Recession is Over, Welcome Back to the Depression

One turkey turns to the other…

“Things were pretty rough there for a while…what with the recession and all. But now there’s a recovery. Business is picking up.”

“Yeah, this is great…no more hanging around this place waiting…finally, the boss says we’re all shipping out today…”

“I wonder what we’re going to be doing…”

“I don’t know…I’m going to some place called ‘Butterball Birds’…”

“Hey, sounds like it might be fun…maybe it’s some kind of theme park. I’m going to work for a fellow named Frank Perdue…”

As our friend Nassim Taleb says, a turkey’s life is very agreeable…until the very last day. Until then, his whole life is a bull market. Everything looks good. Good food. A roof over his head. Plenty of company. Even free health care. The MPT guys would look at his history. They’d see no volatility. Every day, the turkey gains weight. Every day things get better. They’d see all reward and no risk. They’d say ‘every investor should have turkeys in his portfolio.’

The chartists, too. They’d look at the turkey’s life and see a line moving steadily up. ‘Is this a winner or what,” they’d say to each other.

And what about the economists? Well, the old-timers would be suspicious. ‘There’s no such thing as all upside…there’s no boom without a bust,’ they’d grumble. But the young fellows wouldn’t listen. They’d plump for the turkeys without hesitation, confident that if anything were to go wrong, Ben Bernanke and Tim Geithner would set it right lickety-split.

And now, they think the Bernanke-Geithner team has just pulled off a save. Thanks to them, the turkeys who ran Wall Street – and invested in it – have been spared. America is getting back to work.

But what kind of work?

Alas, it’s the work of a DEPRESSION – de-leveraging, busting up, working out loans, defaulting on debt…going chapters 11 and 7.

Yes, dear reader, the recession is over. Welcome back to the Depression. The number crunchers reported a positive GDP growth figure for the last quarter of 3.5%. Everyone cheered. Now, the crunchers admit that they were a little too optimistic. The real number is only 2.8%. But it’s still positive. So the recovery is still on…

Sort of. If you deconstruct the numbers, and pull out all the feds’ hot money effects, you’ll probably find that the economy is not growing at all. How could it be? It’s a consumer economy. Consumers aren’t consuming…

The Wall Street Journal reports that “One in four borrowers underwater.”

Mortgage delinquencies at a record high, adds The New York Times.

Real joblessness is at 17.5%, reports CNBC.

Insiders are selling 17 of their own shares for every one that they buy.

“Consumers lose appetite for dining out,” says The Los Angeles Times.

The National Retail Federation thinks holiday sales will be 1% lower than last year. And last year they were depressed.

But The New York Times is worried about us over here in England. “Lost decade feared for British economy,” says a headline.

As we pointed out yesterday, the US economy has already suffered a lost decade. No employment growth in the last ten years. No gains in the stock market. No household income growth. As near as we can tell, the whole nation is just another decade older and deeper in debt.

But that’s the way it works, isn’t it? A bull market on Wall Street…or a boom in the economy…they’re just like a turkey’s life. It’s all fine…until it ain’t fine any more.

And now, we’re going to let you in on the secret. You can pass this on to the White House and the Fed if you like.

How can you really get an economy out of a depression? Well, you have to get into a depression first. Then, you can get out.

The cure for a depression, in other words, is a depression. Nothing else will do. Mistakes need to be addressed and corrected. Losses need to be recognized and written off. Bad decisions need to be put right.

So, bring on the depression! Get it on. Get it over with.

Too bad the feds don’t get it at all.

Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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4 Comments on "Recession is Over, Welcome Back to the Depression"

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im like wondering after watching “biggest chinese restaurant in the world tv show” and they tell me that there are 20 MILLION BABIES BORN IN CHINA EVERY YEAR that we don’t have a freakin problem here This potential level of DEMAND is a WORRY How many power stations will this require? What is the GOLD and OIL demand etc. Is this to be IGNORED in the Equation? CAP and TRADE ?? CAP POP GROWTH they must need like a Hunter Valley power station every few days to meet this growth!!! AM i wrong or what!!! SO in 3 years they… Read more »
Peter Andrews

>>a turkey’s life is very agreeable..

This clueless remark is so far from the truth it is sick.

The truth is that the life of a factory farm raised turkey is one of constant stress. He is crammed into a tiny space jostled night and day by thousands of other birds and has to breath in air which burns his lungs.

nick r

Peter, is that so different from a factory worker in China or the average overworked American?

Irv Thomas

Yes, true, but like all American turkeys, he’s pointing toward retirement, when ‘his ship comes in’ loaded with the precious rewards from investment. The parallel is actually remarkably close to reality.

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