In one of the few pieces I have seen in recent days about the turmoil in our nation’s financial system, Irwin Kellner on MarketWatch says we are not seeing a second Great Depression, and that we should not refer to what the US House of Representatives failed to do today as a “bailout.” Odd that I tried to link to the actual US House of Representatives web site (www.house.gov) and couldn’t get it to come up – must’ve crashed or something. Hmph.
Anyway, Kellner’s point is that the market turmoil we’ve seen over the last couple of weeks, certainly worrisome and cause for action, is not the death knell some would claim it to be. I have no way of knowing, of course, but I have wondered for some time about the use of increasingly sensationalistic language on the part of “news” organizations. I even emailed CNNMoney once complaining about their use of terms like “slammed,” “crushed,” “tanked,” and the like in describing what had become run-of-the-mill losses on Wall Street. A hundred points in the Dow here, a hundred points there. One day down, the next day up. The psychological whipsaw was working overtime.
So how much of this is more of the kind of sensationalism and fear-mongering to which we have become accustomed over the last seven or so years? On the part of the media? On the part of our public officials? Just how do we know how big a problem this is? And how do we know what is (was?) before our Congressmen was the solution? I’m not sure (m)any of us know the real answers to these questions.
Looking at some of the figures Kellner uses in his column, there may not be as much immediate comparison to the Great Depression as we think. Then again, several of the figures he’s used for comparison took several years to manifest themselves. Who’s to say that unemployment won’t decline between now and 2012 (like it did between 1929 and 1933) or that GDP won’t slump over the next few years? Only time will tell, of course, whether Dr. Kellner is right or wrong. On October 30, 1929 I wonder how many people expected the global economic decline that persisted through the 1930s?
Even if this is not the start of a second Great Depression it needs to be a wake-up call to stop living beyond our means and start investing in things that matter.