The Great Depression of early this century left a mark in the world that continues being
today, almost 80 years after its beginning. They started the creation of
our present banking system, moulded our laws of values, and left marks in
psiquis of the nation that have disappeared with the only modestly
decades. During the Depression, the economizers saw evaporate their
bottoms in the banking bankruptcies, because the deposits that were not
assured. Bankers got to be so unpopular that asaltabancos, as Bonnie
and Clyde, became popular heroes. In the depths of the depression, 25%
of the population outside the work. The industrial average Dow Jones
had fallen 89%. All the banking system was closed during four days by
presidential order. House and the farm of the mortgages goes out.
People without created home enormous quarters, call " Hoovervilles, "
outside the majority of the main cities.
What makes it sound like the current situation?
Few deny, however, that the current economic climate is worrying similarities with the Great Depression:
• The large decline in the stock market fell wealth and reduce costs, said Timothy Canova, deputy dean of international economic law at Chapman University School of Law. Dow did not fall steadily: it sank 47% from its peak of 381 in September 1929 to November 1929, and then began the famous "sucker in the rally" in the spring of 1930, before falling to 41 in July 1932.
• The banking system was paralyzed on loans and speculation. In 1929, loans were actions of speculators, most recently, loans have been the owners and investors in mortgage securities.
But there are some big differences that make today, repeating the Great Depression is unlikely. The biggest: the massive intervention of central banks around the world. "The Fed has been very aggressive and its role as lender of last resort," said Paul Kasriel, chief economist at Northern Trust. That is why the Fed was created - to prevent economic recession, but to prevent the implosion of financial systems. "
today, almost 80 years after its beginning. They started the creation of
our present banking system, moulded our laws of values, and left marks in
psiquis of the nation that have disappeared with the only modestly
decades. During the Depression, the economizers saw evaporate their
bottoms in the banking bankruptcies, because the deposits that were not
assured. Bankers got to be so unpopular that asaltabancos, as Bonnie
and Clyde, became popular heroes. In the depths of the depression, 25%
of the population outside the work. The industrial average Dow Jones
had fallen 89%. All the banking system was closed during four days by
presidential order. House and the farm of the mortgages goes out.
People without created home enormous quarters, call " Hoovervilles, "
outside the majority of the main cities.
What makes it sound like the current situation?
Few deny, however, that the current economic climate is worrying similarities with the Great Depression:
• The large decline in the stock market fell wealth and reduce costs, said Timothy Canova, deputy dean of international economic law at Chapman University School of Law. Dow did not fall steadily: it sank 47% from its peak of 381 in September 1929 to November 1929, and then began the famous "sucker in the rally" in the spring of 1930, before falling to 41 in July 1932.
• The banking system was paralyzed on loans and speculation. In 1929, loans were actions of speculators, most recently, loans have been the owners and investors in mortgage securities.
But there are some big differences that make today, repeating the Great Depression is unlikely. The biggest: the massive intervention of central banks around the world. "The Fed has been very aggressive and its role as lender of last resort," said Paul Kasriel, chief economist at Northern Trust. That is why the Fed was created - to prevent economic recession, but to prevent the implosion of financial systems. "
