What happened to the talk of Great Depression 2007?

Question

Seems like it has gone away and just sold a lot of books last year , doesnt it?

Answer 1

The problem that you and the other posters are getting bogged down with is the date, ie, 2007. The authors of these kinds of book make the huge mistake of putting a date on it. But, just because the date is wrong doesn't mean that basic argument is. I mean, it's only Jan 24th, 2007 has barely started.

I've never read the book, but I can guess on what the argument is based on. Let's see:

- The U.S. in running huge budget and trade deficits, prompting a rather large sell of in the U.S. dollar. The dollar is so weak right now, that many countries are moving away from acquiring dollars and getting right of the dollar reserves. Currently the Dollar Index is in the 84 range. In 2001 it was 120 and 80 is the demarcation line for a dollar crisis. Current price action projects the dollar index hitting 40. At that level, the dollar would no longer be the worlds reserve currency. Even now, OPEC nations are looking at pricing oil in Euro's instead of dollars - foreign nations no longer want to hold dollars because they've lost faith in it.

-The real estate market is coming apart. What's been keeping the U.S. economy going for the last 5-6 years was a blistering r.e. market. That tide has now turned and we are in the beginnings for a prolonged real estate correction that is going to take home prices to levels not seen in years. That kind of correction is going to have a major negative impact on the economy.

-The stock market is still in the overvalued range and is in a bear market rally. The ensuing correction, when it comes, is going to hammer the Dow and trillions in wealth will be lost.

Those 3 are enough to collapse the U.S. economy and sent up an economic firestorm that will make the great depression look mild in comparison.

The savings rate in the U.S. is negative. That last time it was negative was just prior to the market crash of '29. The Treasury Dept. on Dec. 15, 2006 released their report detailing the financial position of the U.S. based on congressionally mandated GAAP standards instead of cash basis. The $8 trillion you hear about is only current debt. The true debt as stated in the Dec. 15th Treasury report is --- $53 TRILLION. That's 1) net present value, meaning to pay it off, we'd need $53 trillion in the bank that day and 2) that's only federal debt. If you include all gov't debt (fed., state, local, etc.) corporate and private household, the figure is upwards of $80 trillion.

So, you got huge debt, a falling dollar on the verge of a collapse, the national real estate market coming apart and the stock market that is overvalued and waiting for a trigger for it to correct. There exists right now, the components that when triggered would cause an economic megastorm that will drive the U.S. economy into the ground.

Prior to every major economic crises around the world, the general population saw nothing wrong and even ridiculed those that said there was.

Forget what the books say, look at what's happening in the U.S. economy and define for yourself whether the U.S. can keep going the way it has been and not some day face a financial day of reckoning.

Do I see a depression coming on the U.S. again? Yes, very much so. When? That's a whole different ballgame, but unless things change, that day will come and it's going to be VERY UGLY.

Answer 2

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Helping you eliminate depression?

Answer 3

I hadn't heard anything about a depressions -- and do not expect one. However, the yield curve is still inverted. Every inversion of the yield curve (3-mo vs 5-year) has been followed by a recession in three to five quarters.

Where is it? The year isn't over yet -- but the economy is already showing signs of slowing. I expect a recession to come by the end of the year.

Answer 4

2007 is not over yet. Bush is his state of the union address asked for another chance. He has been trying for 6 years to drive the country into a depression. He might succeed yet.

Answer 5

History repeats itself. It is only a matter of time before another great depression hits the USA. But remember that even during the great Depression, only 11% of the workforce was unemployed. If you have skills needed today, you will have a job. It is the uneducated few, the minority of the population that will be unemployed in the coming depression or economic collapse.

Them that gots, gets.

Answer 6

The January indicator is for a good year but we are not immune to a real breakdown. Perhaps a crude oil crisis plus a few terrorists attacks or a currency crisis and things could pretty much grind to a halt. Not a likely scenario to be sure but possible and what our enemies are hoping for.

Answer 7

It is fairly impossible to ever have another "Great Depression".

There has been a great deal of federal legislation, including chunks of the New Deal, which were enacted to combat the economic pitfalls the economy fell into preceeding the depression.

Answer 8

a lot of human beings cry concerning to the top of the international, sky is falling, Armageddon etc. etc... there have been all varieties of dire predictions concerning to the turn of the millennium in 2000... all those predictions disappear after the form while proved fake.. oftentimes with some style of excuse for postpone by way of the predictor...

Answer 9

It went to the same place as all the talk about the poles shifting, California falling into the sea, Haley's comet hitting the earth, the sky falling, etc.

Answer 10

I'm very depressed, but I don't think that is what you are talking about!

There are so many scare stories in the news that just disappear a few months later, this is just another one :)