Monday, September 29, 2008

Not a depression

One could say it better. One could argue it more tightly. One could use longer words and more jargon. But my sense is that the general drift of this article is correct.
In the crash of 1929 the Dow Jones industrials plunged 40% in two months; this time around it has taken a year to fall 22%.
The jobless rate jumped to 25% by 1933; it is little more than 6% today.
The gross domestic product shrank by 25% during the early 1930s; it is up over 3% during the past year.
Consumer prices fell by about 30% from 1929 to 1933; and the last time I looked they were still rising.
Home prices dropped more than 30% during the Depression vs. about 16% today.
Some 40% of all mortgages were delinquent by 1934 compared with 4% today.
In the 1930s, more than 9,000 banks failed compared with fewer than 20 over the past couple of years.
Instead of increasing the money supply, the Federal Reserve of that era reduced it by one-third.
Instead of lowering taxes, Herbert Hoover raised them.
And to channel whatever demand was left into U.S.-made goods, the government enacted the Smoot-Hawley Tariff Act to keep out foreign products; this only provoked our trading partners to do the same.
And according to the author, not a bailout either.

1 comment:

djinn said...

Duh, it's just getting started. Hear about the protectionism that Europe is considering?