The New Great Depression

Wow, what a roller coaster ride we've been on lately! The last week at work, I've been hitting refresh on the stock market charts and shaking my head. A lot of talking heads in the media are talking about the U.S. economy in apocalyptic terms. I tried to think positively and shrug it off since we've gone through years of fear mongering. But peeps, I have finally come to the conclusion that we are in for some deep shit and this is only the beginning.

I heard about TED spread on NPR this evening. This explains what a TED spread means.

I started wondering how a Depression nowadays would differ from the Depression in the 30's. First off, migrant workers picking grapes in CA to escape the dust-bowl doesn't sound like something we would be dealing with. But that brings up two points:

#1 Illegal immigration. If unemployment gets bad enough and we have Americans willing to do any job for any pay, immigration will become a hot button topic nationwide. Considering there has been an argument that Americans don't want to do the type of work illegal immigrants do, that would disappear in economic hardship.

#2 If there is any kind of natural disaster, the lack of response would make Katrina look good. The lack of response would be due to no federal or local funding. It is going to be crunch-time fiscally.

If China can survive the economic upheaval, it may wind up saving our country. Think about it, if Americans cut down their consumption of goods and the rest of the Western world does the same, who is going to buy the crap we make? China. That is if we can avoid dumb ass protectionist politics like the Hawley Smoot Act.

Financing anything is going to be tough for a while. Conspicuous consumerism will grind to a halt. There will be a lot more gray hairs on people (because $200 for a dye job doesn't really seem necessary when you need food and have no job). Of course, as a debt carrying former student I am hoping for Sallie Mae to crash and burn so my student loans would magically disappear. But on the flip side, that would hurt an entire generation of college bound kids...

And finally on the up side of this crisis, at least we don't have Prohibition! I'll have a gin and tonic.

P.S. I detected a flaw in my logic regarding China. Basically, so much of our manufacturing has been shipped offshore, what DOES the US still make? I know our farming industry exports a lot and we still have an auto industry (horribly crippled at that). And we have entertainment. Do we manufacture anything anymore? So what could we produce that would be in demand? Hmmm...