Getting the Name Right

In a paper by Barry Eichengreen and Kevin H. O’Rourke, they point out that "recession" is the wrong term, even "Great Recession" doesn't match reality. This economic crisis is developing faster and falling deeper than the Great Depression. So it is a depression.

To sum up, globally we are tracking or doing even worse than the Great Depression, whether the metric is industrial production, exports or equity valuations. Focusing on the US causes one to minimise this alarming fact. The “Great Recession” label may turn out to be too optimistic. This is a Depression-sized event.

That said, we are only one year into the current crisis, whereas after 1929 the world economy continued to shrink for three successive years. What matters now is that policy makers arrest the decline.

The only hope is that government respond better to this emergency than they did in the 1930s. The evidence from the Republicans in the US Congress is that "no, they are worse". Luckily the Republicans are out of office.