I’m happy to admit that it’s very hard to hold a bear perspective, when all about there appear to be “green shoots”, and when according to my body clock it’s still hibernation time.
There are, however, four factors that keep me in my lair:
I’ll cover the last three in subsequent columns; here I rely on Mark Twain’s brilliant observation that “history doesn’t repeat, but it sure does rhyme”. A US blogger is giving us very good evidence of that with the blog News From 1930, in which every day he summarises the news from the same day of the year in 1930. As Alan Kohler also remarked recently, “one thing that comes through loud and clear is that they didn’t know they were having a Depression” (to which I would add the word “either”).
The entry for this day in 1930 (19 August—a Tuesday as it happens) certainly make that obvious. Change the company names (and those of politicians and market pundits) to their modern equivalents, and you’d be hard pressed to decide whether you were reading a paper from 1930, or 2009.
Economic news and individual company reports:
The general tenor of reports for August 1930 has “recovery” written all over it—though there is “bad”, or at least puzzling news amidst the good, such as the fall in prices.
It appears that, rather like an alcoholic who is one long before she admits so to a meeting of AA, the public and commentators in 1930 didn’t realise that a Depression has started. I feel the same way now—and the economic historians Barry Eichengreen and Kevin O’Rourke provide empirical support for this in their “Tale of Two Depressions”.
Of course, there’s more than merely rhyming history to our current situation: as Rudd pointed out in his recent essay, government fiscal stimuli is pumping something close to 18 per cent of additional demand into the global economy over three years. So there are concerted efforts to ensure that 2009 plays a different tune to 1930. I’ll discuss whether our modern economic musicians are up to the task of composing a different economic concerto in the next installment.
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