Wednesday, October 8, 2008

Is it 1929 again?

If Washington Post columnist Robert Samuelson tells me right now that we're going to come out of the current financial crisis O.K. I am going to go ahead and believe him. Because that's what I need to hear

Samuelson wrote an encouraging opinion piece in the in the Post yesterday morning and I was more than happy to hear some positive (at least, in the current context) news.

Even though six in 10 Americans believe that another depression is likely, Both CNN money and Samuelson disagree - with proof:

In 1929 -
  • the federal government was not a huge part of our economy like it is today. (Gov't. accounts for 20 percent of spending today, compared to three percent in 1929)
  • we have had 10 recessions since the 1940s, but no depressions
  • the two worst recessions in 1973-75 and 1981-82 had peak unemployment rates of nine and 10.1 percent respectively. Unemployment was 25 percent during the great depression and 6.1 percent this September.
  • we have the FDIC insuring our bank accounts up to $250,000
The economy will get worse. The housing glut endures. Cautious consumers have curbed spending. Banks and other financial institutions will suffer more losses. But these are all normal symptoms of recession. Our real vulnerability is a highly complex and global financial system that might resist rescue and revival. The Great Depression resulted from the mix of a weak economy and perverse government policies. If we can avoid a comparable blunder, the great drama of these recent weeks may prove blessedly misleading.
Read the CNN poll and Samuelson's op-ed to feel better about your life. And your 401(k).

You're welcome. :)

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