Crashing Like its 1929?

We’ve mentioned the crash of 1929 before, briefly, but we haven’t really discussed the possibility of repeating that horrific event. Robert Kuttner recently gave testimony before the House Financial Services Committee on the “parallels between the systemic risks of the 1920s and many of the modern practices that have been permitted to seep back in to our financial markets.” He not only discusses a lot of the parallels that were present then and now, but also discusses how many of the safeguards that were put into place in the 1930s to prevent a repeat of the crash have been dismantled.

You can read the entire testimony on AlterNet, entitled “1929 Redux: Heading for a Crash?”

Some of the parallels he discusses in depth include “excessive leveraging, misrepresentation, insider conflicts of interest, non-transparency, and the triumph of engineered euphoria over evidence.” Wow, this does seem like a recipe for disaster.

After much hand wringing and discussion, he finally concludes that “it remains to be seen whether we have dodged the bullet for now. If markets do calm down, and lower interest bail out excesses once again, then we have bought precious time. The worst thing of all would be to conclude that markets self corrected once again, and let the bubble economy continue to fester.” I suppose time will tell, but I think every individual should really think about the implications of such an event and really put his or her own house in order. Hope for the best but prepare for the worst…

Related posts:

1. The Stock Market Crash Of 1929
2. Where’s the Recession?