Wednesday, June 17, 2009


Green shoots are bursting out. Or so we are told. But before concluding that the recession will soon be over, we must ask what history tells us. It is one of the guides we have to our present predicament. Fortunately, we do have the data. Unfortunately, the story they tell is an unhappy one.
Two economic historians, Barry Eichengreen of the University of California at Berkeley and Kevin O’Rourke of Trinity College, Dublin, have provided
pictures worth more than a thousand words (see charts).* In their paper, Profs Eichengreen and O’Rourke date the beginning of the current global recession to April 2008 and that of the Great Depression to June 1929. So what are their conclusions on where we are a little over a year into the recession? The bad news is that this recession fully matches the early part of the Great Depression. The good news is that the worst can still be averted.
First, global industrial output tracks the decline in industrial output during the Great Depression horrifyingly closely. Within Europe, the decline in the industrial output of France and Italy has been worse than at this point in the 1930s, while that of the UK and Germany is much the same. The declines in the US and Canada are also close to those in the 1930s. But Japan’s industrial collapse has been far worse than in the 1930s, despite a very recent recovery.
Second, the collapse in the volume of world trade has been far worse than during the first year of the Great Depression. Indeed, the decline in world trade in the first year is equal to that in the first two years of the Great Depression. This is not because of protection, but because of collapsing demand for manufactures.
Third, despite the recent bounce, the decline in world stock markets is far bigger than in the corresponding period of the Great Depression.


A Chata said...

Continuo a pensar que se esquecem de comparar os totais populacionais de 1930 e actuais e a respectiva distribuição demográfica.

Será que as consequências sociais serão comparáveis?

A Chata said...

"The bad news is that this recession fully matches the early part of the Great Depression. The good news is that the worst can still be averted."

The worst news
Em 1930 não havia alterações climáticas com secas, cheias e tornados a acontecer com a frequência actual.
Os centros urbanos não estavam 'cercados' de imigrantes ou 'cidades tenda' como acontece hoje.
As percentagens de desempregados aplicam-se a 3 ou mais vezes o número de população de 1930.

A Chata said...

US cities may have to be bulldozed in order to survive

Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.

By Tom Leonard in Flint, Michigan
Published: 6:30PM BST 12 Jun 2009

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.
Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.
The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.
Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.
Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.
"Much of the land will be given back to nature. People will enjoy living near a forest or meadow," he said.
Mr Kildee acknowledged that some fellow Americans considered his solution "defeatist" but he insisted it was "no more defeatist than pruning an overgrown tree so it can bear fruit again".

Rui Fonseca said...

"Será que as consequências sociais serão comparáveis?"

Tudo é comparável. E um cataclismo económico idêntico ao de 1929 teria hoje repercussões sociais inimagináveis se, entretanto, não se tivesse aprendido a lidar melhor com a situação.

Quero acreditar que a crise económica global será dominada e o próximo ano já será de crescimento nas principais economias ocidentais.

Portugal será favorecido com essa recuperação global sem que, contudo, veja os seus problemas, que são estruturais, resolvidos.

Rui Fonseca said...

"The good news is that the worst can still be averted."

Também penso o mesmo.

Apesar de muitos problemas por resolver, a humanidade progrediu muito, tanto economica como socialmente, nos últimos 70 anos.