Thursday, October 23, 2008
History: doomed to repeat itself?
I've been listening to the Leonard Lopate Show on podcast; a recent episode on the Panic of 1873 was absolutely fascinating. Professor Scott Reynolds Nelson of the College of William & Mary was the guest describing parallels between the current financial crisis with the Panic of 1873. It's completely compelling and alarming. Basically, the start of the crash happened in Europe due to rampant real estate speculation that occurred while their underlying economies were fundamentally unsound - "wheat exporters from Russia and Central Europe faced a new international competitor who drastically undersold them" - American farmers. The effects soon spread throughout the world and eventually caused American railroad companies to collapse. Financiers Marcus Goldman (founder of Goldman Sachs) and J.P. Morgan emerged as the winners of this period. Other parallels and lessons: poor economic conditions caused voters to turn against the Republican Party, and anti-semitism increased in Central and Eastern Europe, and anti-Jewish pogroms followed. (There's an article in Reuters today on ugly election incidents due to U.S. racism.) The New York Times has an article on Nelson's argument, along with some clips from their archive. I highly recommend listening to the podcast, at the very least, and then reading the articles for more color
Posted by B at 7:20 PM
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