It’s worth thinking about where we are in the Great Recession, relative to the same time period in the Great Depression:
1.a October 1929, stocks crash on sharply falling expectations of NGDP growth.
1.b October 2008, stocks crash on sharply falling expectations of NGDP growth.
2.a Early 1931, stocks rise on signs of recovery
2.b Early 2010, stocks rise on signs of recovery
3.a May 1931, stocks fall as European banking/sovereign debt crisis begins
3.b May 2010, stocks fall, as European banking/sovereign debt crisis begins
Let’s hope the European debt crisis doesn’t get as bad as in 1931, or if it does, let’s hope the Fed offsets the effects of the crisis as they should have done in 1931, but didn’t. Today’s 4% drop in stocks suggests that the market is not particularly optimistic on either score.
In other good news, a nice 2 minute drill on how the US is on the same fiscal path as Greece:
Via Gregory White.