The same old mistake all over again - Page 6




 
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January 8th, 2012  
I3BrigPvSk
 
 
Quote:
Originally Posted by samneanderthal
Taiwan is not a foreign country. According to the Chinese it is just a rogue province.
In a world depression foreign trade collapses, so the best way to keep the people employed is fisrt military spending and ultimately war (before the huge accumulated military spending does not become obsolete, losing its value).
During the 1929 depression, America could not consume even its own goods, much less import enormous quantities from other countries. Industry, turism, agriculture, etc, collapsed. The only factor that has delayed the effects of the present depression is the absurd amount of credit, which had allowed many families to buy houses, cars, etc, that they cannot afford. As the credit system collapses so will demand.
The difference between the 1929 depression and the latest years recession is the global economic system; this is even called the economic interdependence. China has lost due to recession; they will never jeopardize their global market share. Take a closer look at the global economic system prior the 1929 depression and the recession we have now.
January 9th, 2012  
George
 
Quote:
Originally Posted by samneanderthal
Taiwan is not a foreign country. According to the Chinese it is just a rogue province.
It's the last bit of the Republic of China the Communists couldn't capture during the Civil War, as such you have 2 Chinese Governments.
Carthage was a Phoenician Colony untill Phoenecia fell. Seems to have been an independant country after that. What if The Czar or Kerenski had found a defensible position that the Reds couldn't take that could function independantly?
January 9th, 2012  
samneanderthal
 
Again, by definition, a recession lasting so many years is no longer a recession, but a depression.
The main difference between 1929 and today, is that at in 1928 the US was the largest petroleum, steel, gasoline, car, airplane, appliance, etc, manufacturer and exporter in the world. Britain was the second largest motor vehicle producer. China, Brazil and India had almost no industrial production, German industry had limited production and Stalin was bulding huge steel and military industries, while his agriculture collapsed.
When the depression hit, demand collapsed and some countries put up tariff to curtail imports. Suddenly, many companies close down or let go most of their employees, so there was little money even to buy food.
Roosevelt started a massive public works program (I never understood why he paid double the minimum wage to government employees, instead of paying minimum wage and hiring twice as many people), which put money in circulation helping the economy, but only was really put an end to depression.
In contrast, today the US imports most of its goods and is the main grain (subsidized and therefore not very profitable) and armament exporter (but will soon lose even that if there is no major war). Millions of Americans have gone from being well paid factory or large company white collar workers to part time jobs, or service industry workers or independent workers without.
The US, Europe and Japan have enormous hurdles to clear before building a new power plant or dam, while China can build all it wants, so that its energy (the most basic and essential ingredient for industry, agriculture, etc,) is unlimited and less costly. Its wages, industrial pollution equipment, etc, are much less expensive than those fo the mentioned countries, so there can be no real fear trade with China in the long term, but for some reason most countries are still in denial about this and continue feeding the giant its industries and buying its products. As the depression intensifies (because the government refuses to call it by its name and implement drastic measures to address it), the American economy will be too weak to buy most products from China. What use will China have for foreign trade then?
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January 9th, 2012  
I3BrigPvSk
 
 
Quote:
Originally Posted by samneanderthal
Again, by definition, a recession lasting so many years is no longer a recession, but a depression.
The main difference between 1929 and today, is that at in 1928 the US was the largest petroleum, steel, gasoline, car, airplane, appliance, etc, manufacturer and exporter in the world. Britain was the second largest motor vehicle producer. China, Brazil and India had almost no industrial production, German industry had limited production and Stalin was bulding huge steel and military industries, while his agriculture collapsed.
When the depression hit, demand collapsed and some countries put up tariff to curtail imports. Suddenly, many companies close down or let go most of their employees, so there was little money even to buy food.
Roosevelt started a massive public works program (I never understood why he paid double the minimum wage to government employees, instead of paying minimum wage and hiring twice as many people), which put money in circulation helping the economy, but only was really put an end to depression.
In contrast, today the US imports most of its goods and is the main grain (subsidized and therefore not very profitable) and armament exporter (but will soon lose even that if there is no major war). Millions of Americans have gone from being well paid factory or large company white collar workers to part time jobs, or service industry workers or independent workers without.
The US, Europe and Japan have enormous hurdles to clear before building a new power plant or dam, while China can build all it wants, so that its energy (the most basic and essential ingredient for industry, agriculture, etc,) is unlimited and less costly. Its wages, industrial pollution equipment, etc, are much less expensive than those fo the mentioned countries, so there can be no real fear trade with China in the long term, but for some reason most countries are still in denial about this and continue feeding the giant its industries and buying its products. As the depression intensifies (because the government refuses to call it by its name and implement drastic measures to address it), the American economy will be too weak to buy most products from China. What use will China have for foreign trade then?
There are several problems to compare the Great Depression and today's recession, you really need to check the difference between these two words. Prior the Depression, the absence of institutions increased the effect of the Depression. The similarities they have are both were/are as a result of a failure of the bank system. Moreover, the currency used internationally was not the US dollar, it was gold. Banks that were large and focused on one business were better fitted to deal with the crisis. European banks had during 1920s started to leave the Gold as a referent currency; they were better suited to deal with crisis. The Protectionist polices (tariffs) contributed to the fall of prices on domestic produced goods, when countries started to build stock piles of goods. Today, the recession has influenced the international trade (supply and demand) The consumers do not spend their available income. China is the factory in this world for consumer products. They need us as costumers, they are not interested to make us disappear and buy things from India instead
January 9th, 2012  
VDKMS
 
Quote:
Originally Posted by samneanderthal
Again, by definition, a recession lasting so many years is no longer a recession, but a depression.
The main difference between 1929 and today, is that at in 1928 the US was the largest petroleum, steel, gasoline, car, airplane, appliance, etc, manufacturer and exporter in the world. Britain was the second largest motor vehicle producer. China, Brazil and India had almost no industrial production, German industry had limited production and Stalin was bulding huge steel and military industries, while his agriculture collapsed.
When the depression hit, demand collapsed and some countries put up tariff to curtail imports. Suddenly, many companies close down or let go most of their employees, so there was little money even to buy food.
Roosevelt started a massive public works program (I never understood why he paid double the minimum wage to government employees, instead of paying minimum wage and hiring twice as many people), which put money in circulation helping the economy, but only was really put an end to depression.
In contrast, today the US imports most of its goods and is the main grain (subsidized and therefore not very profitable) and armament exporter (but will soon lose even that if there is no major war). Millions of Americans have gone from being well paid factory or large company white collar workers to part time jobs, or service industry workers or independent workers without.
The US, Europe and Japan have enormous hurdles to clear before building a new power plant or dam, while China can build all it wants, so that its energy (the most basic and essential ingredient for industry, agriculture, etc,) is unlimited and less costly. Its wages, industrial pollution equipment, etc, are much less expensive than those fo the mentioned countries, so there can be no real fear trade with China in the long term, but for some reason most countries are still in denial about this and continue feeding the giant its industries and buying its products. As the depression intensifies (because the government refuses to call it by its name and implement drastic measures to address it), the American economy will be too weak to buy most products from China. What use will China have for foreign trade then?
There is no recession in the Western world, only no to slight grow. The western world has a strong demand for their internal market, China hasn't. When China stops or winds down their export the western world will look for the goods somewhere else or make them themselves. If China's export stops they will have no money coming in and that means no money to buy the recourses needed for expanding their military. No exports mean closure of thousands of factories with millions of unemployed persons and that will create chaos or uprisings. As long as China does not have a strong internal market they are very vurnable.
January 9th, 2012  
samneanderthal
 
Hello Ghostrider,
You're right to point out the fact that gold ruled in 1929, not a completely fictitious, inflated dollar, without anything to back it up. The US has been printing dollars like crazy. The only thing that has prevented inflation is the super abundance of Chinese goods and China sucking up those dollars. As the international market becomes flooded with dollars and these lose their value, crap will hit the fan.

Roosevelt could help his situation by getting rid of the gold standard and printing dollars that were accepted by the world. The US president who decides to call it a depression and to take measures to correct it will have to deal with a much weakened American credibility. Even the American people of today have much less trust in and respect for their government.

Other major differences.
In 1929 over 5% of the population worked in agriculture, compared to 1% today.
About 140 million Americans in 1929 Vs. over 300 million today, with much fewer natural resources.
Most families had one car at most, many families didn't have any. Public transportation was much better, especially the trams and trains, which used electricity or burnt coal and consumed no rubber. Most houses didn't have air conditioning (a huge energy waste today).
Roughly 1% of Americans or about 3 million people are in jail or prison, costing billions of dollars a year (a prisoner costs over 10 times more to keep and is no longer expected to work).
Over 12 million living on welfare today, no such thing in 1929.
A baseball or football player or singer earns several orders of magnitude more (in gold) and there are many times more of them.
A teacher works fewer hours and has many fewer students, who are not really expected to learn much today, so the teacher can no longer beat or scold them, but has to cheer them into learning. Most highschools have to have an armed policeman on site full time, not the case in 1929.
January 9th, 2012  
George
 
A few comments...One of the biggest differences between then & now is..back then we were the biggest Creditor nation, now we are the biggest debtor nation. Tarriffs increase prices by reducing competition. In the 20s global trade collapsed because of the Smoot-Hawley Trade Tarrifs & the resulting retaliation. The Fed was the main cause of The Depression when it strangled the money supply fighting the post WWI inflation & didn't let up in time. The resulting collapse of the Stock Market & banks made things even worse.
January 9th, 2012  
I3BrigPvSk
 
 
Quote:
Originally Posted by samneanderthal
Hello Ghostrider,
You're right to point out the fact that gold ruled in 1929, not a completely fictitious, inflated dollar, without anything to back it up. The US has been printing dollars like crazy. The only thing that has prevented inflation is the super abundance of Chinese goods and China sucking up those dollars. As the international market becomes flooded with dollars and these lose their value, crap will hit the fan.

Roosevelt could help his situation by getting rid of the gold standard and printing dollars that were accepted by the world. The US president who decides to call it a depression and to take measures to correct it will have to deal with a much weakened American credibility. Even the American people of today have much less trust in and respect for their government.
Roosevelt had one card he played out as a respond to the crisis, even if he was not the first to use this tool. The standard governmental response to an economic recession to start to increase the infrastructure which was undeveloped during the depression. The major difference from then to now is the institutions, even if the institutions vary from country to country. Today people have a social safety net, back then they had nothing. Today we have international institutions (IMF, world bank, UN economic division) and a more extended economic system between countries to avoid a "trade war". During the depression...nothing. Governments were much unprepared back than. One reason for this is the industrial revolution, which begun in the end of 19th century, when the economies transformed from an agricultural based economy to an industrial. When people migrated from the countryside into cities. This was the first major blow to the new concept of the new economy. Although, we have faced changes after the depression, economists' are using the term structural changes. When traditional based industries (mining, saw mills, logging) are disappearing and they are replaced with new industries. Washington State in the US is a good example to study this change. However, the "new" industries are demanding a totally different work force. How can we view China from this perspective? If China is "taking" over the production and companies are closing their facilities in the US and Europe and establish in China. One change will be to transform from a production based economy to a knowledge based economy, the process is quite painful for the workers, but it has happen before.

take care,

G
January 9th, 2012  
samneanderthal
 
Most of the world has no social safety net. China, India, North Korea, Thailand, the Philippines, most African and Latin American countries, etc, and many of the ex USSR republics have little or no social support for the unemployed.

The construction of Hoover dam started in 1931 and FDR became president in 1933, so public works were not invented by him.

The largest public spending in Roosevelt's term was in dams and irrigation projects, which today would be blocked by the greens in order to save a fly that might go extinct. Actually, for years the greens have been lobbying to tear down several dams in Washington state, even though there is a nationwide power shortage.
Only dictatorships like China can afford to build whatever is best for the country, without opposition from small minorities.
January 9th, 2012  
I3BrigPvSk
 
 
Quote:
Originally Posted by samneanderthal
Most of the world has no social safety net. China, India, North Korea, Thailand, the Philippines, most African and Latin American countries, etc, and many of the ex USSR republics have little or no social support for the unemployed.

The construction of Hoover dam started in 1931 and FDR became president in 1933, so public works were not invented by him.

The largest public spending in Roosevelt's term was in dams and irrigation projects, which today would be blocked by the greens in order to save a fly that might go extinct. Actually, for years the greens have been lobbying to tear down several dams in Washington state, even though there is a nationwide power shortage.
Only dictatorships like China can afford to build whatever is best for the country, without opposition from small minorities.
Infrastructure projects means roads, railroads, bridges, etc. The dam took longer to process. The structural change I referred to is the transformation from logging, mining to high tech industry. (Microsoft, Boeing, Macdonald Douglas) I said Roosevelt did not invented the classical response to an economic crisis. The countries you are referring to has no network, because the majority of them are a hand to mouth based economy, even if parts of the countries have industries (China and India) They are similar as how the US and Europe were during the depression. So they have reasons to be more worried than we.
 


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