Today’s Economic Crisis is. . .

Like the Great Depression

-The crisis hit Florida before the rest of the nation
(It started here with the 1920s land bust)
-Everyone is invested. Today through our 401(k)s. Back then, through tips and gossip when stock trading was essentially unregulated.
-We suddenly realized there was a whole financial sector that was unregulated (Back then it was Wall Street, today it is credit default swaps and mortgage-backed securities) and that the people running these crazy investments are threatened our stability.
--The Depression was a time of great creativity in literature, photography, music, film and in creating regulations to deal with Wall Street. I predict a lot of creativity is going to be required soon in Washington. I predict Congress and the Obama administration will set off on the greatest explosion of financial regulation since the 1930s.

-We have regulation of banks and Wall Street
(The Securities and Exchange Commission was created during the Depression, as were the rules that Investment Advisors, brokers and brokerages must follow, plus all the regulations on what companies have to disclose, plus insurance for brokerage accounts.)
-We have the Federal Deposit Insurance Corp.
(Which went into business Jan. 1, 1934. Since then, not one dime of FDIC-insured deposits has ever been lost.)
-We have a tuned-in Federal Reserve and executive branch
(In the Depression, they raised interest rates instead of cutting them and that made it worse. President Hoover refused to admit the importance of Wall Street’s crash, which pretty much paved the way for a financial disaster to affect the entire economy.)
-We magnify all the issues through the lens of the Internet and the 24-hour news cycle, which can affect public moods but also create demands for solutions that are so big they can’t be resisted. In the Depression, the people were beaten down. And they didn’t have the Internet to use as their loudspeaker.

By the Numbers

Then
9,000 banks failed
26 percent unemployment
Stocks lost 90 percent of their value

Now
22 banks failed this year
6+ percent unemployment
Stocks are down about 40 percent