New findings:
World industrial production continues to track closely the 1930s fall, with no clear signs of ‘green shoots’.
World stock markets have rebounded a bit since March, and world trade has stabilised, but these are still following paths far below the ones they followed in the Great Depression.
There are new charts for individual nations’ industrial output. The big-4 EU nations divide north-south; today’s German and British industrial output are closely tracking their rate of fall in the 1930s, while Italy and France are doing much worse.
The North Americans (US & Canada) continue to see their industrial output fall approximately in line with what happened in the 1929 crisis, with no clear signs of a turn around.
Japan’s industrial output in February was 25 percentage points lower than at the equivalent stage in the Great Depression. There was however a sharp rebound in March.
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To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30. (Emphasis added.)
The good news, of course, is that the policy response is very different. The question now is whether that policy response will work. For the answer, stay tuned for our next column.
I'm not as sanguine as they appear to be about current policy being better than policy in 1929 - 1930. For one thing, the sheer volume of spending that the Obama Administration has embarked upon is staggering, dwarfing anything dreamed of under FDR. Moreover, if the Waxman-Markey Cap and Trade bill passes, its inclusion of tariffs will have a similar effect to the Smoot-Hawley Tariff which helped set off a trade war deepening the Great Depression.
If you aren't taking steps to prepare for significant economic disruptions, what are you waiting for?
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