What would financial Armageddon look like?

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Many people have compared the current financial crisis with the Wall Street crash of 1929 and the Great Depression of the 1930s that followed it.

Yet current events are clearly not in the same league.
"I don't think so, considering that the Great Depression had thousands of banks failing and people losing their life savings, 25% unemployment and social unrest and tent cities of the poor," says Allan Sloan, Washington Post and Fortune magazine columnist.

The US government may end up spending trillions of dollars dealing with the problems, but so far, with unemployment at about 6% and arguments going on about whether the US economy is even in recession, it seems frivolous to mention the current crisis in the same sentence as the Great Depression.

However bad things seem at the moment, they could be a great deal worse.

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Jules R. Benjamin - 9/28/2008

We will not experience a repeat of the depression of the 1930's because our economy is very different that that of the 1930's. We are much more dependent on consumer spending and credit than we were in the 1920's. International trade is not only much larger today but much "freer." The trading system of the 1920's was tariff bound. Bank deposits are protected and government intervention will protect the bankers as well; as we are seeing. I am not saying that we cannot have a major economic collapse only that it will not take the form that it did in the 1930's. One similarity, however, between today and 1929 is that the crisis began at the top and was the result not of failures of production or consumption but of leverage, liquidity and "confidence." Yes, that means Wall St. But -- since Wall St. has the ability to bring down the whole system if we don't come up with the level of "confidence" they need, kowing who is guilty doen't mean we can afford to punish them. I guess our economic system is not the wonder that we usually take it to be.

Randll Reese Besch - 9/26/2008

The un and under-employed are not counted in any meaningful way that hides their true number. Plus we have a middle class that has been eviserated on purpose by those who do not like the New Deal or its outgrowths.