The lost decade for the economy

[dtotire]

The lost decade for the economy

The U.S. economy has expanded at a healthy clip for most of the last 70 years, but by a wide range of measures, it stagnated in the first decade of the new millennium. Job growth was essentially zero, as modest job creation from 2003 to 2007 wasn't enough to make up for two recessions in the decade. Rises in the nation's economic output, as measured by gross domestic product, was weak. And household net worth, when adjusted for inflation, fell as stock prices stagnated, home prices declined in the second half of the decade and consumer debt skyrocketed.




more:(graphs)
http://www.washingtonpost.com/wp-dyn/content/graphic/2010/01/01/GR2010010101478.html

[spooky3]

1. Bush and friends ruined everything they could get their paws on.

[bhikkhu]

2. Here's my vote for a "sustainable economy"

which is to say, one that is considered healthy not because it is growing, but because it provides a stable standard of living for a stable population, in a finite world.

There is no "economic growth" model which doesn't hit the wall at some point, given a finite resource base. We'd be much better, at this point, just getting off that bus completely.

[spooky3]

3. here's a longer version of the story, now the most frequently emailed from WaPo

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/01/AR2010010101196.html

[bhikkhu]

4. One sentence from that reinforces my doubt:

"how do we get what I call a post-bubble growth model, one that is sustainable". Spoken by our president, who I do support. But still, every model of economic growth hits the wall at some point, in a world of finite resources. "Sustainable growth" is then an oxymoron, unless you limit the time you sustain it to, say, you own lifespan, or your own term in office, or something along those lines. In any case, thats just kicking the "collapse" down the road a little.

[cabluedem]

6. How does that model work in a world of ever growing populations?

[bhikkhu]

7. Not very well

ever growing populations in a world of finite resources become ever poorer populations, increasingly stressed and increasingly prone to conflicts over what remains.

How well that describes our world really goes down to whether you think resources are finite.

[steven johnson]

5. Some calculate we've lost 15 years, taking dollar devaluation into account

The dollar has devalued 40% since 1998. So when people see stock valuations similar to those in 1999, these are based on dollars that are worth 40% less. We've lost more than a decade in inventment value. We've lost at least 15 years and there are some who say we haven't seen the bottom of the stock market yet.

Whenever I want to hear worst case scenarios, I read the Market Oracle.

We are told the credit crisis is over and that recovery is underway. We do not believe that. It is projected that as many as 300 more companies will default on debt in 2011. A default rate of 12 to 14 percent. That is up from 1% in 2007 and a long-term average of 4.5%. These are not just small firms, but companies with more than $100 million in assets as well. That doesn’t sound like recovery to us. What is very significant is that the 300-figure is based on recovery. Only 116 companies defaulted between 2004 and 2007. One of the groups hit hard will be commercial real estate. The figures are already bad, but companies and lenders have been buying time by using two sets of books, marking to model and refinancing. All that doesn’t change the big picture and that is with a recovery the situation will be bad, without recovery it will be dreadful.

The fund-less FDIC reports US banks may be making money gambling with leverage using TARP funds, but bank loans fell by $210.4 billion, or 2.8% in the third quarter, the biggest drop since the FDIC started keeping records in 1984. Those same banks booked profits of $2.8 billion reversing a $4.3 billion third quarter loss. Loans to businesses fell 6.5% and those to real estate 8.1%.

Small business cannot borrow and they created 64% of new jobs in the past 15 years says the SBA. We see that figure at 75%.

124 banks have failed thus far this year, up from 25 in 2008 and we could see more than 2,000 fail in 2010 and 2011.


The Credit Crisis is Not Over