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Posts Tagged ‘1930s’

Today at Naked Capitalism, Yves Smith compares the news that Greece is broke and needs a 45 billion euros bailout (60 billion U.S.) with the collapse of Creditanstalt, an Autsrian bank that collapsed in 1931 when markets thought a sustainable recovery was underway..

“The news about Greece’s bailout has me thinking a lot about Creditanstalt, the Austrian bank which collapsed in 1931. This account bears remembering because we should see the 1929-1933 descent as a two-part episode, with the second part starting in the Spring of 1931 with Creditanstalt.It should be noted that there were a lot of positive economic signs before the Creditanstalt ruined this. The key difference to today is the monetary liquidity and fiscal stimulus, which has buoyed both asset markets and the real economy. But, the situation in Greece makes me think a lot about Creditanstalt.”

She then points to a website that chronicles news from the 1930s to highlight the similarities with that era…

“First, there is the blog site News from 1930 which provides verbatim news from the Wall Street Journal exactly 79 years ago because the September 2008 Lehman bankruptcy roughly corresponds to the October 1929 crash . They have an entry from yesterday with a lot of good data points. The ones I want to highlight are bulleted below. By and large, they are very bullish. Everything is upbeat.”

In a nutshell we’re back to a situtation where just when things seem to be on the mend two years after a critical financial shock a systemically important financial player goes insolvent bringing down Europe and subsequently the U.S. along for the ride.

Check it out. Very interesting, if not unsettling, demonstration of Mark Twain’s insight into the rhymes of the times…

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