The differences between the COVID-19 crisis and the great depression

An opinion piece.

The differences between the COVID-19 crisis and The Great Depression | AMP Capital

 

This article really needs some basic fact checking.

"We’ve had no inflation problem". There was zero inflation from 1923-1929 in the US.

"Yes, there are pockets of excess. But nothing like what we saw prior to the Great Depression." Really? The only time in history the richest 1% owned over 50% of global wealth was at the peak in 1929. It dropped to about 25% in the late 70s. We went above 50% again in 2017 and it's been climbing ever since. Wealth inequality and debt as a % of gdp are the highest in history.

As for political responses, the UK and Europe implemented austerity last recession. We'll see what they do in 6 months.

 

I thought the same thing Woodjda.

Household debt to income in Australia has never been higher. Outside of Switzerland, we have the highest level of household debt in the world. And its all concentrated in our property bubbles!

“We haven’t had a boom, we’ve been talking about slow growth for years,” said AMP Capital’s chief economist and head of investment strategy, Dr Shane Oliver.

LOL, I wonder what Shane is smoking.

And if you have any money invested with AMP, I would get it out now. They have no idea.

 

In many countries it was the comfortable middle class and many business owners that bore the brunt during the depression.
They lost any savings that were held in the bank and they could not pay back their loans on their debt.
Debt was destroyer.

 

The single biggest difference between this economic environment and any pre-1990s recession is that many businesses have the option to trade in some form online. Without this we would be in a depression scenario.

 

The biggest difference imo is that economists and the government learn from prior shocks - Lehman was allowed to go under in the GFC and that caused a real panic and mess. Unfortunately or maybe fortunately governments will underwrite all banks for now as seen with RBAs action in opening up funding lines

 

I think he was more referring to conditions in the wider economy outside of property- lack of business investment, slow wage growth and stagnant retail spending etc.