Jun 10
29
Yesterday, economist Paul Krugman said we’re headed for another Depression. The world’s new obsession with “austerity” will kill the global recovery, Krugman says, and plunge the economy into a double dip.
Could that really happen? Could we really be headed for a repeat of the 1930s?
Last year, Dan Alpert, managing principal with Westwood Capital, described the huge stock market rally that followed the March lows as the “greatest sucker’s rally in history.” He also produced a fascinating series of news clippings from early 1930, a few months after the historic market crash of 1929, that showed that market participants in those days had no idea of what was about to hit them.
Specifically, Dan assembled headlines and commentary from the New York Times, Wall Street, Journal and other papers that showed vigorous debate about how strong the recovery would be–with almost no suggestion that the market crash of the previous fall might only be the beginning. The market rallied strongly in the spring of 1930 amid booming optimism. Then it crashed to the horrific lows of early 1932.
Dan Alpert says we have not yet addressed the core problem with our economy, which is the massive debt mountain that we have built up over the past 30 years. Until we address that problem, and fix it, the economy will struggle.
And with unemployment still at 10%, global economic indicators turning downward, and the government’s stimulus efforts failing to turn things around, it is not a stretch to think that another Depression has already begun.
Posted Jun 29, 2010 09:48am EDT by Henry Blodget
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