Similarities and differences between the economic crises of 1929 and 2008

Two more recent bank failures in the United States have brought the total number of bank failures this year to 19, nearly double the number of failed banks in the previous five years combined. This is reminiscent of the wave of bank failures nearly 80 years ago, so what are the similarities and differences between the 1929 financial crisis and the bank failures triggered by this year's financial crisis? What can the financial crisis of nearly 80 years ago teach us?

Dr. Guan Qingyou believes that, first of all, the financial crisis of 1929 is different from the financial crisis of this year. The financial crisis nearly 80 years ago was triggered by the gold standard, and this year's financial crisis is triggered by the dollar standard. Moreover, the 1929 financial crisis involved nearly 10,000 bank failures, and the current financial crisis caused fewer than 20 bank failures.

Second, the transmission mechanisms of the two financial crises are different. Although the tipping point of the two financial crises was real estate, the financial crisis nearly 80 years ago was a double crisis of financial crisis and economic crisis, and this year's financial crisis is caused by a currency shortage caused by excess monetary liquidity, which has not yet fully affected the real economy. Dr. Guan Qingyou believes that the financial crisis nearly 80 years ago has three main implications for us today:

First of all, it is necessary to correctly understand the duality of the US dollar currency, take measures to strengthen supervision to make the US market more transparent, and increase the voice of the euro and the Chinese currency; secondly, to re-understand the relationship between financial innovation and financial supervision; Third, it is necessary to reflect on the role of the best banks in the United States. It can be said that the Fed made mistakes in both financial crises, the 1929 financial crisis in which the Fed made major mistakes and did not act in time, and this financial crisis in which the Fed made mistakes but intervened in time to save the market.

No matter how you answer, it's all copied, hehe, you still have to figure it out yourself

And this time is just the beginning, and the follow-up things can't be compared yet Hehe.

The main cause of the 2008 economic crisis was over-indebtedness.

Five years have passed since the collapse of the Lehman Brothers investment bank in the United States, but the world has still not found an antidote to the root cause of the financial crisis: over-indebtedness. Most economists, central bankers, and regulators not only failed to deliver the crisis, but even believed that persistently low inflation would ensure financial stability.

One reason for the lack of vision is the indiscriminate admiration for financial innovation; Another reason is the inherent structural deficiencies in the eurozone. But the fundamental reason is not to know that the high level of debt that has been accumulating for decades and that the private sector is even more than the public sector.

The famous milk dumping incident of 1929 was: In 1929, the Great Depression in the United States. There is a serious overproduction of dairy products, and a large amount of milk is unsalable.

So many post-70s and post-80s generations think of pouring milk, and they automatically make up a ** in their brains: in order to ensure profits, American capitalists with fat brains pour buckets of fresh milk into the Mississippi River, but on the bank stand poor Americans who are starving because of the economic crisis.

Milk is poured just to solve the economic crisis. The essence of capitalists is to pursue profit maximization without limit, and pour out the milk, just because the milk is too low at this time, and in order to maintain the higher **, they would rather pour out the milk and wait for the ** to pick up and then re-produce.

The capitalists would rather throw away the milk than give it to the poor. It tries to show that the capitalist economic system in Britain and the United States at that time caused periodic overproduction, and the poor were starving because of the economic crisis, unemployment and no money, and the capitalists preferred to dump milk rather than give it to the poor.

As a result, the milk dumping incident in 1929 became the most intuitive impression of the cruel reality of Western capitalist society for generations, and also became an important symbol of the Great Depression.

Overcapacity is the essential feature of an economic crisis, and relative overcapacity refers to the appearance of a surplus of goods produced by society relative to the effective demand of consumers, rather than an absolute surplus compared to the actual demand of consumers. The possibility of an economic crisis is caused by money as a means of payment and circulation.

The U.S. subprime mortgage crisis is also known as the subprime mortgage crisis, also translated as the subprime crisis. It refers to a financial turmoil that occurred in the United States due to the bankruptcy of subprime mortgage lenders, the forced closure of investments, and the drastic. It has led to a crisis of illiquidity in the world's major financial markets.

The "subprime mortgage crisis" in the United States began to emerge gradually in the spring of 2006. In August 2007, it began to sweep the world's major financial markets, including the United States, the European Union, and Japan. The subprime mortgage crisis has become a hot issue in the world.

Subprime mortgage loan refers to the "subprime mortgage loan", which means that it corresponds to "high" and "excellent", describing the inferior party, and in the term "subprime mortgage crisis" refers to low credit and low ability to repay debts.

Loans are a very common phenomenon in the United States. Locals rarely buy houses in full, often with long-term loans. But unemployment and re-employment are common here.

These people who have an unstable or even no income at all, and buy a house because their credit rating does not meet the standard, they are defined as subprime credit lenders, referred to as subprime lenders.

Subprime mortgage lending is a high-risk, high-yield industry that refers to loans made by some lenders to borrowers with poor credit ratings and low incomes. The difference from the traditional standard mortgage is that the subprime mortgage does not require much of the borrower's credit history and repayment ability, and the loan interest rate is correspondingly much higher than that of the general mortgage. Those who are denied a quality mortgage by the bank because of their bad credit history or weak repayment ability apply for a subprime mortgage to buy a home.

The U.S. subprime mortgage market typically uses a combination of fixed and variable rate repayments, where homebuyers repay their loans at a fixed rate for the first few years after home purchase, and then at a variable rate.

In the five years leading up to 2006, the U.S. subprime mortgage market grew rapidly due to the continued boom in the U.S. housing market and the low level of U.S. interest rates in previous years.

As the U.S. housing market cools, especially short-term interest rates rise, subprime mortgage repayment rates have also risen sharply, and homebuyers' repayment burdens have increased significantly. At the same time, the continued cooling of the housing market has also made it difficult for home buyers to refinance their homes or mortgage homes. This situation directly led to the borrowers of large batches of loans not being able to repay the loans on time, and the bank repossessed the houses, but could not sell them, and suffered a large area of losses, triggering the subprime mortgage crisis.

The economy triggered by the United States in 1929-1933 led to a global economic malaise for the following reasons:

1. Fundamental cause: the basic contradiction of the capitalist system, that is, the contradiction between the socialization of production and the private ownership of the means of production.

2. Direct cause: The contradiction between production and sales in the whole society causes a relative overproduction.

3. Specific reasons: the gap between the rich and the poor is too large, ** excessive speculation, installment payments and bank credit overflow The economic crisis of 1929 occurred after the formation of the whole world. At this time, the world economy had finally taken shape, and the economies of various countries were interdependent.

An economic crisis is when one or more national economies or the entire world economy contract over a relatively long period of time (negative economic growth rate). The economic crisis is a crisis of relative overproduction that breaks out periodically in the course of capitalist economic development, and it is also a decisive stage in the economic cycle.

Similarities:

All of them started in the financial field and affected the entire capitalist society; All of them have caused the unemployment rate to rise and the credibility to decline; Inflation is rife; All of them have led to the regression of the world economy, and the road to revival is long; are the cyclical nature of the fundamental contradictions of capitalism**; All of them may lead to the obsolescence of old economic instruments and the birth of new economic ideas.

Differences: The economic crisis of 1929-1933 politically led to the prevalence of fascism in Germany, Italy and Japan, which was one of the main reasons for the outbreak of World War II and the Japanese invasion of China, while the economic crisis in 08 did not cause major changes in the world political pattern, but also caused a new world war; After the economic crisis of 1929-1933, countries erected high tariff barriers, which aggravated the economic crisis again, and after the economic crisis of '08, countries were relatively more united.

China has not been hurt much...