This week in U.S. News, there was an article on "How to Live Happily on 75 Percent Less" - an economic reality which all too many of us are going to need to face over the next decade, unless something nearly miraculous occurs. The article includes lots of happy-happy tips on how to get the same effect out of much-cheaper or do-it-yourself methods (something a few of us have been doing for years, and urging others to do), and much Pollyanna-ish rhapsodizing about things must be good, because they could be so much worse, but there was one part which, for the first time in days, brought me close to shouting at the computer screen. (Okay, so I have a short fuse. BFD.)
The Great Recession--which is technically over, economists insist--may be morphing into a broader epoch: the Great Humbling. Millions of Americans who felt prosperous just a few years ago are now coping with long-term unemployment, sharp cutbacks in living standards, foreclosure, bankruptcy, and a deep sense of failure. That could persist for years. "This is not like earlier recessions, where things fell, then they bounced back to where they used to be," says Dennis Jacobe, chief economist for the Gallup polling organization. "We haven't seen this before. It's the only time this has happened since the Great Depression."
First of all, if the recession is over already - less than a year after it officially began - then it can't really be called a "Great Recession", now can it? After all, many of us have already lived through longer recessions than that, and if that were the extent of it, harder ones as well.
But - as the add-on bit implies - the recession probably isn't really over. The phase we're in right now - a moderate upswing which shows all the hallmarks of being temporary - bears a strong resemblance to a phenomenon which economic historians and analysts refer to as a "dead cat bounce" - from the phrase "if it falls hard enough, even a dead cat will bounce." Economic analysts who aren't currently being paid to be professionally optimistic are cautiously skeptical of these claims that the downturn is over. They point out that there were rallies all through the Nineteen-Thirties as well... but those rallies didn't alleviate the major problems of that time; to wit: tight credit and high unemployment.
What conditions do we see in today's economy? Well, how about tight credit? I saw an article the other day on a national credit card company offering a new card program... with a top APR of 79.9%. Personal credit is as tight as it's been during my lifetime, and the housing market is no better, despite all federal efforts to the contrary. And, to be honest, I see no reason why credit should loosen up in the near term; the credit collapse was a clear indication that policies were not aligned with reality, and nothing which has happened since then would change that fact. The federal government has made funds available to allow financial institutions to continue lending money - on the proviso that they continue to lend it under the same failed policies (federally dictated policies, at that!) which landed us in this situation in the first place.
The functional definition of insanity is "doing the same thing over and over again, expecting a different result."
And how about high unemployment? Well, we currently have the highest unemployment rate this country has experienced since the Great Depression... with little prospect of that changing any time soon. Our Federal Cheerleaders are loudly trumpeting all of the jobs their programs have created... but the information which gets treated with the pianissimo approach is the fact that nearly all of those created jobs are of short duration - mostly less than fifteen days. Day labor is not going to cure unemployment, folks. In the meantime, those same Federal Cheerleaders are campaigning loud, long, and hard to put further burdens on both the employer (at all scales) and the individual worker. When these new insurance requirements go through, what, pray tell, will happen to the bottom lines of those businesses which provide jobs? And what will that do to the number of jobs which they can provide?
"We haven't seen this before. It's the only time this has happened since the Great Depression."
Okay, outside of the built-in contradiction this pair of sentences carries (If it happened during the Great Depression then we've seen it before, twit!), there's something to consider here. If this has happened before - and the chief economist for Gallup said it has, right there in black and white - then maybe it's time to consider that we may be going through the same thing? The economy is acting like it's in another depression. If it walks like a duck, and it quacks like a duck, perhaps we shouldn't insist on keeping it in a goldfish bowl?