Is this actually turning into a Depression?

dandy-candy

Ok I fully admit i'm not clued up on the in's and out's of Recessions v's Depressions but from skimming the internet it seems to say that roughly :

Recession is when prices are dropping and people are holding back on their spending but most are still employed.

Depression is when people have held back with their cash so long that buisnesses can't carry on trading anymore and let their staff go so unemployment rapidly rises.

I am sure there will be loads of you out there who can explain it better (or correct me because the internet has so many varying descriptions) but isn't this happening now?

pararct

Not yet, the outlook is still for a deep recession.

The key is the banks lending, if they start then depression may be averted. If not then all bets are off. The stakes for bailout 2 last Monday could not have been higher.. Trouble is there is no appetite amongst them to do so due to the state of their balance sheets. This simply compels the Nationalisation argument.

As things stand asset prices are suffering a serious devaluation that will continue anyway. Bank lending is critical to allow business and commerce to function to maintain the basics of the economy and of course secure the majority of the population in employment.

mr.broderick

When i seen the thread title i thought you were referring to this forum and was about to agree with you.

mvengemvenge

dandy-candy wrote: »

Recession is when prices are dropping and people are holding back on their spending but most are still employed.

Depression is when people have held back with their cash so long that buisnesses can't carry on trading anymore and let their staff go so unemployment rapidly rises.

Well, I guess that unless unemployment goes over 50%, we usually have had 'most' employed, but I think of a depression as a combination of both of your examples.

A technical recession is two quarters of falling output.

wymondham

I'm depressed!

mewbie_2

I'm recessed. Well receding, but that doesn't quite work.

hederahelix_2

Have a look at this, might give you a clue...

http://cynicuseconomicus.blogspot.com/2008/06/funny-view-of-wealth.html

Bit long, but worth it!

Sorry, I meant this for the personal debt thread. OOOOpps

PasturesNew

I bought some vaguely appropriate domain names a year ago in case it did turn.

Must do something with those really.

mr.broderick

PasturesNew wrote: »

I bought some vaguely appropriate domain names a year ago in case it did turn.

Must do something with those really.

Yeah i bought one pn to be honest.

www.we'reallfukkedbutwhogivesashiti'msurethatpicklescharacterisfungusfightertoo.com

mvengemvenge

mr.broderick wrote: »

Yeah i bought one pn to be honest.

www.we'reallfukkedbutwhogivesashiti'msurethatpicklescharacterisfungusfightertoo.com

What's funnier is that I clicked on the link to see it!

treliac

hederahelix wrote: »

Have a look at this, might give you a clue...

http://cynicuseconomicus.blogspot.com/2008/06/funny-view-of-wealth.html

Bit long, but worth it!

Sorry, I meant this for the personal debt thread. OOOOpps

Doesn't matter where you posted it, it's fascinating, brilliant and says it all (I think!), though scary stuff.

So believable, I can't see any other unravelling given the mismanagement of the country's finances.

To quote:

“All the while this is happening the government will fall into crisis. With a falling pound, an economy collapsing around them, and an already overstretched borrowing position, they will be faced with ever more expensive borrowing, meaning higher interest rates, or massive cuts in public expenditure. There will be no room to manoeuvre. The only solution will be to cut back on expenditure. Continuing to borrow will be too expensive, and would destroy the value of the pound, as well as creating an even deeper crisis of credibility that the UK government can manage the economy.”

He states:

"The only way out of the crisis will be to alter the fundamentals of the UK economy back to producing more goods and services for export led growth, and away from debt based growth in services. It will be a long, and very painful adjustment that will see the UK lose its place as one of the worlds’ leading economies, and recovery from the crisis will take many years."

And warns:

"A crisis of confidence will certainly take place, as assumptions about the ‘right’ to continue to grow ever wealthier are challenged. How British people respond to the crisis will determine how the UK will recover from the crisis.

It would be nice to end this conclusion with a sunny and positive note for the future, and to say that the UK economy will bounce back. However, this would require major changes in the structure of the UK, changes that will be hard to make. I worry that the politicians will not have the courage to lead the people of the UK through such changes, and therefore wonder whether the bounce back is possible."

It's a salutory lesson. Let’s hope to God the learning starts soon.