United States Progresses Down the Path to Depression

A very important article to consider:

United States Progresses Down the Path to Depression
By Lawrence Tout
Sunday, February 8th 2009

What’s in a Depression?

Is the USA in a Depression yet? It’s a question that a lot of us are asking currently. Well it’s rather hard to tell because it seems that no one really knows how to define a depression. It appears there is no formal definition to be had with attempts ranging from the ‘not very helpful’ to the ‘how the heck did you arrive at those figures’ types. The vague to the more specific range of definitions basically run from “a prolonged and severe downturn in economic activity” to “a decline in real GDP exceeding 10% or a recession lasting 3 years or more”.

Does it really matter you may well ask? To which I would reply – I wish Mr. Bernanke had the foresight to manage our deflation expectations as well as he managed our inflation expectations. When you are dealing with rigged casinos rather than free markets; when whole economies teeter on a knife-edge, and when two thirds of GDP are derived from wanton consumption, consumer confidence and expectations are key.

In the absence of a sound formula therefore, it is more apt to rely on popular consensus. So can we confidently say we are in a Depression when enough Main Stream Media (MSM) economists use the ‘D’ word or maybe when it seems that ‘all-things-economic’ have gone to hell in a hand basket. Until then we will just have to read more saner commentary (try here and here), read the signposts along the way and try to make up our own minds. Interestingly enough it seems that the ‘D’ word is even sinking deep into the psyche of world leaders. Gordon Brown’s (Freudian?) slip of the tongue recently made UK headlines.

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