Wednesday, April 8, 2009

Discouraging views anyone ?

Then have a look at Mark Thoma’s blog "Economist's View" in which he sums up the paper « A Tale of Two Depressions » by Barry Eichengreen and Kevin H. O’Rourke:

“ … two leading economic historians show that the world economy is now plummeting as it did in the Great Depression; indeed, world industrial production, trade and stock markets are diving faster now than during 1929-30”.


“Paul Krugman has compared the fall in US industrial production from its mid-1929 and late-2007 peaks, showing that it has been milder this time. On this basis he refers to the current situation, with characteristic black humour, as only “half a Great Depression”.”

My reminder:

The Great Depression ran its course over three years, 1929-1932, and lingered on for some more years until WWII. The present story is not finished yet and accordingly it is too early to conclude. Moreover the unemployment figures are nowhere comparable to those of the 30s and wages aren't rising as they were then.

What we can say (with Mark Thoma) and what the authors show is that we are, globally but until now, on the same track, in terms of industrial production, trade, and stock market prices.

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