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A nation of slaves to big corporations. And we all know who is winning this battle

By:  Michael Pento
Wednesday, June 15, 2011
For the better part of a century the foundations for a semi-comfortable retirement for many Americans have rested on the financial pillars of rising real estate and equity prices, positive real interest rates on savings, the continued solvency of public and private pension plans, and the reliability of national entitlement programs (Social Security, Medicaid). But in the last few years, the economic sands have fundamentally shifted and these pillars are no longer sturdy, some have cracked completely. For many Americans, the traditional idea of a comfortable retirement, filled with golf carts, cruises, and fishing trips, is going the way of the dodo bird.

Over the last decade incomes and job growth have stagnated, causing savings rates to drop. According to Jim Quinn author of the Burning Platform, 60% of retirees have less than $50,000 in savings. Such sums won’t last very long, especially when consumer prices are up 3.6%, import prices are up 12.5% and commodity prices are up 35% year over year. What’s worse, any savings placed in a bank will pay next to zero interest and will likely not even pay for the fees associated with the account. With cash savings essentially non-existent, the other pillars of income take on paramount importance. But these former bastions of financial security are being washed away by a torrent of red ink.

For years the essential Ponzi-like structures of Social Security and Medicare were concealed behind positive demographics. But once taxes collected from current payers fall short of the required distribution owed to current recipients, the ruse will be laid bare. That day is now in the foreseeable future. With insolvency a real and present danger, at least a consensus is now forming that Social Security must be structurally altered if it is to survive.

According to the Social Security Administration, in 2008, Social Security provided 50% of all income for 64% of recipients and 90% of all income for 34% of all beneficiaries. With these numbers, it’s not hard to see how even small cuts will spark big protests. Now try cutting the $20 trillion prescription drug program and the $79 trillion Medicare entitlements and watch the political sparks fly! However, given the realities, it’s hard to see how the program can escape deep cuts.  

In the past many retirees could count on accumulated stock market wealth to help fund retirement. Not so much anymore. As of this writing, the S&P 500 is now no higher than it was in January of 1999. For over 12 years the major averages have gone nowhere in nominal terms and have declined significantly in real (inflation adjusted) terms. The dreams of becoming rich from investments have crashed along with Pets.com and Bernie Madoff.  Then there is always the supposedly safest asset of all—a retiree’s home.

Despite a misguided faith that real estate prices could never fall, they have done just that…with a vengeance.  According to S&P/Case-Shiller, the National Home Price Index has declined some 30% to levels not seen since the middle of 2002. And prices are still falling, with the rate of decline accelerating. The National Index dropped 4.2% in Q1 of 2011, after dropping 3.6% during Q4 2010. This means that only those retirees who have owned their homes for at least 10 years have any hope of selling at a profit. Ownership of significantly longer periods may be needed to have built up significant equity.

That leaves public and private pension plans. But here again there are serious issues. Let’s just look at state public pension shortfalls. According to the American Enterprise Institute for Public Policy Research, “States report that their public-employee pensions are underfunded by a total of $438 billion, but a more accurate accounting demonstrates that they are actually underfunded by over $3 trillion. The accounting methods that states currently use to measure their liabilities assumes plans can earn high investment returns without risk.” Huge returns without risk? Bond yields are the lowest they have been in nearly a century! What world are these states living in? With few options, the states will undoubtedly look to the Federal government (taxpayers) for a bailout. Failing that, cuts are inevitable.

The sad facts are; Americans are broke, the real estate market is still in secular decline, stock prices are in a decade’s long morass, real incomes are falling, public pension plans are insolvent and our entitlement programs are structurally unsound. If the pillars that seniors have relied on in the past fail to miraculously regenerate (and there is certainly no reason to believe they will), all that most retirees will have will be freshly printed greenbacks that come from a never ending policy of federal deficits and an obliging Federal Reserve. Unfortunately, the inflation that will result from such a policy will sap most of the purchasing power that those notes possess. In other words, for most people retirement is now an illusion, and many Americans will find themselves working far longer, for far less real compensation, then they ever imagined. The quicker we realize this, and plan accordingly, the better off we will be.

You know the only thing you complain about is nothing about nothing. Stoip wasting your time and get a job!!!

It sounds like you have nothing going in your life Billy.

Stop writing garbage not worth reading!

The disastrous U.S. June jobs report, blow by blow

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Eric Lam, National Post
Friday, Jul. 8, 2011

For once, calling something catastrophic falls only just short of hyperbole as the U.S. economy added only 18,000 jobs in June, shocking markets and analysts alike who had been forecasting 105,000 adds or more.

Here are all the grisly details. We recommend you read them through your fingers while running for a bomb shelter (no, not really):

- June job creation the weakest in nine months

- The overall unemployment rate has climbed to 9.2%, highest since last December

- May non-farm payrolls revised down to 25,000

- Downward revisions of 44,000 for both April and May

- Private sector added only 57,000 jobs

- Government employment shrunk by 39,000

- Wage growth up only 1.9% yoy; excluding inflation wages are actually declining

- 12,000 decline in temporary jobs

- Household survey measure of employment shows 445,000 drop, most since December 2009

- Participation rate at 27-year low of 64.1%

- Average hours worked down to 34.3 from 34.4

- Average duration of unemployment a new high at 39.9 weeks

- All-in jobless rate, including underemployed and discouraged job seekers back above 16%

BoC rate hike not likely in short term

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David Pett, National Post
Wednesday, Jul. 13, 2011

Things are definitely looking up for the Canadian economy, but don’t bank on interest rates rising anytime soon.

With Europe’s credit mess spilling over and the faltering U.S. recovery eliciting serious talk about QE3, it’s pretty much unanimous the Bank of Canada will stand pat when setting its policy direction next Tuesday and may not budge until later this year or next year.

“The arguments are there for the Bank of Canada to start hiking rates next week, but we increasingly think that this fall might even be too early given the problems we are seeing in the global economy,” said Jimmie Jean, an economic strategist at Desjardins Capital Markets based in Montreal.

Despite encouraging news over the past week, including solid housing and jobs numbers and improving business sentiment that suggest Canada is bucking the global slowdown, not one of 37 economists and strategists recently surveyed by Reuters expects the Bank of Canada to hike rates July 19.

While some do expect a 25-basis-point increase in September, the median forecast predicts the central bank will leave its key policy rate at 1% until the fourth quarter.

Mr. Jean has pushed his rate-hike expectations out to December. In his mind, as positive as Canadian economic data have been lately, there is no urgency for the Bank of Canada to tighten policy when both Europe and the United States, the world’s two biggest markets, are struggling.

If Europe’s sovereign crisis results in a country defaulting on its debt or escalates in some other manner, it could shock the global financial system by straining funding markets for banks — Canadian ones included — to create another liquidity crunch, he said.

Meanwhile, prospects of the U.S. economy regaining its footing in the second half of the year seem to be diminishing, especially following last week’s dismal jobs report and now U.S. Federal Reserve chairman Ben Bernanke has raised the possibility of another round of quantitative easing.

“That was pretty firmly ruled out just a few weeks ago and now the possibility is being raised,” Mr. Jean said. “There’s no question that if the Fed goes QE3, the Bank of Canada is not going to hike rates.”

Karen Cordes Woods, a financial markets economist at Scotia Capital Markets said the risks of tightening monetary conditions currently outweigh the benefits and she doesn’t think the Bank of Canada will move on rates until the second quarter of 2012.

She said material tightening is being imposed on the economy from fiscal retrenchment and the strength of the Canadian dollar to stricter mortgage lending guidelines and elevated commodity prices that continue to crowd real wage growth despite the improvements in the labour market.

Although there is recent evidence of inflation creeping into the economy, it’s not nearly enough to justify a rate hike and Ms. Cordes Woods believes a move to tighten by the Bank of Canada would only put more upward pressure on the dollar and represent an unwanted headwind for the economy.

“The Bank of Canada still has time to stay on the sidelines,” she said. “They will do what they see fit given the conditions.”

June Existing Home Sales Drop, Cancellations Up
Reuters | July 20, 2011 | 10:06 AM EDT
Sales of previously owned U.S. homes unexpectedly fell in June to touch a seven-month low as cancellations of pending contracts surged, an industry group said Wednesday.

The National Association of Realtors said sales fell 0.8 percent month over month to an annual rate of 4.77 million units, the lowest since November. May's sales were unrevised at a 4.81 million-unit rate.

Economists polled by Reuters had expected sales to rise 2.9 percent to a 4.90 million-unit pace. In the 12 months to June, sales dropped 8.8 percent.

World feeling alittle underrr the weatherr. The real storm is just beginning for our fellow americans. Italy will fall. The euro will collapse. The U. S. Dollar and economy is collapsing. Gold will cross the dow. As the debt in the U. S. Will hit 20 trilllion. And no shot of ever having a balanced budget. The military has bankrupted america as did the russian machine. This is just the beginning. Food lines will grow as will the downturn in home value. They are done and there is no way out. WW3 might be the only end game.

Stay out of any. American dollar investment. Buy canadian realestate and line the ceilings with golld.

Adios. W

A Second Great Depression, or Worse?
By SIMON JOHNSON

Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

With the United States and European economies having slowed markedly according to the latest data, and with global growth continuing to disappoint, a reasonable question increasingly arises: Are we in another Great Depression?


TODAY’S ECONOMIST
Perspectives from expert contributors.
The easy answer is “no” — the main features of the Great Depression have not yet manifested themselves and still seem unlikely. But it is increasingly likely that we will find ourselves in the midst of something nearly as traumatic, a long slump of the kind seen with some regularity in the 19th century, particularly if presidential election-year politics continue to head in a dangerous direction.

The Great Depression had three main characteristics, seen in the United States and most other countries that were severely affected. None of these have been part of our collective experience since 2007.

First, output dropped sharply after 1929, by over 25 percent in real terms in the United States (using the Bureau of Economic Analysis data, from its Web site, for real gross domestic product, using chained 1937 dollars). In contrast, the United States had a relatively small decline in G.D.P. after the latest boom peaked. According to the bureau’s most recent online data, G.D.P. peaked in the second quarter of 2008 at $14.4155 trillion and bottomed out in the second quarter of 2009 at $13.8541 trillion, a decline of about 4 percent.

Second, unemployment rose above 20 percent in the United States during the 1930s and stayed there. In the latest downturn, we experienced record job losses for the postwar United States, with around eight million jobs lost. But unemployment only briefly touched 10 percent (in the fourth quarter of 2009; see the Bureau of Labor Statistics Web site).

Even by the highest estimates — which include people discouraged from looking for a job, thus not registered as unemployed — the jobless rate reached around 16 to 17 percent. It’s a jobs disaster, to be sure, but not the same scale as the Great Depression.

Third, in the 1930s the credit system shrank sharply. In large part this is because banks failed in an uncontrolled manner — largely in panics that led retail depositors to take out their funds. The creation of the Federal Deposit Insurance Corporation put an end to that kind of run and, despite everything, the agency has continued to play a calming role. (I’m on the F.D.I.C.’s newly created systemic resolution advisory committee, but I don’t have anything to do with how the agency handles small and medium-size banks.)

But the experience at the end of the 19th century was also quite different from the 1930s — not as horrendous, yet very traumatic for many Americans. The heavily leveraged sector more than 100 years ago was not housing but rather agriculture — a different play on real estate.

There were booming new technologies in that day, including the stories we know well about the rapid development of transportation, telephones, electricity and steel. But falling agricultural prices kept getting in the way for many Americans. With large debt burdens, farmers were vulnerable to deflation (a lower price level in general or just for their products). And before the big migration into cities, farmers were a mainstay of consumption.

According to the National Bureau of Economic Research, falling from peak to trough in each cycle took 11 months between 1945 and 2009 but twice that length of time between 1854 and 1919. The longest decline on record, according to this methodology, was not during the 1930s but rather from October 1873 to March 1879, more than five years of economic decline.

In this context, it is quite striking — and deeply alarming — to hear a prominent Republican presidential candidate attack Ben Bernanke, the Federal Reserve chairman, for his efforts to prevent deflation. Specifically, Gov. Rick Perry of Texas said earlier this week, referring to Mr. Bernanke: “If this guy prints more money between now and the election, I don’t know what y’all would do to him in Iowa but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous — er, treasonous, in my opinion.”

In the 19th century the agricultural sector, particularly in the West, favored higher prices and effectively looser monetary policy. This was the background for William Jennings Bryan’s famous “Cross of Gold” speech in 1896; the “gold” to which he referred was the gold standard, the bastion of hard money — and tendency toward deflation — favored by the East Coast financial establishment.

Populism in the 19th century was, broadly speaking, from the left. But now the rising populists are from the right of the political spectrum, and they seem intent on intimidating monetary policy makers into inaction. We see this push both on the campaign trail and on Capitol Hill — for example, in interactions between the House Financial Services Committee, where Representative Ron Paul of Texas is chairman of the monetary policy subcommittee, and the Federal Reserve.

The relative decline of agriculture and the rise of industry and services over a century ago were long believed to have made the economy more stable, as it moved away from cycles based on the weather and global swings in supply and demand for commodities. But financial development creates its own vulnerability as more people have access to credit for their personal and business decisions. Add to that the rise of a financial sector that has proved brilliant at extracting subsidies that protect against downside risk, and hence encourage excessive risk-taking. The result is an economy that is at least as prone to big boom-bust cycles as what existed at the end of the 19th century.

The rise of the Tea Party has taken fiscal policy off the table as a potential countercyclical instrument; the next fiscal moves will be contractionary (probably more spending cuts), whether jobs start to come back or not. In this situation, monetary policy matters a great deal, and Mr. Bernanke’s focus on avoiding deflation and hence limiting the problems for debtors does not seem inappropriate (for more on Mr. Bernanke, his motivations and actions, see David Wessel’s book, “In Fed We Trust“).

Mr. Bernanke has his flaws, to be sure. Under his leadership, the Fed has been reluctant to take on regulatory issues, continuing to see the incentive distortions of “too big to fail” banks as somehow separate from monetary policy, its primary concern. And his team has consistently pushed for capital requirements that are too low relative to the shocks we now face.

And the Federal Reserve itself is to blame for some of the damage to its reputation, although it did get a major assist from Treasury in 2008-9. There were too many bailouts rushed over weekends, with terms that were too generous to incumbent management and not sufficiently advantageous to the public purse.

But to accuse Mr. Bernanke of treason for worrying about deflation is worse than dangerous politics. It risks returning us to the long slump of the late 1870s.

And to think that millions of dollars are paid in salaries to executives for decisions like this when realestate has yet to fall another 50 percent.

I'm in the wrong line of work.


Royal Bank of Canada reported a 13-per-cent increase in profit in its core operations during the third quarter, but an accounting charge relating to the recent sale of its U.S. retail bank pushed Canada’s largest lender to an overall loss.
Net earnings from continuing operations were $1.57-billion in the third quarter, or $1.04 a share. That compared to $1.38-billion, or 92 cents a share during the same quarter last year, the bank said. Revenue rose 2 per cent to $6.79 billion.
National looking for targets
Banks move to bump up mortgage rates
BMO's trading results buck expectations of decline
Royal Bank of Canada lost $92-million in the third quarter after taking a charge of $1.57-billion related to the recent sale of U.S. retail bank operations.
The charge is comprised mainly of a $1.3-billion writeoff of goodwill related to its divested U.S. retail bank operations, RBC said.

The US economy created no jobs and the unemployment rate held steadily higher at 9.1 percent in August, fueling concerns that the US is heading for another recession.



What's wrong with that statement.

Unemployment is at 20 percent. What a joke.
The banks needed to fail to avoid this mess and its not going away.
And all this talk about going into another recession. Give me a break. They are in a depression and will not get out of it. Realestate is to fall another. 50 percent.

And the banks need to fail. Obama passed tarp and it was his death nail. What a moron. The do nothing dumbo.

Mortgage Demand Slides Despite Low Loan Rates
Reuters | September 07, 2011 | 07:03 AM EDT
Demand for U.S. home loans fell for a third straight week last week although mortgage rates fell to or near record lows, an industry group said on Wednesday.

The Mortgage Bankers Association's seasonally adjusted mortgage applications index, which includes both refinancing and home purchase demand, dropped 4.9 percent in the week ending Sept.2.

A state of depression.



Recovery from the worst global slump since the Great Depression promises to be agonizingly slow as governments and consumers in the developed world struggle to claw their way back, restraining Canada’s comparatively healthier economy.
Statements from the central banks of Canada and the United States paint a troubling outlook, particularly for the European and U.S. economies. But even emerging markets will be held back, hit by the weakness in the more advanced economies.
Why Carney’s not keen on Canada as a safe haven
Exporters caught in global headwinds
Bank of Japan stays on hold
This outlook prompted the Bank of Canada Wednesday to signal an extended period of borrowing costs at near-emergency lows, as the shaky global landscape lessens the need to make it harder to borrow and spend. The central bank held its benchmark rate at 1 per cent for the eighth time in a row, and economists expect it won’t hike again until the second half of next year.
The Bank of Canada outlook, coupled with a regional report from the Federal Reserve, suggest there’s no quick fix as Europe struggles through a debt crisis and the United States grapples with slow growth, high debts and millions of unemployed, threatening a prolonged period of pain and angst that will span the globe.
“The European sovereign debt crisis has intensified, a broad range of data has signalled slower global growth, and financial market volatility has increased sharply,” Bank of Canada Governor Mark Carney and his colleagues said in their policy announcement.
“Recent benchmark revisions show that the U.S. recession was deeper and its recovery has been shallower than previously reported. In combination with recent economic data, this implies that U.S. growth will be weaker than previously anticipated,” the central bank said.
High debt loads, joblessness and lower net worth will continue to squeeze household spending in the United States, the bank said.
Across the Atlantic, the European debt crisis could lead to ``more severe dislocations in global financial markets’’ unless there are ``additional significant initiatives by European authorities’’ to figure out a way out of a mess that has already caused financial strains and inspired brutal austerity measures that are choking growth.
In addition, while growth in emerging-market economies has been ``robust,’’ the bank warned that it will be ``affected by weakness in major advanced economies.”
Where Canada is concerned, the central bank’s rate-setting panel noted that the economy stalled in the second quarter, but expects growth to pick up in this half of the year amid “stimulative” conditions. Still, exports will be held back by weaker global demand and a strong Canadian dollar.
In Washington, the Federal Reserve released a survey of its regional offices that showed the U.S. economy expanding “at a modest pace,” but some parts of the country experiencing “mixed or weakening activity” because of skittish consumers and a pullback by factories.
The message in Canada has definitely changed.
Just weeks ago, Mr. Carney was expected to raise interest rates at least once before the end of the year, as policy makers watched for inflation signs in a healthy domestic rebound that was the envy of the Group of Seven, and as they fretted that too many households were using ultra-cheap money to amass dangerously high levels of debt.
At this point in the rebound, though, the best-case scenario seems to be Europe finding a solution to its debt crisis and U.S. policy makers figuring out a way to stop confidence from sliding, but much of the world nonetheless still feeling stuck in the mud years from now. A scarier, but arguably less likely, scenario is a worsening euro zone crisis that paralyzes the banking system, confidence continuing to drop in the advanced economies, and emerging markets eventually being pulled under, too.
``If not for Europe, this could go on indefinitely,’’ said Nicholas Rowe, an economist at Carleton University in Ottawa who sits on the C.D. Howe Institute’s shadow monetary policy group. ``The U.S. could continue muddling along indefinitely, rather like Japan has -- not getting worse, not getting better. Europe looks different; it’s just getting slowly worse, and worse and worse.’’
As well, the stimulus spending that propped up the U.S. recovery will soon give way to restraint and cuts.
Many investors and some economists, including Prof. Rowe, say the central bank’s next move could be to lower interest rates. Other observers argue that isn’t likely.
``The market expectation is we’re back in crisis mode, but I don’t think we are,’’ said Denis Senecal, vice president and head of fixed income investing at State Street Global Advisors (Canada) in Montreal. ``It will be a long period of time before we see any rate hikes, globally, but we don’t see a rate cut unless there’s much more deterioration in the global economic picture.’’
Christopher Ragan, an economics professor at McGill University in Montreal who was a guest academic at the Finance Department in 2009-10, said if things do get worse and a global recession becomes more likely, it’s unclear whether an interest-rate cut would do much good.
The reason is because, unlike the 2008-09 credit crisis, there is plenty of monetary stimulus in the financial system, and neither households nor businesses are having difficulty accessing loans.
The best way to mitigate another slump, should it become more likely, would be through a return to government stimulus, he said, such as by putting money in the hands of people without jobs.
``Of all the countries in the world, we have the fiscal room to do this if and when it becomes necessary,’’ Prof. Ragan said

Reading the U.S. treasury yield signs

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David Pett, National Post
Friday, Sept. 16, 2011

Plunging stock prices have contributed their fair share of fear on financial markets this summer, but it’s the slide in bond yields to rock-bottom levels that is keeping many seasoned investors up at night.

The bond market, after all, is considered the financial world’s logical Dr. Spock while the stock market is more akin to the fiery and reactive Captain Kirk.

In other non-Trekkie words, bonds are closely scrutinized because they have proven to be much more reliable predictors of economic fortune over the years than stocks. When bond prices are rising and yields are falling, they have often signalled slow growth, disappearing inflation and possibly recession ahead. And when prices fall and yields are starting to rise, it has been a sign of economic expansion.

So it’s no wonder that the current downward direction in U.S. treasuries is setting off alarm bells for market players, from economists and strategists to analysts and traders as well as the buy-and-hold crowd.

Indeed, the yield on the benchmark 10-year government note has fallen so dramatically over the past few months that it hit a 50-year low last week of 1.877%.

Not even during the financial crisis and so-called Great Recession did yields get that low, and while they have risen back above 2% in recent days, it easily begs the question; just how bad is it?

Unfortunately, it’s a question that is not so easy to answer. While most agree that ultra-low bond yields reflect slower economic growth ahead, there is little consensus on the magnitude or the longevity of such a slowdown.

Are we speeding into recession and worse, a depression? Or is this just a soft patch on the road to recovery? Or maybe the whole bond market is just messed up by intervention from the Fed, and it’s not the indicator it once was.

Here four market participants give their take on what record lows on U.S. treasury yields are telling us about the state of the U.S. economy:

The Strategist: ‘Modern-day depression’ ahead

When the five-year treasury yield is still south of 1% and the 10-year note is down to 2% after a period of unprecedented government bailouts and stimulus programs, then it can only mean one thing, says David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates.

“If market rates are at Japanese levels, or at 1930s levels, then it’s time to start calling this for what it is: A modern-day Depression,” the chief economist and strategist at Gluskin Sheff + Associates said in a note to clients this week.

Whether the U.S. is the next Japan, whose economy has been in a deflationary funk for two decades and counting, or a modern day version of itself following the 1929 Crash, it is clear to him that a very long period of economic malaise is ahead that will prove harsh for investors, particularly those who suggest equities are attractively priced in this low-rate environment.

“If the treasury market is correct in its implicit assumption of a renewed contraction in the economy, then we could well be talking about corporate earnings being closer to $75 in 2011 as opposed to the current consensus view of over $110,” he said in a recent note. “In other words, we may wake up to find out a year from now that whoever was buying the market today under an illusion of a forward multiple of 10x was actually buying the market with a 15x multiple. How’s that for a reality check?”

For those who have intensified their negative outlooks, the conversion has much to do with a repeated inability of policymakers and politicians to come up with solutions to the European debt crisis as well as the jobs stagnation and other problems in the US.

"The various schemes for the European Financial Stability Facility are little more than a shell game to kick the debt can further down the road," Charles Biderman, CEO at the TrimTabs research firm, wrote. "How will shuffling the crappy debt of broke countries from broke banks into a leveraged 'special purpose vehicle' ultimately backed by the taxpayers of broke and nearly broke countries solve anything in the longer term?

"All it may do is postpone the reckoning and ensure an even bigger bust later."

TrimTabs is recommending investors be short the S&P 500 and financials in particular and go long consumer staples and industrials, while holding metals, commodities and inflation-protected bonds as well.

Depression' Makes Return to Mainstream Lexicon
Reuters | October 05, 2011 | 05:41 AM EDT
You know it's grim when the prevailing debate among economists and historians is whether the world economy faces the "Great" depression of the 1930s or the "Long" depression of the 1870s.

Listening to commentary surrounding the seemingly intractable sovereign debt and banking crisis in Europe, the stimulus/austerity battle in the United States and even hard-landing risks in China, gloom is fast becoming the consensus.

Only the shade of gloom, it seems, is in question. It's got so that, depending on your view of big or small government, you can pick your version of the pending depression.

Harvard professor and economic historian Niall Ferguson, a fan of the British government's austerity drive and septic of further stimulus, reckons the world is facing a "slight depression" and favors comparison with the late 19th century rather than 1930s.

Speaking on Monday at private bank Kleinwort Benson, where he is on the advisory board, Ferguson restated his critique of the fiscal and monetary stimuli from western governments over the past four years and said their modest impact questioned the key lessons most economists took from the Great Depression.

"They may have stopped another 'Great' depression but not a depression and what for many was the most profound lesson of economic history may turn out to be wrong," he said, adding the fact that government debts and obligations were already so high before the crisis pump priming meant they now risked backfiring.

Quite what a "slight depression" would look like, however, is not all that clear—most likely years of low to zero economic growth and deflation across several countries, structurally higher unemployment, periodic bursts of banking shocks and crises and possibly rumblings of social unrest.

Some call that a "Japanisation" of the western economies to mirror Japan's recent decade of lost growth and deflation. Others, like giant U.S. bond fund investors Pimco, talk of the "new normal" of several years of low, sluggish growth.

But however bad it has been there, Japan's permafunk can hardly be equated with the Great Depression.

Long-term market bear Albert Edwards at Societe Generale [ GLE-FR 19.025 +0.985 (+5.46%) ] has talked more apocalyptically for years of an economic "Ice Age" dominated by household deleveraging, low growth and deflation.

But now "depression" is very much back in the mainstream lexicon as the small economic bounce from the deep global recession of 2008/09 fades rapidly after little more than two years and Europe's bank and sovereign debt crisis intensifies.

Economist and doomsayer Nouriel Roubini now says there's a "huge" risk of 1930s-style depression and, on the other side of the political spectrum to Ferguson, advocates further government spending to offset it.

HSBC [ HSBA-LN 480.15  +6.60 (+1.39%) ] chief economist Stephen King, who wrote earlier this year of a "new economic permafrost", warned last week that the systemic financial threat of a euro zone collapse and breakup risked another "Great Depression".

Depression Back in Lexicon

"Depression" in economics is a big word. To most people, it conjures up images of large scale bank and business failures, mass unemployment, homelessness, soup kitchens and forced migration.

Because depressions thankfully haven't happened too often in the modern era, most people think only of the "Great Depression" of the 1930s which had all those terrible features.

But search for a precise definition of economic depression and you'll be hard pressed to find anything more specific than it's more severe than typical business cycle recessions, tends to cross multiple countries and lasts much longer.

Anecdotal rules of thumb—cited in The Economist magazine and elsewhere—center on a peak to trough drop in real gross domestic product of more than 10 percent or recessions lasting more than three years.

On that measure, the 1929-1933 Great Depression in the United States qualifies with a 27 percent loss of GDP and a peak unemployment rate of some 25 percent. The shorter 1937 and 1945 downturns qualify on the GDP measure alone too.

No other post-World War Two recession comes close. Even the 18-month U.S. recession of 2008/09 saw a 5 percent drop in real GDP and a peak jobless rate of 10.1 percent.

Harvard's Ferguson and HSBC's King both cite the panic sown by another European banking crisis—1931's default by Austria's Creditanstalt—as a trigger that made that depression "Great".

But, despite that parallel, it's still a very big call to talk of another depression of that scale looming again.

So, is the "Long Depression" of the 1870s—a global crisis rooted in the bursting of financial bubbles from European stocks to the post-Civil War U.S. railway boom—a more appropriate comparison?

The banking and financial contagion was estimated to have caused an estimated peak to trough drop in U.S. business activity of some 20-30 percent but was reckoned to have been shallower over a longer period of time, lasting over five years.

Some economists even doubt there was a continuous contraction, rather a protracted period of low sluggish growth or unremarkable recoveries.

But the United States was still essentially an emerging market back then and the parallel depression in global economic powerhouse Britain was said by some to have persisted from 1873 to 1896 and weakened the country against its continental rivals.

For Ferguson, now is not the 1930s for some key reasons—China has emerged as the world's second largest economy, globalization has not broken down into protectionism and the era's rapid technological revolution has not skipped a beat.

And just in case you thought this depression talk was too dark, he doesn't expect a rise of fascism or another world war.