The Crash: Time for a New Superlative? – Financial Times Deutschland
Is the current financial crisis worse, as bad, or not as bad, as the Great Depression of the 1930s? That seems to be the meme-question of our economic times. According to Wolfgang Munchau of Germany’s Financial Times Deutschland, the situation may not only be worse than the Great Depression, we might have to come up with a new word to describe its severity.
“Is it too early for a new superlative? At first we spoke of the worst economic crisis since reunification [of Germany]. Then it was the worst since the Second World War. Now, anxious observers are wondering: Is it possible that this crisis will be even worse than the Great Depression? … International trade plummeted during November, December and January, with far stronger force than during the Great Depression. In November, global trade volumes nosedived a full 6 percent compared to the month before. German exports, which fell just under 11 percent, receded a further 4 percent in December. Experts forecast further declines in the first quarter on an order of magnitude of 7 percent. When added up, these losses equal a decline of over 20 percent within the space of only five months. Between 1929 and 1932, total trade volumes fell slightly more than 25 percent. This will likely be reached this year – even without a new era of protectionism … there is little reason to believe that we’ll emerge from this downward spiral with the policies of new President Barack Obama.”
By Wolfgang Münchau
Translated By Jonathan Lobsien
February 11, 2009
Germany – Financial Times Deutschland – Original Article (German)
There are increasing signs that the current economic crisis will be worse than the Great Depression. There is a danger that we won’t pull ourselves out of the rapid downward spiral for a long time to come.
Is it too early for a new superlative? At first we spoke of the worst economic crisis since reunification [of Germany]. Then it was the worst since the Second World War. Now, anxious observers are wondering: Is it possible that this crisis will be even worse than the Great Depression?
Those who answer “no” – with great certainty – bring the following arguments into play: In the United States, gross national product sank more than 30 percent between 1929 and 1933. The unemployment rate soared from just over 3 percent to 25 percent. It’s fairly safe to say that during this crisis, such an order of magnitude will not be reached.
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