May 13, 2009

In the first installment of a three-part series, economic historian Price Fishback showed just how different the basic macroeconomic facts are in the current financial situation versus during the Great Depression.In the second of three blog posts, Fishback turns to a discussion of the recent financial meltdown compared to the one that accompanied the Great Depression.For everyone still scratching their heads about what happened to the financial sector this fall, Fishback offers one of the clearest descriptions I’ve seen yet.

He then discusses the similarities and differences of the financial collapse that began in 1929.The “greatest financial disaster since the Great Depression” has become the catchphrase for the current situation. In Old Testament fashion, the U.S. appears to be paying for the financial excesses associated with a real estate boom between 2000 and 2006.The reasons for the boom were many. As the stock market dropped at the beginning of the decade, investors sought a new haven for their assets in housing and real estate.