In retrospect, it wasn’t hard to see that the markets were becoming dangerously unstable. Germany had just adopted a new monetary system, and Europe was being flooded with cheap German money. Greece had signed up to a monetary union with Italy and France but was struggling to hold it together.Financial markets had been deregulated. New technologies were transforming production and communications, allowing money to move across borders at lightening speed.
And a massive new industrial power was flooding the world with cheap manufactured goods, blowing apart old industries.When it all fell apart in an almighty crash, it was only to be expected.
A prophesy for London, New York or Berlin in 2012? Not exactly. It is a description of Vienna in 1873. In that year, in one of the great crashes of all time, the Austrian markets triggered collapses across Europe, swiftly followed by an equally spectacular collapse in New York. It was the start of what economic historians call the Long Depression, a prolonged period of volatility, unemployment and slumps that lasted an epic 23 years, only coming to an end in 1896.Read the rest at MarketWatch
This slump won’t end until 2031
by Matthew Lynn, chief executive of Strategy Economics, a London-based consultancy. His latest book The Long Depression: The Slump of 2008-2031 is published by Endeavour Press.
Interesting historical comparison. Makes some good points.