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Here's some great reading for those who might be tempted to believe the doombaya message. http://www.cnn.com/2008/POLITICS/10/09/eichengreen.depression/index.h

by sabat 18y ago

Here's some great reading for those who might be tempted to believe the doombaya message. http://www.cnn.com/2008/POLITICS/10/09/eichengreen.depression/index.html http://www.cnn.com/2008/POLITICS/10/09/eichengreen.depressio... Excerpt: Barry Eichengreen is George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley. Every time the economy and stock market turn down, financial historians get predictable calls from reporters. Could this be the start of another Great Depression? Could "it" possibly happen again? My stock answer has always been no. The Great Depression resulted from a series of economic and financial shocks -- the end of a housing bubble in 1926 and the end of a high-tech bubble in 1929 -- but also from truly breathtaking neglect and incompetence on the part of policymakers. It couldn't happen again precisely because policymakers know this history. Fed Chairman Ben Bernanke is a student of the Great Depression. Treasury Secretary Henry Paulson remembers the mistakes of Andrew Mellon, Herbert Hoover's treasury secretary.

davi 18y ago
This is flawed logic, which goes like: "The biggest economic problem we know about is the Great Depression. Policymakers know how to deal with that; therefore we are fine." Maybe the new global economy contains challenges which current policymakers don't know how to deal with. And if these challenges aren't met, we might end up with Great Depression effects, due to a different set of initial causes. Or, maybe everything will settle down in a week or two.
- colinplamondon 18y ago
  Or, we're facing a far larger economic calamity than that of the Great Depression itself.
- khafra 18y ago
  Insightful. "Fighting the last war" is one of the more popular ways for generals to utterly fail.
ca 18y ago
I wasn't quite sure how to interpret this part of that article, but I think Professor Eichengreen later explains that his traditional answer ("it can't happen again") is no longer true. "We can be confident, I always answered, that there will not be another Great Depression because policymakers have read financial histories like mine. At least that was my line until recently. Now I have stopped taking reporters' calls." While he could mean that he's now getting so many requests that he can't be bothered to return them any more, I wonder if instead he meant that he can no longer give the "it can't happen again" message. Lending credence to this interpretation I think, he goes on to point out the ways in which the problem could continue to worsen without drastic action.
anamax 18y ago
> It couldn't happen again precisely because policymakers know this history. Fed Chairman Ben Bernanke is a student of the Great Depression. Treasury Secretary Henry Paulson remembers the mistakes of Andrew Mellon, Herbert Hoover's treasury secretary. Andrew Mellon remembered the mistakes of 1873....
anamax 18y ago
> Fed Chairman Ben Bernanke is a student of the Great Depression. Treasury Secretary Henry Paulson remembers the mistakes of Andrew Mellon, Herbert Hoover's treasury secretary. The Great Depression wasn't "Great" because of Hoover, but because of FDR's policies, which extended it for seven years (according to the latest research from UCLA). If it wasn't for WWII, the GD might have gone on even longer.

by sabat 18y ago

davi 18y ago

This is flawed logic, which goes like: "The biggest economic problem we know about is the Great Depression. Policymakers know how to deal with that; therefore we are fine." Maybe the new global economy contains challenges which current policymakers don't know how to deal with. And if these challenges aren't met, we might end up with Great Depression effects, due to a different set of initial causes. Or, maybe everything will settle down in a week or two.

colinplamondon 18y ago
Or, we're facing a far larger economic calamity than that of the Great Depression itself.
khafra 18y ago
Insightful. "Fighting the last war" is one of the more popular ways for generals to utterly fail.

ca 18y ago

I wasn't quite sure how to interpret this part of that article, but I think Professor Eichengreen later explains that his traditional answer ("it can't happen again") is no longer true. "We can be confident, I always answered, that there will not be another Great Depression because policymakers have read financial histories like mine. At least that was my line until recently. Now I have stopped taking reporters' calls." While he could mean that he's now getting so many requests that he can't be bothered to return them any more, I wonder if instead he meant that he can no longer give the "it can't happen again" message. Lending credence to this interpretation I think, he goes on to point out the ways in which the problem could continue to worsen without drastic action.

anamax 18y ago

> It couldn't happen again precisely because policymakers know this history. Fed Chairman Ben Bernanke is a student of the Great Depression. Treasury Secretary Henry Paulson remembers the mistakes of Andrew Mellon, Herbert Hoover's treasury secretary. Andrew Mellon remembered the mistakes of 1873....

anamax 18y ago

> Fed Chairman Ben Bernanke is a student of the Great Depression. Treasury Secretary Henry Paulson remembers the mistakes of Andrew Mellon, Herbert Hoover's treasury secretary. The Great Depression wasn't "Great" because of Hoover, but because of FDR's policies, which extended it for seven years (according to the latest research from UCLA). If it wasn't for WWII, the GD might have gone on even longer.