Paul Krugman of the NYTimes is an economics professor who has a clear grasp of the big picture. Guess that would be macroeconomics, wouldn’t it?
And he has a way with words.
For yr (justifiably) humble svt, as a child of children of the Depression, its lessons were removed by time, heavily insulated by the cornucopia of plenty that followed the cleansing and rebirth that was World War II for the U.S.
Only those who were very young during the Thirties, certainly not policy makers, are around now, so it’s good that Prof. Krugman is here to teach us some important lessons.
Partying Like It’s 1929
By PAUL KRUGMAN | Published: March 21, 2008
If Ben Bernanke manages to save the financial system from collapse, he will — rightly — be praised for his heroic efforts.
Contrary to popular belief, the stock market crash of 1929 wasn’t the defining moment of the Great Depression. What turned an ordinary recession into a civilization-threatening slump was the wave of bank runs that swept across America in 1930 and 1931.
It’s like this, children: after the banking debacles of 1930-31, that contributed directly to the global unrest that culminated in the war, the U.S. at least put into place checks and balances on the banking system to prevent recurrence of the calamities.
Lately it seems that we all seem to looking over our shoulders.
We hear about some famous banking names taking hallucinogenic quarterly losses, bailed out by cash infusions from “sovereign wealth funds” (Saudi princes) and one get sold to another at pennies on the dollar.
We read the reports: oil at $109 (and gas at the pump certain to hit $4/gallon before long), the Euro at $1.59, gold over $1,000.
We watch the “For Sale” signs on our neighbors’ homes get old, and hear about declining values for housing and growing numbers of foreclosures nationwide, trends that threaten every middle class household’s economic stability.
We read about the Federal Reserve, whose last two (exalted) leaders let us get into this mess (if not caused it outright), and whose current one is an academic still getting his feet wet in the real world.
This is not a drill, Ben.
Buckle up, faithful reader, we may be in for a very bumpy ride.
It’s it for now. Thanks,
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