Economy: Is it soup lines yet?

At last The New York Times has uttered the D word. Does the Times, like the 59 percent of average citizens surveyed by Gallup, think the U.S. is headed for a depression? Heck, no! At least, that is, kind of — not really. Yet it’s notable that the gray lady on Sunday finally deigned to recognize the growing fear that this is more than your average recession: 

“The stock markets are spiraling like whirling dervishes, one of the nation’s largest financial institutions has flirted with bankruptcy and the former Federal Reserve chairman Alan Greenspan invoked the ghost of past calamities when he wrote that the current economic turmoil is likely to become the ‘most wrenching’ since World War II. Meanwhile, home foreclosures are at their fastest pace in at least 30 years and in a survey conducted by USA Today and Gallup, more than half of respondents indicated that they had fears the downturn could become a depression…

“‘I used to give a lecture explaining that the Great Depression could never happen now because of the regulations that emerged from that crisis,’ said Barry Eichengreen, an economist at the University of California at Berkeley. ‘But we’re learning that there is a shadow banking system, of hedge funds and investment banks, that are outside of those safety nets. What happened to Bear Stearns last week looked a lot like a 19th-century run on the bank. And that’s why the Fed reacted so quickly.’”

More: Greenspan: Worst U.S. economic crisis since end of WWII; Robert Pollin: It’s still the economy, stupid.