want to still deny that we are in a recession. Others believe we are in a depression. So what is really going on? We have seen the housing industry fall, the food prices skyrocket, and the gas go up. Here are the facts and tips to be prepared for the worst. I would suggest you take the time to read this because it could help you.
Since many economist have defined recession and depression differently it is very hard to come up with a solid definition for both. But a Harvard economist states that a recession is a drop in employment and production. Economist Robert Nathan defines a recession as a decline which last 6 months to a year. Now all of this is very confusing when it comes to depression and recession.
Here are the facts as of right now. Freidman's Jewlary is going out of business. I spoke with the sales women and she informed me that Linen n Things filed for bankrupcy. Old Navy a clothing store many people love will be also going out of business.
Businesses closing is a very bad sign. If one place goes out of business, it is bound to happen this happens often, but 3 different chains of businesses at the same time across the united states is a very bad sign. Businesses closed during the great depression but since there are still wealthy people and many people still employed we are still in a recession. If unemployment goes up to 25% we will be in a depression. It is currently at 4.8%.
Gm is laying off 3,500 workers, lay offs happen yes, but if we keep seeing a steady decline in everything then we really will be screwed. Food prices are going to raise more, causing us to spend more money on food and not being able to buy other things.
The stock market crashed in October 1929. Even after the crash politicans said the economy would be ok, which of course we know is a damn lie. Many people lost money they had been saving their entire lives. Businesses shut down,factories closed, banks "failed". Farmers lost 50 percent of their income. 1932 was one of the worst years. It was estimated that 1 in 4 Americans were jobless.
The main thing that we should worry about is a truckers strike. Diesel here is $ 4.14 a gallon. Many other places it is higher. When truckers strike they will refuse to bring food to the supermarkets, and every other place because they can't compensate for the fuel needed. What food they have in those supermarkets will be all there is until they go off strike.
What would first happen if we were in a depression would be many businesses closing for good. Although there are a few it is a waiting game to see if more will crumble. Housing is bad right now, but in a depression it would be even worse, almost every single person would be selling their homes. The upper class would go to middle class, the middle class would go to lower class. If we were in a depression you would definately know it.
It does not look good right now, but you can not deny the fact that we are in a recession. Some people are losing their houses, housing rates dropped to 2%, the American dollar is not worth a crap, and gold has skyrocketed in value. I have tried to show the difference between a recession and a depression but it was very hard to do. I hope I at least some what got my point across.
"We will not have any more crashes in our time."
John Maynard Keynes in 1927 (The authenticity of this one is a little suspect) DOW ~ 175
"There may be a recession in stock prices, but not anything in the nature of a crash." - Irving Fisher, leading U.S. economist, New York Times, Sept. 5, 1929 – DOW ~ 375
Do these statements sound common to you? These were stated back in 1929 before the crash, many statements are made today that yield a scary similarity.
Here is a tip from Christphor S. Penn:
" It’s never a bad idea to have some emergency rations on hand. Brown and white rice store well in plastic, animal and insect-resistant containers, cook relatively easily, and last for months, if not years. Having a few gallons of water in your basement in sealed jugs is always smart, even in the best of times."
"Be ready. 2008 is going to be a rough ride."
I feel I did not convey this well enough for you all but I would suggest stocking up on non-parishable items. We are slowly slipping into a depression if things don't get any better.
-Save your money the best you can, I would suggest tucking some away at home.
OR a smarter thing that was just brought to my attention would be to invest money in gold since it is worth more..this is logical.
-Stock up on non parisable items such as rice and can goods (You don't have to do this all at once or even at all but it is just precaution.)
-Spend money wisely. Make a list of things you really want, buy them then save your money.
-Don't panic just take precautions it is better to be safe than sorry.
- You can run but you can't hide. Moving to another country probably won't help you, because the cost of moving may break you. You can't hide from it but you can prepare yourself.
http://www.christopherspenn.com/2007/11/19/2008-recession-or-depression-...
http://www.marketoracle.co.uk/Article3656.html
http://countrystudies.us/united-states/history-93.htm 1929-1932 very little information on Great depression.
http://www.time.com/time/magazine/article/0,9171,819199,00.html Recession and depression
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Nicely put. The quotes were a good touch to this. People in denial..sounds like something that could happen at anytime. Including now.
Stocking up on food sounds like a scary precaution--something that occurs in end-of-the-world movies, but if it must be this way it's better safe than sorry.
~ *~
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Thanks for your comment Bridge:)
It was really hard to write this because they don't have any solid definitions on depression and recession. So some of it is theorized according to the great depression.
This is the problem people think since we have advanced in technology that a depression won't happen. But it could and sadly it looks very grim right now.
Yeah stocking up on food is kind of scary especially thinking about how it is in those movies, it worries me but it would be a very good thing to do. Now the jug of water thing I don't know because tap water would be ok to comsume. People believe that they will die from drinking tap water. But it is just a precaution. People in the 1930's weren't prepared and I think that lead to many problems. our government is good at giving us a sense of false security.
http://www.progressiveu.org/032913-lupus-uncureable-wait-what
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Closing businesses is one aspect of recession, not just depression. It is actually one of the good things about recession because it forces businesses to become more efficient and businesses that are unable to become efficient are pruned from the economy; this helps the economy grow well in times of economic expansion. Think of it as pruning your trees of dead/dying limbs so that it doesn't have to put energy into something that is harmful.
One of the problems in the Great Depression was the runs on the banks, this is why people lost their savings. With the current system it is unlikely that there will be another instance of major bank failure, so "tucking money away at home" is not going to be the smartest move. In fact, not only would that make you lose out on interest income but it will also hurt the economy since saving in such a way is effectively dead money.
I would also argue with your reasoning for increased savings. If you are going to liken the current economic situation to the Great Depression then saving makes less sense due to the risk of deflation.
If everyone takes your advice and stocks up on emergency rations then the price of food stuff will sky rocket. That is certainly not going to help anything.
-m-
Our world is already f*ked anyway so you can believe what you want. People who tucked money away at home when the depression hit were better off then people who kept their money in the bank. Sure banks are safer now, but the interest rates at banks aren't even worth keeping your money in there. it depends where you live, but here the highest is 5%. I did not say take ALL of your money out of the bank and save it but I was saying save some money at home.
I should have worded it better: slowly stock up on food rather than at one time.
The price of food is already skyrocketing where have you been? It is only going to go up even more because of the gas prices.
That is why I said a few businesses closing is normal and yes I know this is good but if you see all of the big businesses closing like they more than likely will, then we are in trouble.
Plus probably no one will take my advice anyway, because this happens alot. I give advice people don't listen I am used to this. So there will be no deflation because no one is going to take this personally. This is the problem everyone thinks they are always safe and bad things won't happen, but of course they do. It is better to be prepared even if something isn't 100% going to happen then be f*ked if that time comes.
http://www.progressiveu.org/032913-lupus-uncureable-wait-what
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If the value of the dollar is dropping steadily, how is saving money in your mattress going to help you in the long run? All paper money is is a special kind of paper and ink. Coins are made from cheap metal. If you want to save up on money, investing it in silver or gold, or some other precious metal, will probably get your further in the long run.
~C
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