Digital Daily » Great Depression

Econalypto

John Paczkowski — Tue, 02 Dec 2008 08:00:54 +0000

Good thing the National Bureau of Economic Research wasn’t established with the goal of providing timely economic analysis; otherwise its announcement Monday that the country has been in a recession since December 2007 might seem, you know, ludicrous. But the NBER’s business is quantitative historical analysis, not timely economic intelligence. As Jeffrey Frankel, a Harvard professor and member of the NBER’s business cycle dating committee, notes, “Our job is to be definitive, not fast.” And that makes Monday’s pronouncement even more worrisome. Because, according to the NBER, the current contraction, already the longest since 1982, is entirely likely to grow longer still. Certainly, that’s what all the leading economic indicators suggest. “It is clearly not going to end in a few months,” explains Frankel. “We would be lucky to get done with it in the middle of next year.”

If that proves true–if the economy doesn’t hit bottom until the second quarter of 2009–this recession will have been the longest since the Great Depression. What a horrific thought….

Tesla Foiled

John Paczkowski — Fri, 17 Oct 2008 11:42:04 +0000

While $25 billion in low-cost federal loans keeps General Motors (GM), Ford (F) and Chrysler churning out SUVs through the econalypse, the wheels are coming off cleantech car company Tesla Motors. Without access to the same sorts of loans given its Detroit colleagues, the country’s leading electric car maker is delaying production of its Model S sedan, sacking an unspecified number of employees and shuttering two offices. “These are extraordinary times,” Tesla CEO Elon Musk wrote in post to the company blog. “The global financial system has gone through the worst crisis since the Great Depression, and the effects are only beginning to wind their way through every facet of the economy. It’s not an understatement to say that nearly every business will be impacted by what has unfolded in the past weeks, and this is true for Silicon Valley as well.”

Lehman Brothers: $2.5 Billion for a Bankruptcy Well Done

John Paczkowski — Wed, 24 Sep 2008 00:10:18 +0000

Finally, some reassuring news amid all this economic woe. The United States financial system is suffering the worst financial crisis since the Great Depression. The Treasury is planning to buy up to $700 billion in bad debt. But things are looking up for the long-suffering employees of investment bank Lehman Brothers.

But wait. Wasn’t it Lehman that filed for bankruptcy just last week?

Yes, it was.

But as luck would have it, that sorry, sorry turn of events apparently had no effect on the $2.5 billion the bank set aside for staff bonuses. So, according to The Independent, Barclays, which is buying Lehman Brothers for $1.75 billion, plans to make good on those bonuses, though it has no obligation to do so.

Two-and-a-half billion. Plus whatever portion of that $39 billion they were given last year. And then there are the pay and severance packages. Lehman Brothers Chairman and CEO Richard Fuld Jr. made $34 million in 2007. He also banked $490 million from selling Lehman stock.

Such is the price of failure.

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