Alan Greenspan, former Chairman of the Federal Reserve, said the other day that “the financial crisis that began with the collapse of the subprime-mortgage market last year is probably a once in a century event that will lead to the failure of more firms,” according to Bloomberg Press.
“The United States is mired in a “once-in-a century” financial crisis which is now more than likely to spark a recession.” – Washington (AFP)
Hmm…a recession, eh? I’m just thinking about another once-in-a-century financial crisis, back in the 20th century, that history books call The Great Depression. What’s the difference between a recession and a depression? There’s apparently an old economists’ joke:
A recession is when your neighbor loses his job.
A depression is when you lose your job.
Unfortunately, there isn’t any real definition of the two terms. How interesting, though, that when we hear about economic bad news these days, the worst that could happen is that we might have a recession. Isn’t that a much nicer word than a depression? Recessions are minor and temporary; depressions are where we go broke and sell apples on the street corner.
Much of our modern civilization runs on perception, not reality. We see it everywhere, with the “spin” being much more important than the underlying facts. Actually, facts themselves are under attack, as are truth, absolutes, and the whole concept of objective reality.
If people get scared, they’re likely to act in one way. If they’re not scared, they act differently. Everyone knows this. So if we talk about the current economic situation, the word “current” means that things’ll likely get better and “go back to normal.” It’s an economic situation, and people worry about housing “issues.”
Imagine going to a doctor to hear your test results, and he or she says, “Well, the current situation is that we have an issue with cancer. It’s an annoying problem, perhaps even a once-in-a-lifetime concern, but we’ll focus on it. After all, we wouldn’t want it to slow you down for the long term.”
Unh-hunh…I wonder whether or not we should be concerned about a cancer issue, or should we be totally freaked out?
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