Parallels to the Great Depression?
Some people like to draw parallels to the current economic situation and the Great Depression which started with a stock market crash on October 29,1929, or many like to think it started then. However, if you look at the numbers concerning unemployment, then you will see that we are nowhere near those numbers now, although ours right now are admittedly not something that should make you feel all warm and fuzzy inside. Right now, at the peak of unemployment most likely, unless jobs continue to be lost at an alarming rate, we are at almost a 9% unemployment rate.
The Great Depression saw unemployment rates as high as 30%, which is catastrophic. People saw their net worths and income drop by anywhere from one half to two thirds, which devastated personal worth and also led to a vicious cycle of spend cutting by consumers. Right now, yes, we are looking at some huge losses to people’s investment portfolios as well as their income, but the stock market has already slightly rebounded, although not to anywhere near the pre-recession levels it was at before this all hit.
You have to remember also, that during the Great Depression, the government was not as proactive as it is today in preventing this sort of catastrophe. I guess you could say that we learned a great deal from the Depression, and that has taught the top economists how to avoid that same thing from happening again. Even back during the Depression, great visionaries and financial gurus saw that this time would pass and that financial prosperity would return to the people of America and to the society itself.
And they were right, just as people today know that although we are near a bottom now and things seem pretty bad, they will indeed get better, and who knows, they may even emerge stronger than they were before. I think that the Obama administration has done what they can, but the government can only do so much, and then it is left up to the private sector and businesses to make things right again. Let’s just hope that the right safeguards are put into place and the same risky lending practices that led to this fall will be monitored from now on.
