Like a lot of people I have been trying to understand what is going on with the economy. I have decided that I am going to start spending 30 minutes a day of my regular study (usually around 2.75 hours) looking at and trying to decipher the current economic crisis.

I am not a trained economist–I have never taken a single economic class–but I have done a fair amount of reading of economic texts over the years and am a regular reader of the Economist magazine, the New York Times, the Washington Post, Paul Krugman, Z Magazine, the Industrial Worker, Labor Notes, the Anarcho-Syndicalist Review, and Aufheben. I also occasionally read the Wall Street Journal, La Jornanda and CNN’s financial pages and regularly listen to Marketplace, Democracy Now! and the two main NPR shows. Some of these media organs have a decided left-wing, particularly libertarian socialist, bias. Some are more mainstream and a couple are positively laize fair. I could probably balance my reading with a look at the National Review and the Weekly Standard but one only has so much time.

My efforts at understanding the economic crisis will be regularly reported on this blog. I will collect opinion, analysis and slowly create a glossary of economic terms. Since I am not an economist I will not, for the most part, offer my own opinion. The first question I want to explore is whether or not the global economy is on the verge of another Depression. According to an article on CNN 6 in 10 Americans currently think this. Paul Krugman thinks that the economy "may well experience its worst slump since the Great Depression" if European and American governments fail to act in concert this weekend.

Another opinion piece, this one by Casey B. Mulligan of the University of Chicago, in the New York Times today argued that another Depression is unlikely. Here are a couple of key passages from his article:

It’s important to keep in mind, too, that the financial sector has had a long history of fluctuating without any correlated fluctuations in the rest of the economy. The stock market crashed in 1987 — in 1929 proportions — but there was no decade-long Depression that followed. Economic research has repeatedly demonstrated that financial-sector gyrations like these are hardly connected to non-financial sector performance. Studies have shown that economic growth cannot be forecast by the expected rates of return on government bonds, stocks or savings deposits.

It turns out that John McCain, who was widely mocked for saying that “the fundamentals of our economy are strong,” was actually right. We’re in a financial crisis, not an economic crisis. We’re not entering a second Great Depression.

So, if you are not employed by the financial industry (94 percent of you are not), don’t worry. The current unemployment rate of 6.1 percent is not alarming, and we should reconsider whether it is worth it to spend $700 billion to bring it down to 5.9 percent.

The Economist magazine had an article last week in which it suggested that the country and the world is nowhere near entering a Depression but that without good leadership there’s a some chance something like one might occur. Here’s the concluding paragraph of the article:

Is 2008 a repeat of 1929 or 1930? Look not at the road ahead but the immediate surroundings, and the question seems absurd. America’s economy may be just entering recession; between 1929 and 1933 it shrank by more than a quarter. Some economists fear that unemployment, now a touch over 6%, might reach 10%; in 1933 it was about 25%, and many of those in work were on short time and short pay. Americans are not banging at the doors of banks demanding their money, nor queuing around the block for soup and bread. America is not yet a land of Hoovervilles—or Bushvilles—inhabited by those turfed out of jobs and homes. Nor should it be allowed to become one.

I personally do not yet have much of an opinion as to whether a Depression is likely. Capitalism, as it is practiced in the United States and globally, has a natural boom and bust cycle. In the last ten years we have seen both a technology and a housing boom and bust. It’s quite possible that what is occurring now is simply part of the regular boom and bust cycle. Such cycles have been mitigated in the past by government regulation and oversight. The governmental policies of the last twenty five years under advocates of the "free market" like Ronald Reagan, Bill Clinton and the Bushes, has gutted a good chunk of regulation of the financial markets and industry. I think that means that the current bust could be worse than previous ones by a rather significant degree. However, the economic history of the last 100+ years also leads me to believe the country and the world will probably emerge from the bust eventually. The question for me is what do people do until then. How can people organize so that they are hurt less by the bust and able to weather the storm? What governmental measures and collective actions can be taken? I hope to look at some of the above in future blog entries.