During these hard times, it is refreshing to see uplifting perspectives, like the article above.
Here's another great article I found on Investor's Business Daily: http://www.ibdeditorials.com/IBDArticles.aspx?id=316049209319113&kw=hamilton.
If the link doesn't work, you might have to copy/paste into your browser.
Here's an excerpt, "It might be illuminating to note that by 1933, during the height of the Depression, the unemployment rate was 24.9%. During that same period, GDP was falling dramatically, which created a devastating impact on the country."
JUDGMENT CALLS
Robert J. Samuelson
Is This a Replay of 1929?
Unlike during the Great Depression the government is now a huge part of the economy. And officials have moved quickly, if clumsily, to contain the crisis.
Published Oct 3, 2008
From the magazine issue dated Oct 13, 2008
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Watching the slipping economy and Congress's epic debate over the Treasury's unprecedented $700 billion financial bailout, it is impossible not to wonder whether this is 1929 all over again. Even sophisticated observers invoke the comparison. Martin Wolf, the chief economic commentator for the Financial Times, began a recent column: "It is just over three score years and ten since [the end of] the Great Depression." What's frightening is not any one event but the prospect that things are slipping out of control. Panic—political as well as economic—is the enemy.
There are parallels between then and now, but there are also big differences. Now, as then, Americans borrowed heavily before the crisis—in the 1920s, for cars, radios and appliances; in the past decade, for homes or against inflated home values. Now, as then, the crisis caught people by surprise and is global in scope. But unlike then, the federal government is now a huge part of the economy (20 percent vs. 3 percent in 1929) and its spending—for Social Security, defense, roads—provides greater stabilization. Unlike then, government officials have moved quickly, if clumsily, to contain the crisis.
We need to remind ourselves that economic slumps—though wrenching and disillusioning for millions—rarely become national tragedies. Since the late 1940s, the United States has suffered 10 recessions. On average, they've lasted 10 months and involved peak monthly unemployment of 7.6 percent; the worst (those of 1973–75 and 1981–82) both lasted 16 months and had peak unemployment of 9.0 percent and 10.8 percent, respectively. We are almost certainly in a recession now, but joblessness, 6.1 percent in September, would have to rise spectacularly to match post-World War II highs.
The stock market tells a similar story. There have been 10 previous bear markets, defined as declines of at least 20 percent in the Standard & Poor's 500 Index. The average decline was 31.5 percent; those of 1973–74 and 2000–02 were nearly 50 percent. By contrast, the S&P's low point so far (Friday, Oct. 3) was 30 percent below the peak reached in October 2007.
The Great Depression that followed the stock market's collapse in October 1929 was a different beast. By the low point in July 1932, stocks had dropped almost 90 percent from their peak. The accompanying devastation—bankruptcies, foreclosures, bread lines—lasted a decade. Even in 1940, unemployment was almost 15 percent. Unlike postwar recessions, the Depression submitted neither to self-correcting market mechanisms nor government policies. Why?
Capitalism's inherent instabilities were blamed—fairly, up to a point. Over borrowing, overinvestment and speculation chronically govern business cycles. Herbert Hoover was also blamed for being too timid—less fairly. In fact, Hoover initially expanded public works to combat the slump. The real culprit was the Federal Reserve. Depression scholarship changed forever in 1963 when economists Milton Friedman and Anna Schwartz argued, in a highly detailed account, that the Fed had unwittingly transformed an ordinary, if harsh, recession into a calamity by permitting a banking collapse and a disastrous drop in the money supply.
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