by Victor Davis Hanson<\/p>\n
Tribune Media Services<\/p>\n
Are we headed to something like the Great Depression?<\/p>\n
There is clearly much to be worried about. Most of America’s private retirement 401(k) accounts have significantly decreased in value since last autumn’s crash. Home equity has plunged. The unemployment rate is above 7 percent and climbing.<\/p>\n
We had negative GDP growth last quarter. Stock prices are the lowest in 10 years. Almost daily some company announces layoffs. Some big banks may be nationalized. The American auto industry will not survive as we have known it for nearly a century.<\/p>\n
Abroad, the news is worse. European banks have lost trillions of euros in bad loans to Eastern Europe and Asia. Countries like Iceland, Ireland and Greece are teetering on insolvency. China’s export industries may have to lay off millions of workers.<\/p>\n
Given all that news, we are in a funny sort of depression. Our spiraling national deficit is being financed by China, Japan and other overseas concerns at almost no interest \u2014 saving the United States trillions of dollars in debt service costs.<\/p>\n
Nearly 93 percent of those Americans in the workforce are still employed. The difference between what the banks pay out in interest on depositors’ savings and what they charge borrowers for loans is one of the most profitable in recent memory.<\/p>\n
The sudden crash in energy prices may be hurting Iran, the Gulf monarchies, Russia and Venezuela. Yet Americans, who import 60 percent of their transportation fuel, along with natural gas, have been given about a half-trillion-dollar annual reprieve. The reduced price of energy could translate into more than $1,500 in annual savings for the average driver, and hundreds of dollars off the heating and cooling bills for the homeowner.<\/p>\n
For the vast majority of Americans with jobs, the fall in prices for almost everything from food to cars has, in real dollars, meant an actual increase in purchasing power. The loss in value of home equity is serious for those who need to relocate for work or want to downsize and move to an apartment or a retirement community. But when averaged over the last decade, real estate still shows a substantial annual increase in value.<\/p>\n
Moreover, the vast majority of American homeowners \u2014 well over 90 percent \u2014 meet their mortgage payments. They have no plans to flip their homes for profit. For them, the fact that they have lost paper equity, or even owe more than their homes are currently appraised at, is scary \u2014 but not equivalent to a depression. Most are confident that after a few years their houses will appreciate again. As for now, working young couples have a chance to buy a house that would have been impossible just two years ago.<\/p>\n
The same holds true for many retirement accounts whose decline is terrible for those retirees who count on drawing out each month what they put away or must cash out their depleted accounts at vastly reduced value.<\/p>\n
But the majority of working Americans are not yet pulling out their sinking retirement funds. Most are still putting away pre-tax money each month, apparently confident that within a few years their portfolios will return to their former value. Some are even consoled that they are now buying mutual funds at rock-bottom prices rather than investing in sky-high investments at the peak of a bull market.<\/p>\n
Times are bad for those out of work or those who bought expensive homes with paltry down payments. Yet for those hurting, there is a vast array of government help. Both private companies and public agencies offer all sorts of ways to either walk away from mortgage obligations or have them renegotiated. The same is true for credit-card debt.<\/p>\n
Unemployment insurance, welfare, food stamps and even more new social programs on the way have redefined poverty from what our grandparents told us of the Great Depression.<\/p>\n
I live in southeastern Fresno County, one of the poorest regions of a now nearly bankrupt California. Many people are hurting. Yet to go to the local Wal-Mart is to see late-model cars in the parking lots and plenty of cell phones, iPods and Blackberrys among the shoppers. Carts are stuffed with consumer goods, lots of food and Easter confections.<\/p>\n
So are we in a depression that justifies a vast redefinition of government and a massive takeover of the private sector? Not quite. What we are witnessing instead is a sharp downturn from the most affluent era in the history of civilization. For the last two decades, we borrowed and spent as if there were no tomorrow. Now we are living in that tomorrow of cutting back and making do.<\/p>\n
In relative terms, it is no longer 2005, but that does not mean it is 1932 either.<\/p>\n
\u00a92009 Tribune Media Services<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
by Victor Davis Hanson Tribune Media Services Are we headed to something like the Great Depression?<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[723],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p466Sb-Lf","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":3000,"url":"https:\/\/victorhanson.com\/wordpress\/dont-waste-a-crisis\/","url_meta":{"origin":2929,"position":0},"title":"Don’t Waste a Crisis","author":"victorhanson","date":"January 25, 2009","format":false,"excerpt":"Absorbing as much of the economy as possible. by Victor Davis Hanson Tribune Media Services Euphemism comes from the Greek word\u00a0euphemia, which means \u201cusing the good word\u201d\u2014usually in place of the accurate bad one. Recently we\u2019ve become experts at it. Printing trillions more dollars and growing government to cover new\u2026","rel":"","context":"In "January 2009"","block_context":{"text":"January 2009","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/archives\/2009\/january-2009\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2878,"url":"https:\/\/victorhanson.com\/wordpress\/dr-obama-first-do-no-harm\/","url_meta":{"origin":2929,"position":1},"title":"Dr. Obama: First, Do No Harm","author":"victorhanson","date":"March 24, 2009","format":false,"excerpt":"by Victor Davis Hanson Tribune Media Services When it comes to our complex economy, President Barack Obama would do well to heed the physician's ancient commandment to first \"do no harm.\" Instead, Obama's administration has been prescribing all sorts of multibillion-dollar borrowing remedies without any consistent diagnosis of what is\u2026","rel":"","context":"In "March 2009"","block_context":{"text":"March 2009","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/archives\/2009\/march-2009\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1201,"url":"https:\/\/victorhanson.com\/wordpress\/how-to-turn-a-recession-into-a-depression\/","url_meta":{"origin":2929,"position":2},"title":"How to Turn a Recession into a Depression","author":"victorhanson","date":"October 17, 2010","format":false,"excerpt":"by Victor Davis Hanson National Review Online It is hard for a president to turn a recession into a long-term downturn in the United States, given the inherent resiliency of private enterprise and America\u2019s open and free markets. But if you were to try, you might do something like the\u2026","rel":"","context":"In "October 2010"","block_context":{"text":"October 2010","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/archives\/2010\/october-2010\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2882,"url":"https:\/\/victorhanson.com\/wordpress\/the-depression-for-us-idiots\/","url_meta":{"origin":2929,"position":3},"title":"The “Depression” for Us Idiots","author":"victorhanson","date":"March 21, 2009","format":false,"excerpt":"by Victor Davis Hanson PJ Media I\u00a0confess I don\u2019t know all that much about the theory of economics, and have done some unwise things in the strict financial sense the last thirty years \u2014 remodeled an ancient family farm house that will never be appraised at what was sunk into\u2026","rel":"","context":"In "March 2009"","block_context":{"text":"March 2009","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/archives\/2009\/march-2009\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1077,"url":"https:\/\/victorhanson.com\/wordpress\/the-coin-toss-on-eu-crisis-for-germany-heads-we-lose-tails-you-win\/","url_meta":{"origin":2929,"position":4},"title":"The Coin Toss on EU Crisis For Germany: Heads We Lose, Tails You Win","author":"victorhanson","date":"January 13, 2012","format":false,"excerpt":"by Victor Davis Hanson NRO's \u00a0The Corner Watching the current EU dramatics over southern Mediterranean debt reminds me of the farm crisis of 1982\u20134 when lots of big farming concerns around here defaulted on what they owed banks. At first, the banks with tough talk demanded sharp cut-backs, immediate overdue\u2026","rel":"","context":"In "The EU"","block_context":{"text":"The EU","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/the-world\/europe\/the-eu\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5453,"url":"https:\/\/victorhanson.com\/wordpress\/american-culture-the-truth-about-40-years-in-the-movies\/","url_meta":{"origin":2929,"position":5},"title":"American Culture: The Truth About 40 Years in the Movies","author":"victorhanson","date":"August 15, 2007","format":false,"excerpt":"by Bruce S. Thornton Private Papers As\u00a0New York Times\u00a0critic A.O. Scott wrote recently, forty years ago this summer the movie that changed the movies premiered. Anybody old enough to remember films before\u00a0Bonnie and Clyde\u00a0can testify to the jolting power of Arthur Penn\u2019s kinetic blend of blue-grass slapstick, Depression-era nostalgia, and\u2026","rel":"","context":"In "Bruce S. Thornton"","block_context":{"text":"Bruce S. Thornton","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/our-contributors\/bruce-s-thornton\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/2929"}],"collection":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/comments?post=2929"}],"version-history":[{"count":2,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/2929\/revisions"}],"predecessor-version":[{"id":2931,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/2929\/revisions\/2931"}],"wp:attachment":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/media?parent=2929"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/categories?post=2929"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/tags?post=2929"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}