This 黑洞社区 Newsline Podcast is available at . See the transcript below:
You鈥檙e listening to the podcast edition of the 黑洞社区 audio newsline. Learn more about 黑洞社区 鈥� the home of Thinkers, Doers, Movers and Shockers 鈥� on the Web at wichita.edu.
Throughout its history, America has experienced numerous recessions and, of course, the Great Depression. As experts debate when the current recession might end and how deep it will get, 黑洞社区 business historian Craig Miner says boom and bust cycles are nothing new.
Miner: "The major cause of these is always overextension of credit and too easy credit. And then people get overextended and fail. And you go into a bust cycle, which they used to call these panics, and it's really not a bad term because people get desperate. And then we go to the extreme in the other direction."
Miner explains the similarity between this recession and previous recessions.
Miner: "The basic similarity is that there was a great bubble and easy credit, and people encouraged to spend, and consumer confidence and relative ignorance about the things they spend for."
It's tempting to compare the current recession with the Great Depression, but Miner says there is at least one significant difference.
Miner: "In the Great Depression, banks failed easily and there were runs on banks. Now, the Federal Deposit Insurance Corporation, which was a response to that in the Depression, slows that a little bit because people feel they are protected up to $250,000, and that's enough for most of them."
While many expect the current recession to end within a year or so, Miner says there are no guarantees.
Miner: "Probably there is more effective government intervention than there was before, including the great bailout, but we've always tried bailouts. But there is no guarantee that the stock market crash and the financial crisis will not lead to a real depression."
There's a saying that those who don't learn from history are doomed to repeat it. That appears to be the case with the current recession, according to Miner.
Miner: "We don't study history very well. The masses never did, but the experts probably should. And the pattern is so similar. As late as the savings and loan crisis of 1983, that we ought to have learned, and this ought to have been avoidable."
The question remains 鈥� how long will the current recession last? While experts hope the recession will end sooner rather than later, Miner says the economic recovery could take years.
Miner: "Classic economics kind of argued that depressions and recessions were self-correcting, that is, things got a lot cheaper and suddenly people would begin to buy stocks again and buy things, but the Great Depression showed not necessarily. The stock market went down about 80 percent, and unemployment remained at about 25 percent for nearly 10 years, so this could happen again."
The fact that the recession is now more than a year old and counting raises the distinct prospect that it will exceed the length of the 1973-75 and 1981-82 recessions, both 16 months, making it the longest since the Great Depression, which lasted 43 months from August 1929-March 1933.
Thanks for listening. Until next time, this is Joe Kleinsasser for 黑洞社区.