What Is The Economic Definition Of A Depression?......

[global1]

How is it different from a Recession? How will we know we've reached depression? Who or what agency announces this?

[PuraVidaDreamin]

1. Or how long after it's been a depression will they finally tell us

not much makes sense anymore

[MzYvonne]

2. I second that n/t

[RainDog]

4. The economist are just now admitting we've been in a recession since Dec. 2007

and the Bush administration lied their asses off about this for more than a year - and the media refused to call our economic situation a recession until the huge bank failures of the recent past...

so, whatever the exact definition, the American people will not hear truth about it from either media or govt. until we are mired in our misery.

[marketcrazy1]

5. we are already

at the start of a depression and we have already been told ( maybe not in so many words but!!! ) this depression began in oct as evidenced by the passage of the bailout bill!!!! when we were told the entire U.S. financial system was (is) on the verge of collapse..... thats how a depression starts.

[RainDog]

10. I think we're in a depression too

the problem is that people look at the 1930s and its unemployment rate in the mid 20% and think that's the only form of depression. but we have other examples in our history of economic crashes that were not exactly like the great depression, but they definitely re-created our economy.

I think the fall of the big 3 in Detroit will create a true depression because of all the jobs that flow from those industries, not simply the industries themselves.

we've had thirty years to respond to Carter's call for new economic models that take into account the energy crisis, but of course the only response to this was Republican rule for the last thirty years. Knowing this, in some ways I feel like saying "fuck you" to a lot of people - saying, hey, you voted for these assholes, these policies, these actions. This is the result.

However, knowing that republicans do not actually represent the majority view of Americans (not just those that vote) and knowing that it is always the poorest who suffer the most - I think we simply need to have massive tax policy changes and directed investment into creating a green collar economy. There is a place for private industry in this. However, stockholders can go fuck themselves, as far as I'm concerned, if quarterly profits are the "law" that corporations must answer to - and they do have to answer to their stockholders and they do have to consider profit as their first priority.

the answer to this, of course, is to have corporations that are owned by those who make up the corporations. This makes sense, really, if taxpayer dollars are funding the economy, then the taxpayers already own those businesses, not the shareholders.

[Veritas_et_Aequitas]

3. A recession is when your neighbor loses his job.

A depression is when you do.

Sorry. I just like that joke.

My dad does retirement planning for a living, and he gave me a pretty good working definition when I asked him for a difference.

A recession occurs when a nation's Gross Domestic Product (GDP) shrinks for two consecutive quarters.

A depression is like that, but on steroids. There's no universally agreed-upon definition, but depressions seem to be characterized by abnormal increases in unemployment, restricted credit, numerous bankruptcies, hyperinflation, deflation, and wildly fluctuating currency values.

So, yeah, we're heading into a depression (if we're not there already).

[LeftHander]

6. The monetary value of the economy declines substantially....

Combined with massive unemployment AND deflation (opposite of inflation)

Basically a depression is a prolonged recession with deflation and decline of credit and cash.

With that comes unemployment.

Typically recessions in the past were accompanied by strong inflation pressures which cause interest rates to climb causing a stagnation in economic growth...but not retraction.

We are not seeing inflation pressures at this time because of the collapsing of financial commercial and consumer credit.

With credit unavailable it makes no sense to raise interest rates.

Credit is money in America. No credit means we have to rely on cash and liquid assets.

How much liquid cash do you have? Are you prepared to liquidate assets to pay your way? A liquid asset is one that can be easily converted to cash...what was once a liquid asset some months ago is no longer. Your house, your car...only cash in deposit accounts, bonds are really liquid at this time. Stocks are liquid but they are worth less than half what they were a year ago.

To me....we entered a depression in September when the fed stepped in to bail out the financial industry.

Collectively we can't move forward until we recognize we ARE in a depression right now. there is a large effort to keep this fact in the distance...so corporations can usurp loans form the fed...loans they have no intention to pay back.

GM - US should buy it. It is a goner.
Chrysler - good bye or Ford take it over.
Ford - offer loan if needed. But make them work for it.

[Venceremos]

7. There isn’t a standard answer

but a depression is commonly defined as an economic downturn where the real GDP declines by more than 10 percent. The real GDP grew in 2007 but it started to decline toward the end of the year. The projected decline for 2008 is 2.9% total.

Good info here:
http://economics.about.com/cs/businesscycles/a/depressions_2.htm
and
http://www.frbsf.org/education/activities/drecon/answerxml.cfm?selectedurl=/2007/0702.html

[Warpy]

8. A recession is when you don't have money to buy anything

A depression is when there's no place to buy it.

[sam sarrha]

9. no job, no home, no food, no hope

[WI_DEM]

11. Here's a good explanation:

Depression
Before the Great Depression of the 1930s any downturn in economic activity was referred to as a depression. The term recession was developed in this period to differentiate periods like the 1930s from smaller economic declines that occurred in 1910 and 1913. This leads to the simple definition of a depression as a recession that lasts longer and has a larger decline in business activity.

The Difference
So how can we tell the difference between a recession and a depression? A good rule of thumb for determining the difference between a recession and a depression is to look at the changes in GNP. A depression is any economic downturn where real GDP declines by more than 10 percent. A recession is an economic downturn that is less severe.
By this yardstick, the last depression in the United States was from May 1937 to June 1938, where real GDP declined by 18.2 percent. If we use this method then the Great Depression of the 1930s can be seen as two separate events: an incredibly severe depression lasting from August 1929 to March 1933 where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression of 1937-38. The United States hasn’t had anything even close to a depression in the post-war period. The worst recession in the last 60 years was from November 1973 to March 1975, where real GDP fell by 4.9 percent. Countries such as Finland and Indonesia have suffered depressions in recent memory using this definition.

Now you should be able to determine the difference between a recession and a depression without resortinghttp://economics.about.com/cs/businesscycles/a/depressions_2.htm to the poor humor of the dismal scientists.

[lurky]

12. All recessions used to be called "depressions",

but after the Great Depression, people decided to rename the phenomenon.

[closeupready]

13. I don't know, but whatever it is, we undoubtedly meet the requirements.

At least, that would be my guess. As others have said, the media and government will lie about everything being fine, so don't look to them for truth.

[RainDog]

14. I think this woman who wrote "The Divine Right of Capital" should be on Obama's economic team

... or, at the very least, they should all be conversant with her premises.

Marjory Kelly : The Divine Right of Capital



http://www.feasta.org/documents/review2/divine_right.htm
Before communities around the world can become sustainable, business practices must become democratic rather than aristocratic. That is the main message of The Divine Right of Capital, an excellent analysis of the way the business and economic systems operate and how they can be improved.

The book's author, Marjorie Kelly, has a long history of involvement in the economics of sustainability. She is the cofounder and editor of Business Ethics, a U.S. magazine that has focused on new approaches to responsible business practices since 1987.

In the course of her editorship, though, Kelly has changed her mind about how such practices can become established most effectively. Initially she believed that change would come about because progressive businesspeople were voluntarily transforming capitalism by supporting corporate social responsibility, which entailed actions such as better environmental stewardship, family-friendly policies, employee profit sharing and good corporate citizenship.

However, after monitoring a decade of this type of 'change', Kelly saw that it was merely cosmetic. While acknowledging that some visionary business founders had brought about important changes in a small number of firms, these progressive practices quickly died out once the business was sold on. Moreover, these few responsible businesses were not bringing about systemic change within the general corporate community, which continued following the goal of maximizing profits for shareholders, regardless of the impact on employees, the environment or the public good. Kelly became convinced the problem was systemic, the result of historical and legal factors. She now believes that deep and lasting change in business practices will not come about until we change the legal factors that guide how businesses operate. The Divine Right of Capital outlines these factors and shows the way to bring about real, deep-down change in business practices and in local and global economies.

http://www.amazon.com/Divine-Right-Capital-Dethroning-Aristocracy/dp/1576751252

http://woodstock.georgetown.edu/publications/article17.htm