Here’s an interesting cluster of headlines.
Nov 2007: Wells Fargo Bank: worst housing crisis since Great Depression.
Feb 2008: US govt: Ohio job losses worst since Great Depression.
Apr 2008: Soros: worst financial crisis since Great Depression.
Apr 2008: Stiglitz: worst recession since Great Depression.
Apr 2008: IMF: worst financial crisis since Great Depression.
Apr 2008: IMF: US in worst economic crisis since Great Depression.
May 2008: Moody’s Economy.com: worst housing crisis since Great Depression.
The bad part of the above is the high credibility of the sources.
The silver lining, if any, is a reasoning error that occurs when reading headlines like these. One infers “as bad as the Great Depression,” when in fact they merely say “worse than everything except the Great Depression.”
Those statements are very different. If today’s situation is only slightly worse than the 1970s, then we can cheerfully look forward to a decade of falling real asset prices and standard of living. Why cheerfully? Because it does not automatically imply the starvation, revolution and global warfare that are conjured up by invoking “Great Depression.”
That said, notice also that the 1970s and 1930s were nothing alike, and this one will likely be yet again something else.
My thinking cannot help being influenced by Nassim Nicholas Taleb, whose excellent book I’m currently reading.