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• Sunday, December 14, 2008 09:34 AM

  maxiemom

  ... risked plunging our economy into a depression (if it's not there already) ...

  Not yet, but it doesn't seem possible to avoid, even with an auto bailout, which could only mitigate the damage now and not prevent it. BEA statistics clearly show that the US unemployment rate is increasing faster now than it did at the beginning of the Great Depression.

  Those who are fascinated by slow-motion train wrecks can google up the raw numbers with the keywords "BEA unemployment". One of my paying clients would be disappointed if I were to just give it away.

  The collapse of the US auto industry would certainly accelerate that trend and make it impossible to reverse for years to come. Judging from the behavior of the DJIA on Friday, investors seem confident that Bush will allow TARP funds to bail out the US auto industry. But Bush is already waffling on a possible bailout of the US auto industry using TARP funds:

  White House: No immediate deal on auto loans

  http://www.salon.com/wires/ap/2008/12/14/D952HC581_meltdown_autos/index.html

  Overseas bourses are already expecting a TARP bailout to fail.

  A bailout deal wouldn't help anyway if the credit freeze, the cause of the crisis, continues to impede vehicle sales - and the weakening economy is feeding that freeze. It's one of a series of negative feedback loops going on between the real economy and the financial economy that is causing a downward spiral that's gone global. That's one of the disadvantages of globalization: if the world's leading economy goes down it takes the rest of them with it.

  Even the US agricultural industry is having severe problems getting loans, threatening the upcoming planting season. I'd seriously recommend that Americans start planting potatoes in their back yards. They're easy to grow from store potatoes, and not only would you be able to survive on them, but they can also be used to make the vodka you're going to need for consolation, in the tradition of Russian serfs.

  So far nobody has had had anything hopeful to post which would counter this analysis, and that should tell you something. As usual, it actually gets worse the more you look at it.

  I wish you folks a lot of luck.

  —walter_map Read walter_map's other letters
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