Double Dip: Lessons From 1937

I commend to you a great article in today's New York Times, written by the excellent James Stewart, which compares the current stall in the economy to 1937 (my own modest attempt drew a great fanfare last week).

It's great history lesson, for the parallels between then and today, and the tactics government applied to the economy and their results.

The story also contains a spooky comment from David Bianco, a strategist at Bank of America Merrill Lynch, on the link between the stock market and the real economy:

..."the [stock] market is collapsing faster than any fundamentals would warrant." The possibility that the United States faces a recession as bad as 1937's seems far-fetched. Nonetheless, the risk of another recession has soared, by Mr. Bianco's estimate, to an 80 percent probability, one that would be worse than the 1991 recession. He noted that there had been only three instances when such a steep market decline was not followed by recession: 1966, 1987 (after the October stock market crash) and 1998 (after the implosion of Long Term Capital Management.)