While the current economic crisis is the most serious in the life of most of us it pales in comparison to The Great Depression suffered in the late 20’s through the 30’s. There are a lot of significant differences bewtween then and now:
- By June 1932 the collapse of the stock market on the New York Stock Exchange had wiped out 83.4% of the markets value. From its 2007 peak to its November 2008 lowpoint the Dow Jones Industrial Average in the U.S. lost 46.6% of its value while Canada’s corresponding loss on the TSX Composite Index was 49.5%. We might add that as of the last week of November 2008 these market losses had recovered to -38.7% for the Dow Jones and to -44.3% for Canada’s TSX.
- In June 1933 the U.S. unemployment rate was 33%. Latest figures are 6.5% for the U.S. and 6.2% for Canada.
- By 1933 11,000 of the United States 25,000 banks had falied. To November 2008 22 U.S.Banks out of a total of over 7000 have failed this year according to the U.S. Federal Deposit Insurance Corporation.
- During the Great Depression there was no bank deposit insurance. Many people lost all their savings. Today U.S. bank deposits are insured to $250,000 while Canada’s are insured to $100,000.
- In the then 4 month transition between the outgoing Hoover Administration and the 1932 incoming Roosevelt Administration there was a power vacuum where both parties refused to cooperate thus worsening anxiety and the crisis. Currently outgoing President Bush has stated that a “seamless transition to a new administration will be a top priority for the rest of my time in office”. Incoming President Obama has moved swifter than any predecessor essentially already the de facto President of the United States of America.
To summarize, the Great Depression was much more serious than today’s events.