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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review July 24, 2008 / 21 Tamuz 5768

A Depression? Hardly

By Robert J. Samuelson


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http://www.JewishWorldReview.com | The specter of depression stalks America. You hear the word repeatedly. Are we in a depression? If not, are we headed for one? The answer to the first question is no; the answer to the second is "almost certainly not." The use of "depression" to describe the economy is a case of rhetorical overkill that speaks volumes about today's widespread pessimism and anxiety. A short history lesson shows why.


The Great Depression of the 1930s — the last time the term rightly applied — was industrial capitalism's worst calamity. U.S. unemployment peaked at 25 percent in 1933; it averaged 18 percent for the decade. From 1929 to 1933, 40 percent of U.S. banks failed. People lost deposits; businesses and consumers lost access to credit. Over the same period, wholesale prices dropped a third, driving farmers and firms into bankruptcy. Farm foreclosures, shantytowns (called "Hoovervilles," after the president) and bread lines followed.


This was a social as well as economic breakdown. Our present situation bears no resemblance to this. In June, unemployment was 5.5 percent, slightly below the average since 1960 of 5.8 percent. It's true that banks and investment banks — Citigroup, Merrill Lynch, Wachovia — have suffered large losses. But on the whole, the banking system seems fairly strong. Although profits in the first quarter of 2008 were down 46 percent from 2007, they totaled $19 billion even after $37 billion set aside for loan loss reserves. Overall corporate profits are still running at a near-record annual rate of $1.5 trillion.


As yet, the present economic slowdown does not even approach the harshest post-World War II slump. The back-to-back recessions of 1980 and 1981-82 (as dated by the National Bureau of Economic Research) constituted, for most people, one prolonged downturn. Unemployment peaked at 10.8 percent in late 1982. In 1981 and 1982, housing starts were down almost 50 percent from their 1978 peak. From 1979 to 1982, the economy stagnated; output lurched down, then up and then down. There had been nothing like that since the 1930s.


"Depression" is a term of art. It has no precise definition. Economic historian Barry Eichengreen of the University of California at Berkeley notes that in the 19th century, the word connoted extended periods of declining prices: for example, between the 1870s and the mid-1890s. People associated falling prices with bad times, because in good times, prices tended to be stable. Falling prices meant either too many sellers or too few buyers. After World War II, the term depression lapsed into disuse, because economic downturns became milder and rarely involved general deflation (price declines). "Recession" ascended as the term of preference.


The paradoxical thing about today's economy is its strength. No kidding. Consider all the hand grenades lobbed at it. Higher oil prices. The housing implosion. Large layoffs in affected industries: autos, airlines, construction, mortgage banking. The "credit squeeze" triggered by losses on "subprime" mortgages. Despite all that, the economy hasn't collapsed. It's merely weakened. Output in the first quarter of 2008 was actually 2.5 percent higher than a year earlier.


To be sure, there are parallels with the Great Depression. People fear what they don't understand or expect. In the early 1930s, no one really knew why the economy had deteriorated so rapidly. Similarly, much of today's bad news was generally unpredicted: the higher oil prices; the losses on subprime mortgages; the collateral damage to financial markets; the sharp run-up of food prices.


People fear what's next. They worry whether complex financial markets and a globalized economy are unstable. These are legitimate anxieties. Economist Nouriel Roubini of New York University believes additional losses at banks and investment banks are being disguised by lax accounting practices. If so, things might get worse.


Still, parallels are limited. With hindsight, economic historians ascribe the Great Depression to a passive Federal Reserve, which didn't stop bank panics and allowed a dramatic drop in the money supply to worsen deflation. Today, no one can accuse Ben Bernanke's Fed of being passive. It has sharply cut interest rates and, with the Treasury Department, performed repeated acts of artificial respiration on financial markets (rescuing Bear Stearns and, recently, Fannie Mae and Freddie Mac). Indeed, some observers — including me — wonder whether the Fed's aggressive policies to prevent an economic downturn might unwisely sanction higher inflation.


We are relearning an old lesson: The business cycle isn't dead. Prosperity's pleasures breed complacency and inspire mistakes that, in time, boomerang on financial markets, job creation and production. Just as expansions ultimately tend to self-destruct, so downswings tend to generate self-correcting forces. People pay down debts; pent-up demand develops; surviving companies expand. The Great Depression was an exception. The present economy would have to get much, much, much worse before it warranted the same appraisal.

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07/17/08: Why isn't globalization making the interconnected world more stable?



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