Changes

In terms of a monetary explanation, there is far more money around, due to the stimulus programs of the Federal Reserve, Treasury, and Congress. However the velocity (turnover rate) is down to the lowest rate since 1991.  That is, people and business are saving and not spending.  Banks are not lending. The nation’s banks in March 2009 had reserves of $679 billion, up from only $45 billion in August 2008.  Individuals are keeping their cash in the banks, or paying off credit cards and debts, and not buying new merchandise.  The goal of federal stimulus spending is to get consumer spending going, to create jobs and keep businesses from slowing down.<ref>[[Inflation]] can do this -- force people to deplete cash and savings with a "spend now" mentality and damn the consequences of impoverishing themselves and heirs later. Keynes said, "In the long run we're all dead". Keynes is dead, but those alive in 2008 have to live with the consequences of decades of these economic theories elevated to public policy. </ref> If people do start spending again all the extra money will cause inflation, but in that case the Federal Reserve plans to reduce the money supply and, hopefully, restore normalcy and prosperity.<ref> Mark Gongloff, “Best Check on Inflation: Broken Banks,” ’’Wall Street Journal,’’ Mar. 20, 2009</ref>

In terms of a monetary explanation, there is far more money around, due to the stimulus programs of the Federal Reserve, Treasury, and Congress. However the velocity (turnover rate) is down to the lowest rate since 1991.  That is, people and business are saving and not spending.  Banks are not lending. The nation’s banks in March 2009 had reserves of $679 billion, up from only $45 billion in August 2008.  Individuals are keeping their cash in the banks, or paying off credit cards and debts, and not buying new merchandise.  The goal of federal stimulus spending is to get consumer spending going, to create jobs and keep businesses from slowing down.<ref>[[Inflation]] can do this -- force people to deplete cash and savings with a "spend now" mentality and damn the consequences of impoverishing themselves and heirs later. Keynes said, "In the long run we're all dead". Keynes is dead, but those alive in 2008 have to live with the consequences of decades of these economic theories elevated to public policy. </ref> If people do start spending again all the extra money will cause inflation, but in that case the Federal Reserve plans to reduce the money supply and, hopefully, restore normalcy and prosperity.<ref> Mark Gongloff, “Best Check on Inflation: Broken Banks,” ’’Wall Street Journal,’’ Mar. 20, 2009</ref>

==US==

==US==

The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The [[Great Depression]] lasted 43 months, from August 1929 to March 1933.  

The longest economic slumps since 1945 were the 16-month downturns that ended in March 1975 and November 1982. The [[Great Depression]] lasted 43 months, from August 1929 to March 1933.  

"This may be referred to as the Great Recession," because of its length, said Norbert Ore, chairman of the Institute for Supply Management’s factory survey. "It looked like we were headed for a shallow recession earlier in the year because of higher energy prices. With the meltdown in the financial sector, it has become something more serious."<ref>see [http://www.bloomberg.com/apps/news?pid=20601109&sid=ar0v6PP3HCpk&refer=home Steve Matthews and Timothy R. Homan, "U.S. May Be in for ‘Great Recession,’" ''Bloomberg News'' Dec 2, 2008]</ref>

"This may be referred to as the Great Recession," because of its length, said Norbert Ore, chairman of the Institute for Supply Management’s factory survey. "It looked like we were headed for a shallow recession earlier in the year because of higher energy prices. With the meltdown in the financial sector, it has become something more serious."<ref>see [http://www.bloomberg.com/apps/news?pid=20601109&sid=ar0v6PP3HCpk&refer=home Steve Matthews and Timothy R. Homan, "U.S. May Be in for ‘Great Recession,’" ''Bloomberg News'' Dec 2, 2008]</ref>

[[File:Housing$.jpg|thumb|340px]]

[[File:Constr1.jpg|thumb|400px|Construction spending--change from previous year]]

===Housing===

===Housing===

see [[Housing]]

see [[Housing]]

The construction of new housing and commercial buildings has fallen off; many commercial buildings and shopping centers have high vacancy rates and may be hard pressed to pay their debts. Housing prices continue low--falling from an average of $255,000 to $180,000, as millions of empty houses are a drag on the market.  Indeed much of the housing activity in 2009 involved sales of foreclosed properties at distress prices.

The construction of new housing and commercial buildings has fallen off; many commercial buildings and shopping centers have high vacancy rates and may be hard pressed to pay their debts. Housing prices continue low--falling from an average of $255,000 to $180,000, as millions of empty houses are a drag on the market.  Indeed much of the housing activity in 2009 involved sales of foreclosed properties at distress prices.

[[File:Constr1.jpg|thumb|400px|Construction spending--change from previous year]]

[[Image:U-2009-2.jpg|thumb|275px|left]]

 

===Auto sector===

===Auto sector===

The automobile industry was in desperate crisis, with General Motors and Chrysler, and numerous parts suppliers, on the verge of bankruptcy.  Ford was in better shape as were the "transplants" like Toyota and Honda that have factories in the U.S. If GM were to shut down, many parts suppliers also would shut, forcing the end of most of GM's North American auto production. Autos would still be imported, though at higher than former prices.  GM and Chrysler were given $17 billion TARP funds in December on condition they present a turnaround plan by Feb. 17, 2009. In its plan GM asked for access to an additional $16.6 billion in federal aid. GM also said it would close 14 U.S. plants, and cut 47,000 global hourly, salaried jobs, and revoke dealerships.  Bankruptcy, GM claimed, could cost the federal government the loss of tax revenue and the loss of 1.3 million jobs across the US, as plants and dealers close down operation.<ref>. For the GM plan see [http://www.treas.gov/initiatives/eesa/agreements/auto-reports/GMRestructuringPlan.pdf GM Plan of Feb 17, 2009]</ref>  

The automobile industry was in desperate crisis, with General Motors and Chrysler, and numerous parts suppliers, on the verge of bankruptcy.  Ford was in better shape as were the "transplants" like Toyota and Honda that have factories in the U.S. If GM were to shut down, many parts suppliers also would shut, forcing the end of most of GM's North American auto production. Autos would still be imported, though at higher than former prices.  GM and Chrysler were given $17 billion TARP funds in December on condition they present a turnaround plan by Feb. 17, 2009. In its plan GM asked for access to an additional $16.6 billion in federal aid. GM also said it would close 14 U.S. plants, and cut 47,000 global hourly, salaried jobs, and revoke dealerships.  Bankruptcy, GM claimed, could cost the federal government the loss of tax revenue and the loss of 1.3 million jobs across the US, as plants and dealers close down operation.<ref>. For the GM plan see [http://www.treas.gov/initiatives/eesa/agreements/auto-reports/GMRestructuringPlan.pdf GM Plan of Feb 17, 2009]</ref>  

[[Image:U-2009-2.jpg|thumb|275px|left]]

[[Image:U-county-09feb.jpg|thumb|450px]]

 

In March 2009 GM reported that its auditors raised substantial doubts about its ability to continue as a going concern, citing recurring losses from operations, stockholders' deficit and an inability to generate enough cash to meet its obligations.  GM received $13.4 billion in federal loans, and the company asked for a total of $30 billion from the government. Since 2006 it ran up $82 billion in losses, including $30.9 billion in 2008.  Bankruptcy took place June 1, 2009. With federal help, GM ultimately escaped [[bankruptcy]] law (see [[Crony capitalism]]).

In March 2009 GM reported that its auditors raised substantial doubts about its ability to continue as a going concern, citing recurring losses from operations, stockholders' deficit and an inability to generate enough cash to meet its obligations.  GM received $13.4 billion in federal loans, and the company asked for a total of $30 billion from the government. Since 2006 it ran up $82 billion in losses, including $30.9 billion in 2008.  Bankruptcy took place June 1, 2009. With federal help, GM ultimately escaped [[bankruptcy]] law (see [[Crony capitalism]]).

 

===Unemployment===

===Unemployment===

After the full implementation of the George W. Bush tax cuts, [[unemployment]] reached a low of 4.1% by October, 2006. After the [[Fannie Mae]] crash, the U.S. unemployment rate began trending upward, reaching 9.4% in May 2009. Analysts from the National Bureau of Economic research say that the current nation-wide recession began in December 2007. Unemployment reached 6.5% by election day 2008, and in some parts of the country already reached 10% and higher.

After the full implementation of the George W. Bush tax cuts, [[unemployment]] reached a low of 4.1% by October, 2006. After the [[Fannie Mae]] crash, the U.S. unemployment rate began trending upward, reaching 9.4% in May 2009. Analysts from the National Bureau of Economic research say that the current nation-wide recession began in December 2007. Unemployment reached 6.5% by election day 2008, and in some parts of the country already reached 10% and higher.

==Worldwide crisis==

==Worldwide crisis==