Comments on: Four Scary Charts

By: ottovbvs

ottovbvs — Wed, 08 Apr 2009 11:38:58 +0000

sinz54 wrote 27 minutes ago”Put it all together, and we could be entering a dangerous new period of geopolitical instability in the world.”…Actually I think the reverse is true…..as the authors of this piece observe the reaction of global policy makers couldn’t have been more different fron the thirties. Markets have been flooded with liquidity; no retreat into beggar my neighbor policies on debt repayment, protectionism and economic autarchy; and global cooperation between the big players. This is going to be the worst recession since the war but not GD II.

By: sinz54

sinz54 — Wed, 08 Apr 2009 11:05:16 +0000

Actually, I think that the Eichengreen / O'Rourke piece *understates* the case--because they are limiting themselves to economic issues, not the impact on world geopolitics.

Let's review that aspect of the Great Depression:

The worldwide Depression hit Germany particularly hard, because Germany was still struggling to pay her World War I debts, and had just been through a bout of hyperinflation. Shirer notes that prior to the 1930s, the Nazi Party was struggling. But then the Depression of the 1930s gave the Nazi Party its biggest shot in the arm. Hitler promised the German people that he would restore prosperity and end unemployment. They believed him. And we all know what happened after that.

Today, a lot of Third World countries had become stable, prosperous emerging markets in the boom years of the 1990s. Now they're being hit hard by the decline in foreign investment, and the decline in demand for their raw materials. The result, I think, will be weaker governments, greater instability, war or civil war--and perhaps a shot in the arm for radical Islamists. Just as Hitler benefited from the Depression in Germany.

Finally, the collapse of the global financial system that was largely inspired by U.S. leadership, has resulted in a significant weakening of that leadership. Put it all together, and we could be entering a dangerous new period of geopolitical instability in the world.

By: ottovbvs

ottovbvs — Wed, 08 Apr 2009 10:33:43 +0000

Er….yes….it’s serious….This is only news to the Republicans in congress who want a five year spending freeze and the repeal of the stimulus bill. Boehner and Cantor said the govt was over reacting as I recall. As Eichengreen and O’Rourke point out the policy reaction is what’s different between 1929 and 2009. What these charts show is we are in the early stages of a down turn which has the “potential” to become another great depression but won’t because of govt actions around the globe not least in the US.

By: Cforchange

Cforchange — Wed, 08 Apr 2009 09:25:11 +0000

Utoh, I’m going to go count my cash.

By: krove

krove — Wed, 08 Apr 2009 08:35:31 +0000

And Cantor says Obama is over Reacting to THIS.