[Note: The chart below has a typo that was carried over from the Japanese CRE chart, which is down 72%.]
Depression: Considered, by some, a rare and extreme form of recession, a depression is characterized by:
its length (it's been almost 5 years to date)...
by abnormally large increases in unemployment...
UNEMPLOYMENT INSURANCE DATA FOR REGULAR STATE PROGRAMS
and falls in the availability of credit— often due to some kind of banking/financial crisis, shrinking output—as buyers dry up and suppliers cut back on production, and investment, large number of bankruptcies—including sovereign debt defaults, significantly reduced amounts of trade and commerce—especially international, as well as highly volatile relative currency value fluctuations—most often due to devaluations. Price deflation, financial crises and bank failures are also common elements of a depression that are not normally a part of a recession.
- Is Another Banking Crisis Inevitable?
- The Coming Interest Rate Volatility, Sovereign Contagion, Geo-political Unrest & Double-Dip Recessions: Here’s The Answer To Valuing Global Real Estate Through This Mess
- ECB Swallows Massive Portuguese Bond Losses As It Is Clear That The Third State Will Soon Join The Bailout Brigade – Haircuts, Here We Come!!!
- The Inevitable Has Finally Been Admitted In Europe: The Macro Experiment Has Ignited Inflation Without Commensurate Growth & Rates Will Spike
- Re: B of A – With Banks Being Forced To Admit The Inevitable Truth, How Long Will It Be Before Fundamentals Rule The Day Again?
- I Warned That Banks Will Soon Be Forced To Walk Away From Homes… Guess What!
- FASB Appears to Have Bent Over For The Final Time & Accuracy In Financial Reporting Dies An Ignominious Death!!!
- Less Than 24 Hours After My Warning Of Extensive Legal Risk In The Banking Industry, The Massachusetts Supreme Court Drops THE BOMB!
There is no agreed definition for a depression, though some have been proposed. In the United States the National Bureau of Economic Research Generally, periods labeled depressions are marked by a substantial and sustained shortfall of the ability to purchase goods relative to the amount that could be produced using current resources and technology (potential output). Another proposed definition of depression includes two general rules: 1) a decline in real GDP exceeding 10%, or 2) a recession lasting 2 or more years. determines contractions and expansions in the business cycle, but does not declare depressions.
You tell me if these diagrams fit the depiction of the situation described above...
Subscribers, reference the Shadow Inventory Analysis model for what I consider to be the elephant in the room. Go through the whole model, of course, but pay attention to the first chart, "Years to Clear Shadow Inventory Backlog'. That will be the gist of my next post on this topic. Between that, and the inevitable spike in interest rates, if we are in a depression now - what will you call it when we lose another 20% of economic value???