Wednesday, October 21, 2009

Being Broke By Any Other Name...

So the VEEP has apparently declared our current financial crisis a "Depression."

"My grandpop used to say: There was a suburb of Scranton called Minooka,” Biden explained in a speech.

“He said, ‘When the guy in Minooka's out of work, it's an economic slowdown. When your brother- in-law's out of work, it's a recession. When you're out of work, it's a depression.'”

So how does Biden view it? "Well, it's a depression. It's a depression for millions of Americans, through no fault of their own," he said.

Reporters and bloggers seem to be taking this as another example of Joe Biden putting his foot in his mouth because as we all know it's really a recession not a depression and anyway, the recession is actually over.*

For example Dan Weil at writes:

"Vice President Joe Biden says the U.S. is in a depression, contradicting the view of virtually all economists, not to mention his own previous statements...Certainly, the U.S. economy shrank by 0.7 percent in the second quarter. Yet nearly all economists now forecast an expansion for the third quarter. Former Federal Reserve Chairman Alan Greenspan goes so far as to predict third-quarter growth of 3 percent... Economists, meanwhile, are coming to believe that the recession, great or not, has already have ended."

So here's my question: Do you care if it is a "recession" or a "depression"? As an individual in the economy, will it change anything if we label it with a word starting with an R or a D? And if the recession is, in fact, over has that made a difference in your personal financial situation and your life?

*A telling line in a CNN Money article on the difference between a recession and a depression written back in March explains: "Even though household net worth has fallen a record $11 trillion, or 18%, during the course of this recession, the broader economy can weather such a shock."

So the people are more broke than they have ever been since we started keeping records, but not to worry because the economy is in good shape. As long as "the economy" is happy...