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Reich: It’s a Depression

By LisaB on April 4, 2009 at 9:00 AM in Current Affairs

Robert Reich used the “D” word. He’s calling our financial mess a depression. From his blog:

The March employment numbers, out this morning, are bleak: 8.5 percent of Americans officially unemployed, 663,000 more jobs lost. But if you include people who are out of work and have given up trying to find a job, the real unemployment rate is 9 percent. And if you include people working part time who’d rather be working full time, it’s now up to 15.6 percent. One in every six workers in America is now either unemployed or underemployed.
————–

All this means that the real economy will need a larger stimulus than the $787 billion already enacted. To be sure, only a small fraction of the $787 billion has been turned into new jobs so far. The money is still moving out the door. But today’s bleak jobs report shows that the economy is so far below its productive capacity that much more money will be needed.

This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on a very large scale. We should stop worrying about Wall Street. Worry about American workers. Use money to build up Main Street, and the future capacities of our workforce.

Reich calls for spending. I’m no economist and won’t weigh in on what he sees as a prescription for improving things. What caught my eye is his use of the label “depression.” I thought that worthy of attention. Anyone else done that yet?

Reich appeared on CNBO today and got into a “discussion” with wild man Rick Santelli. Reich supports huge government expenditures to keep things from getting worse and Santelli definitely does not support such a move.

Newsbusters has a brief transcript of that conversation.

SANTELLI: But you’re assuming it’s going to be spent well, Mr. Reich and we really don’t know that.

REICH: But what is the alternative, Rick? I mean, you assume any spending, you assume all spending is bad.

SANTELLI: The alternative is to know how it’s going to be spent, before we cheerlead about it.

REICH: I mean we are now in a deep, deep hole. This is not a Great Depression, but this is moving in the direction of the Great Depression.

I’m not entirely sure what to make of all this. But Reich is the first economist to break ranks and call this a depression. Notwithstanding Santelli’s position that things aren’t quite that bad, what do you think?

  • politicalidentitycrisis

    Of course it’s a Depression. Many articles have referred to this as a Depression and mention that you’re just not being told so yet. The Government probably wants to pass out more Chinese manufactured condoms so they are ready to scare the begeesus out of us so they can spend the real money, emergently, without anyone knowing where it’s going until it too late (yet again).

  • mountainaires

    I certainly don’t know what the answer is, but our situation is precarious, that I do know. Reich is correct to call it a depression. It could end up being the greatest depression, who knows at this point. The call by Reich to spend, spend, spend doesn’t begin to address the problems we’re facing. All that spending [printing money] creates its own problems; we can’t borrow from foreign countries anymore; we’re in a bind because they keep trying to get the economy back on track by increasing consumer spending [i.e. debt] and Americans are spent out, trying to save, not spend now. Job losses are accelerating; where do they think people [1-in-6 Americans are either unemployed or underemployed] will get the money to spend [get further into debt] to regenerate our economy? They won’t. So, we’re just printing money like mad, spewing it into the economy, and it isn’t working. It’s going to get a whole lot worse. Our entire economy [70%] is based on people borrowing money [debt]. It’s a giant ponzi scheme, acc. to some observers.

    But what do I know? ;-)

    http://www.contraryinvestor.com/mo.htm

    • no kidding

      I won’t believe its a Depression until Obama and Congress begin sacrificing their perks for this country. Because the President and his wife would not be partying like its 1999 if we were in a Depression would they?

    • Cubs in 09

      The US unemployment rates during the 1930′s…

      1930 8.67
      1931 15.82
      1932 23.53
      1933 24.75
      1934 21.60
      1935 19.97
      1936 16.80
      1937 14.18
      1938 18.91
      1939 17.05
      1940 14.45
      1941 9.66

  • C.S.

    This is still not the Great Depression of the 1930s, but it is a Depression.

    We’re still in the shallows of this Depression so we don’t know how bad it will get. It has the potential to be much worse just because the People aren’t as self-sufficient as they were during the 1930s and are too reliant on technology that is worthless without the money to pay for power. Women still knew how to preserve food without technology and families still knew how to make gardens to supply food when store shelves were bare. I listened when my grandparents told stories about how they survived and we are ill equipped to be self-sufficient right now. World War II rationing was also a good teacher of how to do without.

    We should all remember the Boy Scout motto, “Be prepared” because what is happening to our country has not been seen since the last Great Depression and Soertoro/Obama is no FDR.

    • ME

      No that’s all for certai!

    • no kidding

      C.S. Unlike the 1930′s when we manufactured everything–we have now given our jobs to foreign countries who could produce our goods cheaper. We were warned but the lure of cheap goods blinded us to the risk. And now those very companies who sent our jobs overseas are going under because we can no longer afford even the least expensive toys we thought we couldn’t live without. Congress still fiddles with what’s left of our money giving it to everyone but the American people. However, there is a rather hollow sound coming from the Capital now. The Ship of State appears to be sinking and Pelosi and Frank are humming Nearer My God To Thee.

  • ME

    Though you may like to know who’s recieving BONUSES under the populist radar and under the regulatory radar…..clue: Fannie and Freddie

    http://www.black-and-right.com/2009/04/04/fanniefreddie-bus-tour-postponed

  • I’mFedUp

    Maybe if we had a so-called “President” and Congress who stopped putting stink and hate on America, and gave a damn about Americans, then we could get out of this. Sadly, Pelousy the Pig, Obama, etc. are bringing us the change that will destroy us.

  • FrenchNail

    All rhe while, Obama spent millions in Europe during his trip including for the complete redecoration of the Hotel suyite in Strasbourg where he spent ONE night.

    http://europumas.over-blog.com/article-29841835.html

  • andrew191

    Reich is a moron. When he was in the Clinton admin. there was some extensive flooding in the Ohio River valley. When flying over the devastation Reich remarked that repairing the damage, and the jobs that would create, would be a boon to the local economy.??? Wow I thought, an ECONOMIST that is not aware of, or understand the “fallacy of the broken window”? IDIOT!! With that type of reasoning it would REALLY stimulate the economy if we all burn our houses down. Brilliant!

    • listing starboard

      How about his insistence that no “WHITE EXPERIENCED MALES” get any of the constructionb jobs to rebuild infrastructure??????

      • Baba Rum Raisin

        I lived “off the grid” for a few years, so I made the following arrangements here in Suburban-Driving Suburbia:

        Both 6 cylinder cars are paid off, there are enough veggies and tomatoes planted to eat and trade. Bought canning supplies, extra lids, enough jars for Heinz on a MOnday morning. Hand tools that don’t plug into the wall. Solar water heating, small generator, bankable amounts of propane. PV panels and a couple of Deep Cycle batteries. Smoker, BBQ grill, extra tires, lube oil, etc for the cars.

        Dutch ovens, cast irons skillets, 5 gallons of olive oil and a like amount each of canola and rapeseed. Five gallon tub of popcorn.

        Sturdy shoes that haven’t seen the light of day yet, as well as a dozen pairs of Levi’s, lotsa hoodies, leather work gloves, welding rods, nails and materials for patching and repairing. Extra burners and igniter parts for the gas range in the kitchen. 12 Volt TV and DVD player.

        Medical kit extensive enough that I can do an appendectomy in a pinch.

        And, I am downhill from the City’s water storage tanks!

        MOST FUN OF ALL:

        Built all this up over 3 years, all on credit cards, and then took Chapter 7. Figure that I f****d the Money Changers out of the wherewithall to survive their Economic Reshuffling!

        SCREW WALL STREET! TAKE BANKRUPTCY!!

  • oowawa

    For an interesting graph that juxtaposes the current Dow Jones Industrial Average with that of the Great Depression (and updates on a daily basis) see:

    http://www.dickreuter.com/res1.php

  • mountainaires

    If you missed William Black on Bill Moyers’ Journal last night, you can–and should–watch it here.

    http://www.pbs.org/moyers/journal/04032009/watch.html

    • Peggy Sue

      That’s some interview, mountainaires. Thanks for the link. The Big Lie trips on down the road.

      • Peggy Sue

        PS: Now Obama’s comment to the G-20 leaders has context: We’re [the Americans] are the only thing standing between you and the pitchforks.

        We’re covering their asses, all of them. And paying for it too out of the Nation’s coffers. The worries of the banksters isn’t about the citizenry running for the exits; it’s about running for their throats. If the full truth comes out about the massive fraud in the finacial and political sphere, you’ll have calls for public lynchings. And Geithner will be right up there.

        What a mess!

    • rw

      very interesting interview. must read his book.

      Black worked to get Obama elected, but would not openly come out against Obama in general, just on Obama adm. financial policy. But his quote at the end, Dutch from Low Countries’ fight for independence from Spain, might have held a subtle message of regret: It’s not necessary to hope to persevere.

      Don’t know, maybe I’m fishing…I still, and perhaps for the rest of my life, will not understand how people with nous supported the fraud. Maybe their defense is “temporary stupidity”.

  • termo

    “But Reich is the first economist to break ranks and call this a depression.”

    Reich is an attorney – he is not an economist and he never was.

    What is most reckless is that some of you are buying into the Obama bullshit which is intended to dumb down America.

    We are not in a Depression – not even close.

    Pick your poison. Economists use different measures to define a depression – NONE of which apply to our current circumstances. We don’t have a few years of sustained GDP declines or a GDP decline of 10% or more. Frankly while this recession is worse than the last two it does not remotely come close to what we experienced in the late 1970’s/early 1980’s which ended on nearly 11% unemployment while at the same time experiencing double digit inflation and interest rates.

    Reich is a puppet for Obama and has zero credibility.

    Frankly if Obama did not have his socialist agenda and Democrats acted as responsibly as Bill Clinton did, we would not have mountains of new spending that are building up huge debt and eventual inflation, and we would have been coming out of this recession at the time he took office.

    But Obama does have his agenda and he is abusing this economic downturn to rapidly advance that agenda and hoping Americans don’t wake up in time to realize what he is doing.

  • joker

    There is a little town in minnesota by the name of Alexandria..They were notified of their share of the stimulus last week….The police dept gets 12,497 and the sheriffs dept 12,763..Amy Klobuchar senator from Minn and I quote The funding will help local municipalities at a time when cities are facing the prospects of deep budget cuts and layoffs….What the hell happened to the trillions?????

  • Tricia Spiegel

    It sure feels like a depression to me!

    My very favorite department store is going out of business. For some reason, this is hitting me very hard as a symbol of what is yet to come. But I guess that I am parially to blame as I have not been buying much for a long time. Bad cycle.

    • termo

      Every major recession sees a major retail chain or two (or ten) go out of business. Once the recession passes there will be plenty of other places – and new places – to shop and you will surely forget where you used to shop unless you keep receipts.

      • IndianaDem

        Depression is subjective. Here in Indiana, many small town factories were laying off workers all through 2008. People saw trouble coming long before the election. Now many factories are closing for good. Downtown court house squares are surrounded by stores with empty windows; strip malls and shopping centers are filling with vacant retail spaces. Restaurants are closing. Families are shopping for bargains at Dollar General and Big Lots out of necessity. You see worried young mothers in the check out lines, carefully counting out their nickels, dimes, and pennies. Business is booming at the Goodwill stores. Maybe that’s the bright spot in the economy.

      • Ferd Berfle

        And that is supposed to make us feel better, neocon? Between the boob in the WH and the assclowns who took the the unmitigated risks to bring us to this point in time, I could spit 6-penny nails. I don’t care about new places to shop, the new ways for corporate America to make me indentured, or the new ways for me to pay through the nose so That One can pay back his corporate sponsors, or the new ways in which we can employ even more bureaucrats.

  • BVD

    Obama ran on jobs, jobs, jobs. What is he really doing about it? I thoroughly understand improvement will not happen overnight and he has made it abundantly clear it will get worse before it gets better but c’mon, we have a family to try and support; let’s get started. One lone stimulus check will help with one month’s worth of bills (no shopping sprees for us), then we are right back to where we were. I am more than willing to work 2 jobs, part-time and/or otherwise at $10/hr but they are not there! I have been unemployed for close to a year now; we are going backwards with job creation! Obama is way too immersed in wanting to be the most popular, be the most liked, be the bestest ratings-getter ever, getting everything done in 1st 100 days so he can make history and get accolade upon accolade…it’s really crazy. We’re just normal people trying to provide for our children. When he’s back in the US, I fully expect it will be a another week of Michelle fashion/queen stuff/Obama popularity and on and on….It is time to get something, anything going with job creation.

    • Ferd Berfle

      Obama ran on jobs, jobs, jobs. What is he really doing about it?

      He was talking about snow-jobs, apparently.

      • andrew191

        Aren’t there a bunch of openings at Treasury that need to be filled? He could start there.

      • termo

        I don’t think he even had one of those either (snow jobs).

        I think he first has to learn what a job is, what the objective of a job is, how to get one, keep one, and what happens when you get laid off from one. These are only concepts to the great all knowing Obama.

  • http://noquarter foxyladi14

    yes he ran on jobs what a joke..he doesn’t know what a job is..

  • CG

    “Cramer Declares End to Depression He Took Off the Table Months Earlier” http://www.eyeblast.tv/public/checker.aspx?v=ydSUuzkUQu
    Cramer follows Obama’s statements… to this conclusion.