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October 12, 2008
Another Great Depression?
The last time financial markets were as shaken as they are now was October 1929, when three tumultuous days signaled trouble to an oversold stock market that had been encouraging small investors to buy stocks on margin in the hope that then-record prices would continue to rise. Several hasty moves by large banks delayed the ultimate market descent to an early 1932 nadir from which recovery would not be complete until after World War Two. Needless to say, the Great Depression played a key role in Twentieth Century history; but we were reassured by most economists after the War that because the mistake made by Herbert Hoover’s conservative administration— not promptly supplying credit markets with the necessary liquidity— would never be repeated, we shouldn’t see another financial calamity of similar magnitude.Indeed, although there have been several market “bubbles” over the years, (16 is a number I heard recently), none came close to a full fledged depression in either the depth of the sell-off or its duration. The economists seemed to be right.
But they may not have taken full account of a modern world that’s not only more populated with humans than in 1929, but moves at far greater speed, and is even more dependent on credit. Nor do they seem to have factored in the number and complexity of products sold by a variety of financial institutions, which had also been growing alarmingly; even as the regulations intended to control such sales were being discarded or ignored. What now appears to be happening (to my economically untrained eye) is the beginning of another severe depression with the potential for inflicting even greater damage than the last one.
What concerns me even more is that, based on the study of drug users I’m engaged in, it’s our behavior as a species that is most to blame. Although our religious beliefs imply otherwise, a substantial percentage of humans are motivated strongly enough by their emotions to steal and cheat for goals they regard as critical if conditions permit.
The behaviors of which I speak are now on display 24/7 on the world’s TV sets, even as experts try, oh so reluctantly, to decide if we're headed into a major depression from which recovery will be difficult.
There’s obviously a lot more to this complex story, but I’ll stop here before considering the evidence for my dire assessment of human nature in another installment.
Doctor Tom
Posted by tjeffo at October 12, 2008 07:21 PM