How real is the threat of another Great Depression?

[TheDeeble]

I ask because I don't know. I have a basic understanding of how an economy works. Supply/Demand, credit, interest rates, ect. But there's so much more. I've read up on the current economic problems as much as I can, and while every opinion varies somewhat between the economists, market analysts, or economics professors I've read, they pretty much all come to a similiar conclusion. That this bailout bill will be bad for the economy and will only make the recession worse or cause another great depression.

Basically, the exact opposite opinion of Paulson.

 

[BigPapaVol]

depends on which party you ask.

 

[MontereyVol]

Thing is that no one knows if it will work or not? Some people want the buying of bad debt in hopes of getting credit back to what it was. And that's pretty much the one fact you are going to see, credit is not ever going back to what it was.

The media is playing a much larger part this time around as well (this isn't the first time a bailout has happened) they have proven they can scare people into making a run on banks i.e. WaMu and now Wachovia and creating a failure, when it isn't necessary. Interesting to see if the bailout passes are they going to help create a feeling of euphoria that doesn't exist as well.

 

[TheDeeble]

The media is playing a much larger part this time around as well (this isn't the first time a bailout has happened) they have proven they can scare people into making a run on banks i.e. WaMu and now Wachovia and creating a failure, when it isn't necessary. Interesting to see if the bailout passes are they going to help create a feeling of euphoria that doesn't exist as well.

That's what caused WaMu and Wachovia to fail? I thought it had something to do with them not having enough $$$ by a specific date or something like that.

I'm interested to see how the media plays it as well.

Like I said, I'm no expert so I have to defer to those that I believe are. And just about every opinion I've read has said the bailout is bad, will make things worse, and we'd be much better off just letting the market work itself out without govt involvement.

It just seems odd. On one hand you have Paulson and Bernake saying that without a bailout, we'd screwed. On the other hand, you have a mass of individual investors, analysts, and professors saying that we're screwed if the bailout passes.

 

[BigPapaVol]

Wachovia didn't fail that I'm aware of. The other failures are all due to mortgage market writedowns of debt taking their capital toward 0.

 

[droski]

if you look at the citi deal it's pretty obvious wachovia was going to fail. the media has not helped anyone. I work for a very solid institution and it's amazing how many people have called and said "i saw on the news you were going bancrupt." ummm nooo.

as for the chances of another great depression i'd say that was pretty slim. a prolonged recession is certainly possible.