By Arthur I. Cyr
“The greatest financial crisis since the Great Depression,” bas become standard media shorthand for reference to the recent global financial crash and resulting severe recession. This latest massive money meltdown continues to reverberate, even though stability apparently has been achieved.
We have just had reconfirmation that the two eras remain distinctively different. As 2012 unfolds, the Dow Jones Industrial Average has just surpassed 13,000, albeit briefly, for the first time since 2008.
What goes up can and does also go down, especially in financial markets. Yet this benchmark event is cause for considerable reassurance about economic trends, especially long-term. By contrast, the 1929 stock market crash which ushered in the Great Depression was far more severe. From a peak of 381.17 on Sept. 3, the stock market lost 25 percent in value over a tumultuous two days, and then drifted down to the historic low of 41.22 in July 1932. During the height of the selling frenzy, stocks were traded in volumes not reached again until the late 1960s. Stocks did not return to the 1929 peak until 1954, in great contrast to our more recent rebound. Great public suspicion as well as hostility toward bankers continued to define American political life.
Walter Wriston of Citibank along with A.W. Clausen of Bank of America was one of the most innovative commercial bankers of the post-World War II era. He also came from a prosperous family. Yet Wriston noted that for years after the Great Depression he refrained from mentioning his profession in some sectors of society.