Thursday, Jan 29th, 2009
More prominent economists have declared that the U.S. is facing a depression that may be even worse than that of the 1930s.
Noting that current efforts to rescue the mortgage industry are less successful than those used during the 30s, Edward J. Pinto, former chief credit officer at Fannie Mae has warned that the current crisis could be worse.
Mr. Pinto said that, while the subprime crisis was often compared to the Depression, there were differences that made the current problem more acute. The Depression-era collapse in housing prices did not generally put homeowners at risk of owing the bank more than their house was worth. That is not the case today.
In addition, hedge fund manager and billionaire philanthropist George Soros has warned that the current crisis outstrips that of the 30s:
The bursting housing bubble “acted like a detonator that exploded a much larger bubble,” he said.
“The economies of the world are falling off a cliff. This is a situation that is comparable to the 1930s. And once you recognize it, you have to recognize the size of the problem is much bigger,” he said.
Pinto and Soros join the IMF’s top economist, Olivier Blanchard, and Professor Peter Morici, a former chief economist at the U.S. International Trade Commission, who have both concluded that a depression is looming.
These summations dovetail with the analysis of renowned financial publication The Economist, which reported earlier this month that, based on the characteristics of the current financial crisis, the U.S. is in a depression, not a recession.
More and more prominent analysts are now saying what people like Alex Jones and Peter Schiff were being called doomsayers for predicting over a year ago, that the U.S. faces a crisis on the scale of the great depression, if not worse.
The following headlines, all from the last 24 hours, speak volumes about the current situation:
While fiscal conservatives such as Ron Paul have called for cuts in spending and liquidation of debt, The House has passed Obama’s $819 billion stimulus package, at a cost of $6700 more debt to each and every American.
As if that wasn’t bad enough, hundreds of billions of the proposed stimulus is scheduled to be spent on unrelated items, such as climate change studies and digital TV converter box coupons, that will provide little to no stimulation of the real economy whatsoever.
Astoundingly, there are already reports of handing another $2 trillion of taxpayer money to the banks!
The insanity continues.