Bill Bonner

Worse than the Great Depression…

Stocks ended Friday trading not much higher than where they began. Gold rose $3. Oil is trading over $80 a barrel this morning. And stocks in Asia are “recovering” from the Fed’s discount rate increase of last week.

If the market wanted to crash, it would have plenty of reasons to do so. China is tightening bank lending rules. Here in the US, there is the aforementioned Fed discount rate increase. In Europe, Greece is going back to the marketplace to raise more money. And in the Mideast, today’s news tells us that many Kuwaiti could be wiped out by the latest downturn in their multi-billion dollar investment industry.

Many things could go wrong; something will.

If no panic comes it is because the market is just not ready to panic. Still, we leave our “Crash Alert” flag flying…and stand clear. There is just more downside to this market than upside. Markets are always discovering what things are worth. We don’t want to be holding a lot of stocks when the market discovers that they’re worth only half what we paid for them. So, the flag stays up…until prices come down.

Gradually, people are coming to two contradictory realizations. On the one hand, there really does seem to be a kind of economic renaissance going on…or, at least that is what you might think if you read the business and investment news. On the other hand, people are also coming to realize that we’re in a depression.

We’ll leave it to the mainstream press to describe the rebound, such as it is. We’ll focus on the depression.

“Millions of Unemployed Face Years Without Jobs,” says The New York Times.

Readers may wonder what kind of economic renaissance fails to produce jobs. Answer: a depression.

As we’ve opined many times in the past, a depression is not just a time when people stand in line to get bowls of soup or sell apples on street corners. It’s a time of adjustment…when mistakes of the previous boom are corrected…and a new economic model is found for going forward. This doesn’t happen overnight, no matter how much federal money is put to work helping it. In fact, the government money just gets in the way…distorting the picture and delaying the necessary changes.

Those black-and-white depression days of the ’30s are gone. Now, we have a depression in full Technicolor…with plenty of shades of gray, too.

More people today get food handouts than ever got them in the ’30s. We call our soup lines the Food Stamp Program. More people are out of work too….

…but here you have to look carefully at the figures to understand it. In the ’30s, there was no public safety net. No unemployment compensation…no severance packages…and no government welfare. People didn’t give up looking for a job; they had no alternative. They kept looking until they found something. Either you were working…or you were jobless. If we reported the numbers the same way they did in the ’30s…the number would already be up near Great Depression levels…at about 15% to 18% joblessness.

But there’s something else. Now, there are more people per household working. Back in the ’30s, the man of the house was the one that had a job. Typically, the family relied upon him, and him alone, as the breadwinner.

And guess what? If you look at the men of the house…men 25-54…what you see is that one out of every 5 of them is out of work.

For men…this is clearly a Depression…no, it’s worse. Not only are they unemployed. They’re going to stay unemployed for a long time. Because it takes times for a depression to do its work. And when it is over – maybe five or ten years…or 20 years ahead – not only won’t they find their old jobs again…they may never work again. And they won’t have wives or families either.

Men’s jobs are disappearing – jobs in manufacturing and building. As the NY Times explains, they probably aren’t coming back any time soon. What’s more, studies show that the longer a person stays unemployed the harder it is to get back into the workforce. Employers don’t like to take a chance on someone who’s been out of the job market for a long time. They’re afraid they’ve lost the habit of work…or that there’s some other reason why they have been out of work for so long.

Women’s jobs…in information and services…are doing relatively well. So, men not only lose their incomes…they lose their places in the family, and in the world. What woman wants to marry a guy without a job and without income? Not many. During the Great Depression, marriage and family were almost automatic. People got married. Then, for better or for worse, they lived in families.

Even before the depression began, marriage had become optional. Women get more college degrees than men. They typically don’t like “marrying down.” They delay marriage while developing their careers…and then, when they are ready to marry, it’s hard to find a suitable man.

Result? Well, we don’t know where this leads. But it doesn’t look good for the beer-swilling, football loving X chromosome half of the population.

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 The Daily ReckoningDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010. 

  • Plausibus

    Bill seems to be forgetting that people adapt.

    Men will adapt to the changing realities. and become nurses etc.

    Furthermore the market will adapt.

    It may price them lower than women. Presumably a two-for one deal on men in the marketplace vs women would make it pretty attractive to hire men instead.

    Politicians would, in a Democracy, cater to the votes of the unemployed men and may provide more education grants etc.

    Hell, you may find more men becoming engineers, scientists and doctors! – Whatever is valued in the marekt.

    It’s amazing what a motivator eating crackers and living in a tent city can be, I’m sure!

    May we all never have to find out how motivating.

  • jason

    The essay hints at many of the changes that have happened in society: now, more woman than men go to college. Men still maintain their stranglehold on the highest executive ranks, but I think that women are taking over a lot of the administrative and management roles. Companies realize that there’s still a a double standard and they can pay women less, thus realizing a savings on management salaries. Men these days have it harder; read Stiffed by Susan Faludi. Perhaps the government is pushing young men to enlist and go to the multiple wars. Meanwhile, the US role of producing things is over. Waste is our only hope to keep the economy moving. I.E., get rid of your clunker, the government destroys it and you buy a new car that can’t stop accelerating and has to be recalled. When will we realize that all of the people don’t need to work 40 hours per week? When will we figure out that capitalism is a dead battery that ain’t gonna jump start?

  • Harry

    Markets are continuing to hold up and rise because the economic news continues to be strong.

    Again today we see:

    -CRE showing it has bottomed
    -Chicago Fed Activity positive and strongest in years.

    Every day last week I pointed out strong economic indicators. What Bill fails to realize is employment is a lagging indicator. We are beginning to see that turn around with some job creation. As the economy keeps growing, jobs will follow as always.

    Clearly the worst of this was over long ago – last May marked the end of the recession. Ever since we’re seeing strong growth and demand. Jobs will come next.

  • CommonCents

    Who CAN the U.S. compete against?

    Only thing I can come up with is our government can wreak havoc better then any other in the world.

  • Chad

    Y-chromosome is what you meant, right?

    XY – male
    XX – female

  • Ed Howes

    It is important to make WWIII both certain and necessary so the majority will support it. That’s what did the trick last time. They go with what works. Let them go without you and me.

  • jason

    well Campbell’s Soup and Lowe’s both reported increased earnings, but they still felt the need to remind everyone that the consumer recovery is expected to be slow. I’m going to get out there and spend my tax refund to help the recovery!

  • Bill

    I’m afraid I have to disagree with you Harry. I don’t think we have hit the bottom yet. There are too many factors out there that indicate more to come. It’s nice to see someone being positive though.

  • http://wildcardbooks.com Larry Martines

    “….But it doesn’t look good for the beer-swilling, football loving X chromosome half of the population….”
    Therein lies the key to the problem besetting the over-weight, over-fed, over-medicated, under educated, infotainment addicted, too vast majority of the male population. As Forest Gump sagaciously said, Stupid is as stupid does. Enough said . . .

  • Dick Cheney

    To come out of the last great depression we had to destroy the industrial capacity of Europe. China now has more industrial capacity than Europe. I wonder who our target of opportunity would be if were to embark on the same strategy once again?

  • http://n/a Richard A.

    Incredible article-talk about being right on the money. I think that today’s highly compensated “career women” will eventually have to become more open to “marrying down” or else resign themselves to being perpetually single. The current demographics of education and income between the genders is unsustainable over the long term. We can thank modern day “radical” feminism partly for this situation, and Richard Nixon’s taking the dollar off the Gold Standard on Aug. 15, 1971, didn’t help either. Keep up the good work.

  • John Schofield

    Consider; the majority of government jobs are held by women. What do government jobs produce? Nothing. Women are given preference in university faculties because of affirmative action i.e. by laws favouring their employment, university entrance and court decisions. This will not end well for society

  • Bernardo

    US population must change its mind, they need a new paradigm, first need is a Barter Net to exchange goodies for food, and they need go back to the crop fields to have basic food and forget the american dream because is dead.

  • jollyd

    We can only see what is visible, including patterns after they have emerged. However there are those Black Swans out there somewhere, sometime that will blow away everything ones imagination can come up with.

    What if Bloom Energy is for real?

    Total game change?

  • Bruce W.

    Tax refunds will catapult the economy into the next stage of stagflation. Will look and smell like recovery, but will be a head-fake. Much of last years stimulus spending was in the form of tax breaks that only get monitized with tax refunds this spring. This is especially true of purchases folks would have made anyway last year even in the absence of stimulus money.

  • alex verlinden

    The current leg up is coming to an end (something like 10500 on the Dow) … The longer term (since March) might still be marginally up (towards +/- 11100), but it could also very well be that we have seen the high already in January … protect all longs with stops before you would regret not to have done so …

    In the mean time, Bill is the best writer on all things human on the internet (if you know equal or better, post a link) … A “Bonnerism” will be a well known word in the very near future, to describe something like “les Maximes” from de la Rochefoucauld …

  • Stephen B

    Great article Bill. I think Schumpeter’s writings are very applicable to the current economic circumstances, but were he alive today he would fail to understand just how much leverage was allowed to be built up. This is a process of de-leveraging that would have blown his mind. Your point about the family unit is very Schumperian: he thought that with time, it would break down, but that normally depressions would reform it – as you rightly say, however, manufacturing has taken such a hit (and there are no signs it will come back) that the fate for young men in particular is very troubling. I commute through a former industrial area on my way to work in London (out of the rush hours), and I see countless case studies to support your claim.

  • Once upon a time.

    Just an observation.

    How is it that all these manufactured femanist utopias also feature in the most prominent positions on the Bankrupt Nation list?

    I incline to your line of thought, John Schofield. Female employment is concentrated in Government and Law. Both industries whos prime objective is to coerce non-market outcomes in everything, and they use those positions in an unashamedly discriminatory manner.

    But not to worry, all the money is in the Middle-East and China. So the future as usual is most likely to confound the expectations of all the Social Engineers.

  • runningarm

    This parallels the black culture. Welfare destroyed the black family by making males redundant. Black women, flush with welfare checks, did not want to marry down to the unemployed and disenfranchised black males. That is why black women are so lonely.

    Similarly the women of today,misandric and empowered by socialist affirmative action, are flush with cash, and do not want to “marry down” to un(der)employed and disenfranchised men.

    Perhaps male culture will become ghettoized similar to black culture with: violence, misogyny, disenfranchisement, proclivity to riot, etc.

    Women squander their youthful beauty, drunk upon the socialist hubris, but smack down once their looks start to fade and their biological alarm clock explodes. Their aching and empty wombs, their empty lives, and they wind up old and alone when the government disenfranchises them. They have been tricked into squandering their lives, used by the forces of socialism, to destroy their own kind and heritage. Their fancy degrees will not get them a jobs. I’ve seen it with my own eyes. Highly educated women, getting old and ugly, cannot find a job, their fancy degrees notwithstanding. They desperately want a man to commit…a ny man…because they have squandered their youthful beauty.

    College campuses have a majority of women and many cannot find a man so they go lesbian.

    Listen to Aretha Franklin sing what does she sing about? Someday. white women will sing the blues, too.

    You know, I saw a video about a girl getting beaten by a NY subway, while 3 male security guards stood and watched. The female commentator expressed shock that MEN! stood there and did nothing! Hey what about Equal Opportunity? Aren’t women equal to men in every way? Why should MEN be expected to intervene in a dangerous situation?

    But there will always be jobs for men on the battlefield. Men can die and get maimed and then come home and be homeless and disenfranchised by the government.

    That is the flaw. The whole house of cards depends upon men willing to sacrifice their lives. When men become disenfranchised the women will be HELPLESS. There will be a reckoning sad to say.

    There are many good women out there and families are cropping up everywhere. There IS resistance. If the citizens stand together in solidarity the bogeyman government will slither away. That is why the citizens are polarized politically, racially, according to gender, and other special interest creeds…to divide the third estate and pit them against each other.

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