You that trample on the needy, and bring ruin to the poor of the land, saying... We will make the ephah[1] small and the shekel great, and practice deceit with false balances. Amos 8, verses 4-5 (Bible Tools)
It seem very possible, even likely, that 2008 may be the 21st century's equivalent of 1929. Indeed, it may be even worse, as in 1929 there was little currency risk involved because most currencies, including the then reserve currency, the UK Pound, were convertible into gold. The causes are similar in that they both resulted from irresponsible credit expansion and were triggered by the securities markets. The most obvious difference is that the sector of the securities markets that acted as triggers were stocks in 1929 and credit instruments in 2008.
In 1929, the credit vehicle was largely margin extension on common stock. With the greatly increased financial and technical capabilities developed in the half century following 1929, far more creative problems were created using complex financial engineering and pricing the output of this creative engineering using the CAPM. The effects of the problem in 2008 were magnified using sophisticated computer model trading systems. These did what they are supposed to do, and "dumped" portfolio positions not only in stock but in commodities and financial derivatives as well. With the assistance of modern technology, creative financial products, and deregulation that forgot the lessons of the 1930's an even more devastating financial catastrophe may have been achieved.
The political response of President George Bush and his administration may have been even more inept than that of Herbert Hoover; a notable accomplishment. Can Barack Obama equal or hopefully improve on the accomplishments of Franklin Delano Roosevelt? The recent discussions of planned initiatives involving infrastructure spending and employment are disturbing similar to the Civil Works Administration t...