A couple weeks ago, I sat down with a senior trade consultant, a man who has been around epicentres of power for over 30 years. I asked him to look in his crystal ball, to tell me not what would definitely unfold over the coming years but what could plausibly occur given what’s happening in the economy at the moment. Where would we be, in say, 2010?
“1931,” was his answer.
Oh, so we’re going to be two years past the worst of the worst, I said, assuming he meant we’d be heading away from our equivalent of 1929, when Wall Street crashed and the go-go economy ground to a halt.
Wrong. What he meant was that we’d be in the true dog days. For although 1929 marks the start of the economic malaise that gripped the world through the second world war, as Paul Krugman wrote recently in the New York Times, it wasn’t until 1930-31 that the full effect of the aftershocks was felt, ultimately resulting in runs on banks and wholesale unemployment. The event that history records as the Great Depression was, at least initially, only a severe recession. Not until the banks failed did the basic working premises of a complex market economy actually cease to function.