US Financial Crisis: Another Great Depression?
Oct 2nd, 2008 by sirtoppenhat
Comparisons between the current economic crisis and the Great Depression may be exaggerated thus far given that unemployment during the 1930s was at 25% and currently unemployment in the U.S. stands at 6% and declining according to the BBC.
Another big difference between now and the great depression is the FDIC, which did not exist during that time. In the U.S. savings in banks are insured up to $100,000. Conversely in the UK savings are only insured up to 35,000 pounds or about $63, 000. In the UK, HBOS, the countries largest moneylender, was taken over by Lloyds TSB to prevent customers from pulling out their money according to the BBC. This takeover, by reducing competition, could make it easier for other moneylenders to charge more for loans and offer less interest on bank accounts.
In Ireland the department of finance has guaranteed all deposits, bonds and debts in six major banks in an effort to maintain confidence in the Irish banking system. The BBC said the Irish taxpayer will provide a guarantee for up to 400 billion euro of liabilities, or 573 billion dollars.
The focus of many articles is about the likelihood of the U.S. being in a recession, but defining this period, right now, as technically being a recession should not be our main concern as there are obvious critical failures happening right now in the economy which are more important.