Saturday, April 04, 2009

Let's party like it's 1932!

The March employment statistics came out yesterday, and as expected, they sucked. The number to look at if comparing to the Great Depression is the U-6 Alternate Measure, which more closely resembles the definition of unemployment in the 1930's (i.e., you wanted a full-time job but didn't have one). This measure hit the princely total of 16.2% in March.

So how does this compare to the Great Depression? Well, let's go look at our handy timeline of the Great Depression. Unemployment hit a peak of 15.9% by the end of 1931, meaning that on the Great Depression timeline, we're in about February of 1932.

So, will we see a U-6 of 23.6% by the end of 2009, which would correspond to an "official" unemployment rate of around 15%? Well... I hope not. Because if we do... cue the food riots. And, probably, a fascist revolution (Communism having gone out of style over the past half-century or so).

-- Badtux the History Penguin


  1. Let's hope it doesn't come to food riots...or a fascist revolution.

  2. This Depression thing is a bit scary . I heard stories from my Dad who was in his 20's during the Big D. , sounds bad overall and not something I really want to be a part of . I'm not even worried about the home so much as food . I did have a wild Turkey cruise thru the propery this morning but not much food there .
    w3ski getting hungry about now ???

  3. People complain about big government but big business is just as bad.

    We have monopolized the free market by letting corporations rule pushing out the small business, which causes the free market to stagnate.

  4. Thanks for the link to the history page about the hunger marches, Tux. I had never seen that site before. And while I knew of the Bonus March (and I read "People's History of the U.S." a long time ago) I had never viewed it in context of protests by other starving people.

    Monstrous how these "American heroes" MacArthur and Patton were willing to use the fist of government on their fellow (former) soldiers. All because they were considered "communist." How will future hungry mobs be re-branded? As "socialists"? Not scary enough. Somehow, the media, as fascist now as it was then, will declare them "terrorists."

    The differences I see now compared to then is that 1.) Americans are less likely to take group action like mass marches, because we're more socially fragmented and non-cooperative with each other, and 2.) There are a lot more guns and craziness in society, so resistance is likely to take the form of bloody anarchy.

    It's pretty damn fucked-up, mate.

  5. My best friend's Uncle was a bonus marcher.

  6. Bob's your Uncle!

    (It took me two years here before I finally found out what that meant...)

  7. I agree that our U3 unemployment numbers are not an apples to apples comparison to the oft-stated depression era unemployment numbers. But I don't think your use of U6 is much better. 1930's data gathering undercounted migrant and dislocated workers (living in shantytowns) for example. Women were undercounted. I don't think today's "marginally attached" live in the same circumstances as those of the 1930's. I don't know if I endorse his methodology, but here is someone who tried to project U6 back to 1930 and he came up with about 37% U6 for 1933.

    What I'm trying to say here is that I think your Great Depression analogies in terms of misery are overstated. My opinion is that the true analogy with the Great Depression that should be made, is that President Obama is using the crisis, (and subconsciously making it worse) to further political ends. It does take a crisis, real or imagined, to get people to give up their freedom and turn it over to central planners and bureaucrats.

    As I have said before...I support the low-hanging liberal fruit that we picked when we created unemployment benefits and the FDIC. We already live in a world were the likelihood of outright breadlines is very small. But how about those of us clamoring for a revolution to get our freedom back...maybe that is what you should worry about.

    As to the administrations attempts to "fix" the economy, I offer this WSJ (dare I speak their name) op-ed . And again, just to prevent the need to refute a position I don't take...I have supported government's role in stabilizing the economy, it is the size and scope of the influence that I object to. I duly acknowledge that smart economists believe we haven't spent enough, but I don't share their values trade-off.

  8. Shorter op-ed: "The problems will solve themselves by magic! Just leave us Wall Street wizards alone and we'll figure it out!"

    Yeah, that's worked out well. (Sarcasm intended).

    - Badtux the Snarky Penguin

  9. Another short op-ed: Moral Hazard. Google that. Government created it. The current administration is exacerbating it..hence we're setting ourselves up for the next fall.

  10. You appear to be under the delusion that I agree with the Hank Paulson bank bailout (that being where the phrase "moral hazard" most applies here) that the Obama administration is continuing. I do not. I am with Paul Krugman here. The banks f*cked up, the solution is to force them into bankruptcy, sell off the good assets to freshly chartered and capitalized "good" banks, and bury the bad assets in a "bad bank" where they can be liquidated for pennies on the dollar, if that.

    We can't treat banks exactly like we treat any other business because, well, banks create (and destroy) money via their normal day-to-day operations, and a stable money supply is sorta necessary for capitalism to work right (I will be posting a long essay on that subject soon). So treating them exactly like any other business would be cutting off our noses to spite our ears. But enough of this pussy-footing around. They're insolvent, it's time to treat them that way and do what we do with any other insolvent business that cannot meet its liabilities and has no hope of ever doing so at any time in the future -- trot it in front of a bankruptcy judge for its pieces to be auctioned off to the highest bidder. Which, given the current situation, will be the government (i.e., nationalization) for the biggest "too big to fail" banks, since only the government has the capability to print enough money to recapitalize them...

    -- Badtux the Hazard Penguin

  11. I'm glad you seem to agree that bankruptcy is the proper course. I'll have to mull over the nationalization concept. If it can be done in a way that doesn't lead to permanent government control, I can see some merit there. I think we did something similar with the S&L's. But, if it leads a permanent increase in the size and scope of government, then I can't sign on, no matter how good the short term results are. It's too hard to wrestle power back away from a strong central government. I'm glad you see the moral hazard of bailouts. So it would seem you agree with me that administration's plans may in fact do more harm than just letting things unwind on their own. I do agree that banks occupy a special place due to monetary influence. But doesn't this belief that they are "special" lead to the very moral hazard I'm talking about? It's kind of a social moral hazard. Sure maybe we let banks go bankrupt, but the officers of the bank know that the social consequences will be minimized by the government.


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