Their Party Crashed. Ours May Too. [View All]

[ecdab]

By Robert S. McElvaine
Sunday, September 28, 2008; Page B02

"History doesn't repeat itself, but it rhymes." Mark Twain was supposed to have said that, but even if he didn't, there's no denying that we're seeing proof of the adage in today's financial crisis.

Consider this statement: "The extraordinary rate of default on residential mortgages forced banks and life insurance companies to 'practically stop making mortgage loans. . . .' " Sounds like 2008, doesn't it? It is in fact a comment from Ben S. Bernanke, current chairman of the Federal Reserve board. But when he wrote those words in 1983, he was talking about the Great Depression.

We've been hearing a lot of comparisons to the Great Depression lately, because today's crisis rhymes with that one to an extraordinary degree. At the most basic level, the cause of the current crisis is simple: Economists, business leaders and policymakers have all been ignoring the lessons learned from that early 20th-century calamity.

.......more at
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092602836.html

This is a piece that is well worth your time.