1929 vs 2008

The financial panic of 1929, which many people refer to as Black Tuesday, left many people in total shock. Foolish speculation in the markets caused a run on banks when stocks suddenly became worthless. This caused a spiraling effect that undoubtedly sent the economy into abysmal failure. The average family went from easy subsistence to desperation for food in months. Unemployment skyrocketed and businesses folded in record numbers. The people, who were otherwise satisfied with the government
for the majority of the century, quickly turned against it and voted the Republicans out of power. "Hoovervilles" formed, which were regarded by some historians as the first housing projects in the United States. People were upset, and had no hope for the future. Does this sound like something we may be experiencing now?

The current financial crisis has very similar antecedent causes to the Great Depression. Speculation in the housing market, which many regarded as an investment "that could only go up," caused many homebuilding companies to declare bankruptcy. Couple this with the subprime mortgage industry's collapse, and the economy hits a six-year low. Although most economists won't classify the current crisis a depression, the effects are still evident; rapid layoffs and tumbling markets make headlines almost every day. Families have to relocate in order to find employment. Private investment into new production is at a standstill. The worst effects of the recession are still to come.

Similar to the Great Depression, the current recession is seeing a new change in political preference in voting. Popular opinion states that new leadership is needed to drive the nation out of its economic and political problems. Whether this is a valid implication or not has yet to be proven yet, but so far the events leading up to this moment imply one thing; history is repeating itself, whether for better or worse.

The way people react to a crisis can usually be linked to a previous related crisis. For instance, fears of a war in the beginning of the decade fueled anti-conscription movements. Recent controversy over an intercontinental missile defense system has Russians and Americans alike panicking. Outrageous oil prices are nudging Congress to find a solution, albeit different from the oil embargo they errantly proposed. The current financial crisis and the general population's reaction to it must mirror the previous recessions before it. Savings are increasing while consumer spending drops further.

On a personal level, I see the effects of the recession in my every day life. For one, my uncle was forced to quit his job in the last few months. My friends who are looking for summer jobs are having a hard time finding businesses who will pay for their help. My brother, who is a geology researcher at Princeton, is finding grant money scarce during these times. My good family friend, who invested a large amount of money in the Florida real estate boom, is now left with cheap properties and a delayed retirement. Amidst all of these changes that everyday people must endure, there is some hope; economies operate in cycles, and it is only a matter of time before prosperity graces us with her presence once again.