Our economy nearly died, and you are griping about it being too sluggish?
We almost had to rename the Great Depression!
World War One got renamed. It started out as The Great War, the “war to end all wars”. But a few years later we had an even bigger war, and we had to rename it. It became “World War One”.
Well, we almost had to rename the “Great Depression” to the “First Great Depression”.
It was that bad. Instead we only call it the “Great Recession”.
- The port of LA/Long Beach. It is the busiest port in the US, and it came to a near halt. Cars that were already on ships when the crash hit arrived, but had no place to go when dealerships couldn’t afford them, they accumulated. One of our biggest exports through that port also stopped: cardboard. Recycling was a problem when it backed up. (Did you know that recycled cardboard is a significant export from the US to China? They ship us TVs and we ship them the empty boxes.) Normally there have terrible air pollution there, with all the trucks moving freight back and forth, in and out. But the port mostly stopped. The air cleared. Prices to ship goods (such as Baltic Dry Index) plunged because nothing was moving.
- The “TED Spread” shot up to scary levels. That is, the difference between the interest the US government must pay to borrow money and what big banks charge each other. Normally, big banks get almost as good a deal as does the USA and the TED spread is well under a half percent. But in 2008 it shot up to over 4.5%. Banks were unwilling to lend each other money at a good rate because they knew the others were at risk of going out of business.
- The “commercial paper market” stopped. Much of the economy runs by big companies borrowing and lending money back and forth, for short periods of time, at low interest rates. That all stopped. You might remember GE (normally an extremely good credit risk) had to get a big loan from Warren Buffet because it couldn’t borrow money anywhere else. If GE can’t borrow money, the economy is badly broken.
That has all changed. All the “bailouts” that people complain about saved our sorry butts. Heck, the US auto industry is making a profit now. The maligned TARP program even made money for the US government! That’s right, TARP was profitable.
No one bitched that Sully didn’t get them there on time, so quit bitching that the recovery from this recession is too slow.
Our economy almost lost it. We are damn lucky we aren’t in breadlines still in 2011. Instead, our economy is growing. Painfully slowly, but it is growing. Be grateful.
-kb, the Kent who is glad he has a job when so many do not.
©2011 Kent Borg