This argument may never be decided. Is a similar crash on the cards?
This cannot be ruled out.
The 1990's resembled the 1920's in more than one way. Are we ready
for a recurrence of 1929? About as we were prepared in 1928. Human
nature - the prime mover behind market meltdowns - seemed not to
have changed that much in these intervening seven decades.
Will a stock market crash, should it happen, be followed by another
"Great Depression"? It depends which kind of crash. The short term
puncturing of a temporary bubble - e.g., in 1962 and 1987 - is
usually divorced from other economic fundamentals. But a major
correction to a lasting bull market invariably leads to recession or
worse.
As the economist Hernan Cortes Douglas reminds us in "The Collapse
of Wall Street and the Lessons of History" published by the
Friedberg Mercantile Group, this was the sequence in London in 1720
(the infamous "South Sea Bubble"), and in the USA in 1835-40 and
1929-32.
The Shadowy World of International Finance
Strange, penumbral, characters roam the boardrooms of banks in the
countries in transition. Some of them pop apparently from nowhere,
others are very well connected and equipped with the most excellent
introductions. They all peddle financial transactions which are too
good to be true and often are.
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