The last major recession occurred in the early eighties. Some regions were hit harder than others but the impact was felt from coast to coast The northwest was hit particulary hard during the eighties.

The entire region was dependent on the timber industry. Substantially worse than our present downturn, beginning in 1980 housing starts plummeted. The demand for lumber virtually ceased. It never really recovered as the subsidized old growth timber from the local federal forests were for the most part already harvested and the timber industry was just beginning its labor saving modernization and move into the world market. The term cut and run was a reality as timber corporations, fattened by over 100 years of federal subsidies headed for greener pastures offshore.

The working class timber based economy that was so much a part of this region was devastated. Unemployment figures reached as high as 13% but many more were not working. The layoff had occurred over several years and the statistics conveniently hide those who are considered no longer looking for work.

On the up side, local small businesses were flourishing. Commercial and residential rents and start up costs were extremely low. Vacant storefronts were slowly filled with small shops and restaurants. Some survived and some didn’t but the oppurtunities were exciting.

The eighties downturn spurred local governments to subsidize big inverstment. This profoundly changed the economic atmosphere.

Land is most often the most seriously deflated sector of the economy in the downtimes. The early eighties were no exception. Land could be had for as little as a third of what it was at the end of the seventies. Correspondingly, houses had dropped up to fifty percent from their peak values just a few years prior. Most blocks in city neighborhoods had vacant properties; people just picked up and left. The migration into the Northwest was migrating back out.

The timing for first time homebuyers was impeccable. Fed chairman Paul Volker had jacked interest rates up into the stratosphere to fight the beast of inflation that had been hounding the economy since oil began its upward climb in the mid seventies. A bank loan was out of the question at 15-20% but owners were carrying their own land sales contracts with a small down and short [10-15 year] time span. With rents at about the same level as an average house payment, people began to take advantage of the situation and purchase these vacant houses.

In contrast, the present economic crisis has lowered local housing prices about 17% from their 2006 peak. To put this in perspective, a house that would have sold for about $35,000 in the recession of the early eighties can be had now for the bargain basement credit crunch, default swapped, collateral backed price of @ $300,000! What a bargain.

In the eighties a carpenter might have brought in $12.50 per hour. The same job might pull in about $20 an hour today. The wage comparison and the housing price comparison pretty much sums up the real economic problem we are facing today. Even with the current deflation, the bottom of the barrel interest rates that we have today, the numbers don’t work for most people.

Another major difference between the two downturns is the genuine affordability of the first slump. Rent, food, clothing, basically all the necessities of life were much more in line with the ability to pay of the average consumer in the early eighties. A six dollar restaurant meal, inexpensive groceries, $300 house rent; losing your job was tough but a small savings could keep you going for quite awhile. A couple months with no income now can require a small fortune merely to afford the everyday items.

With all the cries of depression we hear, we are still surrounded by amazing displays of wealth. Massive tinted windowed SUVs that could house a family of homeless people have replaced the small gas sipping Japanese compacts and old Ford trucks of the early eighties. Four thousand square foot McMansions have superceded the comfortable but relatively small ranch houses. A basic requirement for survival seems to be a few thousand dollars worth of electronic gadgetry. We are surrounded by almost immeasurable material wealth, yet many of us fear poverty as if it lays in wait just outside our door.

The early eighties recession was deeply rooted in our manufacturing base; our ability to produce. The seventies had ushered out the era of cheap energy. The price of oil began its steep upward climb and we were a country built on manufacturing immersed in the abuse of cheap energy. Ever segment of industry was hit hard. It was the beginning of the end for low cost American manufacturing.

In contrast, the current recession finds us at the mercy of a financial system dependent on artificial and always larger paper profit. Addicted to endless injections of new liquidity by the Federal Reserve, the top heavy system lost its balance. The common sense that ever increasing numbers on voluminous spread sheets did not really constitute a product itself, finally seeped into the dense minds of our corporate leaders. The drop back down was much quicker than the ascent.

The nineties had spawned the belief that the mere passage of time, along with a piece of paper showing our ownership would produce wealth without the bother of work. Whether it be stock or home ownership, the ownership itself entitled us to profit.

The two downturns seem to contain more differences than similarities. The earlier was caused by a real drop in manufacturing and production that reflected a steep rise in energy costs. The recent slump reflects a return to earth of astronomical asset prices caused by overproduction of paper currency and over speculation. The late seventies forecast the beginning of the diminishing earning capacity of the working class while the nineties highlighted the obscene profit taking of the corporatist financial sector.

Perhaps the eighties recession was more painful, that certainly was the case in our region. But, we weren’t overburdened with sob stories of CEOs and corporations. We don’t need to be saddened by news that a company with an asset sheet larger than the country of Peru lost 200 million last year. Our hearts broken because the owners of sports franchise teams have lost 30% of their net worth in the depressed stock market and player’s multimillion dollar salaries might have to be cut next year. Corporations too big to fail receiving 100 of billions of dollars in bailouts. Bloated government agencies reacting to the hard times by growing even larger and demanding even higher taxes.

Times do change.