A Tale of Two Recessions

Frightening graphs from economic historians Barry Eichengreen and Kevin H. O’Rourke over at Vox, where they compare the current economic crisis with that of 1929.

eichengreen_update_fig1

It’s scary stuff, although their conclusion is that “the good news, of course, is that the policy response is very different (to that in 1929). The question now is whether that policy response will work.”

And that’s the key point – much of the other data shows how world trade and stock markets have reacted far quicker than in 1929, probably as a result of our interconnected world rather than having to wait for a letter to cross the Atlantic. While it’s hard to make direct comparisons between 1929 and 2009, trade patterns are vastly different, as are economic policies, it does indicate that we may be in for a slightly longer period of uncertainty than we thought last week.

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