In line with my own thinking at this point. The FT article ostensibly attempts to define a depression but in doing so goes out of its way to single out Ireland as being one that will meet the most extreme definition of a depression - a 20%+ economic decline from peak to trough.
So will this be known as the Depression of the early 21st century? That depends on your definition of a depression. You could define it in terms of the rate of unemployment for individual countries, but since unemployment is a lagging indicator, you will not know whether you are in a depression until some time after the event. You could also define it in terms of peak-to-trough declines in economic growth and choose some nice round number as a threshold such as 10 or 20 per cent.
The Japanese economy is currently shrinking at an annualised rate of close to 10 per cent, according to one forecast. If we set the peak-to-trough threshold of decline in gross domestic product at 10 per cent, we are heading towards a depression in several countries. **Ireland is entering a depression even under the stricter threshold. **The number of countries on course for a depression will increase unless the economic upturn dutifully starts in the third quarter this year.
eurointelligence.com/article … cfb.0.html
That’s an opinion piece not an article.
But yes, it is of course entirely possible based on all the data we are seeing!
Yup, 20% is about where I see it going. I base this on the level of competitiveness required to get to EU averages - reduction in utility costs, reduction in wage costs etc.
See Constantin Gurdgiev’s diagram of relative labour costs in the EU:
trueeconomics.blogspot.com/2009/ … ouble.html
These will feed into a lower level of economic activity, as in the monetary value of the activity will be lower, even if actual activity levels stay the same.
Add to this the reduction due to returning the construction sector to a stable size (from 25% of GDP to
10% of GDP).
Of course, this doesn’t allow for a recessionary overshoot - this is just to get back to a sustainable level of GDP from which real growth is possible.
February 10, 2009, 12:20pm
I can understand why people are angry about top bankers who award themselves bonuses financed by taxpayers’ money or who lavishly redecorate their office. But no single group in society, not even credit derivatives dealers, will have caused as much damage to the global economy as the current generation of lethargic global leaders.
If one dates the onset of the present phase of the crisis to the fall of in mid-September, policymakers have wasted almost five months during which most of the debate has been focused on the size and shape of domestic stimulus packages. In several countries these do not even begin to kick in until the second half of this year.
The world would have been much better off with a speedier, perhaps smaller and globally co-ordinated package that would have encouraged domestic consumption in China, Japan and the eurozone, with a focus on public sector investments in the US, help for distressed borrowers and a globally co-ordinated programme to restructure the financial sector
A coordinated global approach was never going to happen in that timeframe with a dead duck in the White House.