Comparing the Depression and the Recession

On April First I went to the Chicago Council on Global Affairs presentation on the Great Recession, with Barry Eichengreen, an Economics professor at UC Berkley.  It was very interesting to hear his analysis of what went wrong in the great Recession, especially because he framed his own opinions as facts of what happened. He compared the recession and the Great Depression of the 1930’s very engagingly.  He argued convincingly that the two crashes which caused the long term collapses were very similar, and that our improved response to financial disaster was the reason that the Recession was so much less damaging than the depression was. After black tuesday in 1929, the US government allowed big banks to fail, while with one notable exception, Merril Lynch, they didn’t do the same in 2008.  As a result, unemployement hit 25% in the 1930’s, while it only barely cracked 10% in the late 2000’s.  He said that the actions of the Federal Reserve Bank and Ben Bernake in the immediate aftermath of the crash saved the US from facing a world altering crisis, but that their decision to allow Merril Lynch to fail is one of the reasons that the crisis lasted so long.  He talked about the dying political support for the much needed stimulus packages, leaving me wondering how the 24 hour news cycle affected public opinion on the issue.  It seems to me that one of the reason law makers were so hesitant to back bail outs or stimuluses was because of the way news disseminates in our culture today.  News broadcasters like CNBC, FOX, CNN and MSNBC use shock and scare tactics so that they might be able to compete with the addictive reality and scripted TV shows on air, so many people heard exaggerated stories of how all the banks were getting off so easily, and their CEO’s were spending so much money.  The other thing that I thought a lot about during his presentation was who this recession really affected. While many rich people were affected in the short term, in the long term the Western World’s rich have only gotten richer, while the poor have gotten poorer, which leaves the wealth disparity at all time highs throughout the world. This seems one of the biggest issue, and one that isn't talked about enough.