Brett Arends and Dave Kansas: Eighty Years After the Great Crash -- 'Is It the '30s Again?'
Editor's Note: It was the worst thing to happen to the U.S. since Fort Sumter. October, 1929. Wall Street crashed and helped drive the country into the Great Depression—a deep economic and spiritual wound that has afflicted three generations of Americans. Eighty years later, as the country struggles through the harsh aftermath of another crash, two Sunday Journal contributors mark a grim anniversary and weigh the question that haunts everyone:"Is this the 1930s all over again?"
![[Sunday Journal WSJ.com]](http://s.wsj.net/public/resources/images/SJ-AD912A_18LED_NS_20091016191409.gif)
Brett Arends
Markets and the economy look less cataclysmic than they did earlier this year. And so they should, following a torrent of monetary easing.
But that doesn't mean happy days are here again.
If you want a second opinion, don't look at the Dow Jones Industrial Average. Look at three other markets: bonds, gold and the dollar. All of them are flashing amber, or red...
... That's why comparisons with previous recessions ring so hollow. The U.S. came out of the slumps in the early 1980s and early 1990s with much stronger balance sheets. Households and corporations had much greater ability to borrow and spend.
The last time the economy tried to climb out of a deep slump while already this deeply in debt was...the 1930s...
.. The kicker is that in this recovery we probably cannot expect much from rising asset prices either. In the mid-1990s, house prices were dirt cheap by long-term measures. In the early 1980s, that was true of stocks and bonds. The only way was up...
Dave Kansas
During the past few months, a number of economists and even some policy makers have declared the Great Recession over. The data support that view. Leading indicators are on the rise, home sales have improved, and third-quarter growth is expected to come in positive.
And yet, the doomsayers will not relent. The stock-market rise is derisively called a"suckers' rally." The economy may be better, but it will soon"double dip" back into recession. The jobs picture will only worsen.
These mutterers of darkness believe that we are deep into a replay of the Great Depression, an era filled with false dawns.
Oh please.
Let's not make any mistake: The current downturn is almost certainly the worst since the Great Depression. A high jobless rate and the loss of personal net worth from collapsing home values and declining stock markets have made this a period of pain for many people.
Ever since the downturn ripped through the financial system one year ago in the wake of the Lehman Brothers collapse, comparisons to the 1930s have come and gone. On the 80th anniversary of the great stock-market crash those comparisons are likely to intensify, though they shouldn't.
During the Great Depression, more than 10,000 banks failed. Bank runs were so commonplace that moviegoers understood viscerally what was happening during the pivotal bank-run scene in the Christmas classic"It's a Wonderful Life."
Since 2008? A mere 125 banks have failed.
During the Great Depression, stock prices declined 90% in the three years after the Crash of 1929, and gross domestic product fell by 30%. By comparison, the stock market fell about 55% from its 2007 high before rebounding, and GDP declined less than 5%...
Read entire article at WSJ
Brett Arends
Markets and the economy look less cataclysmic than they did earlier this year. And so they should, following a torrent of monetary easing.
But that doesn't mean happy days are here again.
If you want a second opinion, don't look at the Dow Jones Industrial Average. Look at three other markets: bonds, gold and the dollar. All of them are flashing amber, or red...
... That's why comparisons with previous recessions ring so hollow. The U.S. came out of the slumps in the early 1980s and early 1990s with much stronger balance sheets. Households and corporations had much greater ability to borrow and spend.
The last time the economy tried to climb out of a deep slump while already this deeply in debt was...the 1930s...
.. The kicker is that in this recovery we probably cannot expect much from rising asset prices either. In the mid-1990s, house prices were dirt cheap by long-term measures. In the early 1980s, that was true of stocks and bonds. The only way was up...
Dave Kansas
During the past few months, a number of economists and even some policy makers have declared the Great Recession over. The data support that view. Leading indicators are on the rise, home sales have improved, and third-quarter growth is expected to come in positive.
And yet, the doomsayers will not relent. The stock-market rise is derisively called a"suckers' rally." The economy may be better, but it will soon"double dip" back into recession. The jobs picture will only worsen.
These mutterers of darkness believe that we are deep into a replay of the Great Depression, an era filled with false dawns.
Oh please.
Let's not make any mistake: The current downturn is almost certainly the worst since the Great Depression. A high jobless rate and the loss of personal net worth from collapsing home values and declining stock markets have made this a period of pain for many people.
Ever since the downturn ripped through the financial system one year ago in the wake of the Lehman Brothers collapse, comparisons to the 1930s have come and gone. On the 80th anniversary of the great stock-market crash those comparisons are likely to intensify, though they shouldn't.
During the Great Depression, more than 10,000 banks failed. Bank runs were so commonplace that moviegoers understood viscerally what was happening during the pivotal bank-run scene in the Christmas classic"It's a Wonderful Life."
Since 2008? A mere 125 banks have failed.
During the Great Depression, stock prices declined 90% in the three years after the Crash of 1929, and gross domestic product fell by 30%. By comparison, the stock market fell about 55% from its 2007 high before rebounding, and GDP declined less than 5%...