Worse than the Depression

At VoxEU, economists Barry Eichengreen and Kevin O'Rourke compare the current global recession and the Great Depression -- or, more accurately, parse the comparisons. They note that many commentators, like Paul Krugman, include only U.S. stock and economic indicators, in which case, some evidence suggests this downturn may be shorter and milder.

But, they argue, the Great Depression was a global phenomenon; it originated with the U.S. stock crash and soon engulfed the world economy. The current recession, likewise, is one of a globalized world. The U.S. led the fall, but didn't fall alone.

So, they write: "the global picture provides a very different and, indeed, more disturbing perspective than the U.S. case...which as noted earlier shows a smaller decline in manufacturing production now than then." And they demonstrate the effect, with a series of compelling and frightening graphs. 

Here's the global stock market, the blue line representing its value during the Depression and red during the current recession: 


And here is global trade volume, another indicator. They write, "This is highly alarming given the prominence attached in the historical literature to trade destruction as a factor compounding the Great Depression."

The one bright spot, they note: the policy responses have been far, far better this time around. Central banks have slashed interest rates earlier and lower, and increased the money supply more and faster. And, globally, there is heightened government deficit spending, intended to arrest decline.

Still, Eichengreen and O'Rourke's analysis demonstrates that the global recession may be worse than people think, even if the U.S. manages a recovery. 


Focal Point: Field Trip to the DMZ

As part of our partnership with PBS's Wide Angle, we present this sneak preview of the latest episode of their online-exclusive series Focal Point. The full version of this episode will be online tomorrow on Wide Angle's site.


As North Korea’s relations with its neighbors grow increasingly strained, FOCAL POINT trains its lens on one of the 15,000 North Korean defectors who have made it to South Korea. Twenty-year-old Haejung (not her real name) was smuggled out of North Korea some years ago in the hope of a better life -- leaving her family behind. She now attends Hangyeore High School, a special boarding school an hour outside of Seoul, founded in 2006 to help North Korean teens adjust to life in the South.

Most of the school's 240 students are separated from one or both of their parents back in the North, with little hope of ever seeing them again. They experience severe culture shock transitioning from one of the world's most isolated Communist states to one of the most technologically and economically advanced societies.

In Field Trip to the DMZ, the students make their annual trip to the border, and Haejung dreams of a time when her family and her homelands will be reunited.