When unemployment is at a real 17.5% and home foreclosures are increasing rapidly, plus the bottom is falling out of the commercial real-estate market, my feeling is that depression or recession are merely word games. Krugman has this bit in his blog today:
Brad DeLong says that the loss of public trust due to the kid-gloves treatment of bankers has raised the probability of another Great Depression, because the public won’t support another round of bailouts even if it becomes desperately necessary. I agree — but I think the bigger cost is that we’ve greatly increased the chance of a Japanese-style lost decade, with I would now give roughly even odds of happening. Why? Because bank-friendly policies have squandered public trust in all government action: try talking to the general public about stimulus, and it’s all confounded in their minds with the deeply unpopular bailouts.