Oct. 29, 2009 – 6:45 a.m. CT

Black Thursday – 80 Years and Counting

Today marks the 80th anniversary of the 1929 stock market crash, which has prompted many to opine about how little has changed. Instead, I would like to remind us of what has changed:

• Fed Chairman Ben Bernanke kept his promise to Milton Friedman (Nobel Memorial Prize-winning economist) to avert the mistakes of the past, and dropped money from proverbial helicopters to try to backstop the losses endured in financial markets and keep money flowing in the credit markets.
• The government stepped in and recapitalized banks with a massive infusion of credit via the ill-named "TARP" (I could never understand why anyone would include the word "tar" in a program designed to unstick the financial system).
• A massive (albeit highly political) stimulus program was passed by Congress and the Administration less than a month after Obama entered office.
• Protectionism was held at bay.
• And the world joined us in stimulating the economy via both monetary and fiscal policy.

The result was depressing – but not a depression. The Great Recession of 2008-09 was the deepest and longest of the post-WW II period, but with the increase in real GDP today, looks like it may be coming to an end – at least for the moment. The risk of a secondary tightening in credit as banks face the write-offs associated with higher than 10% unemployment rates means a double dip is still a possibility. This is to say nothing of the fact that all of this was achieved while we were already a year or more into a recession, which was not the case in 1929, and price levels were still increasing not decreasing.

The Moral of the Story: We may have made some mistakes over the last year, but at least they weren't the same mistakes that led to and eventually exacerbated the losses associated with the Great Depression. An old dog really can learn new tricks. Now, if only someone would tell my adopted poodle (ugh) "Ronald" that.

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