Great Depression lessons

“I don’t think that any economist disputes that we’re in the worst economic crisis since the Great Depression.”
– President Barack Obama  

At this point in our nation’s economic meltdown, we’ve all heard the dire and hopeless Great Depression metaphors.

From the meltdown of the financial sector to the painful collapse of the stock market, it’s becoming all too easy to invoke catastrophic images from the 1930s – especially when the dire prediction of a 25 percent unemployment rate and other staggering statistics not seen for over seven decades aid in convincing legislators to support your economic stimulus package.

Let me get this out of the way – we are in no way experiencing a Great-Depression-esque downturn at the moment.

When dust storms again ravage the Great Plains and people are once more forced to grow and can their own food, I will be willing to compare my own experiences with those of my great-grandparents.

We are, however, experiencing some financial discomfort. More importantly, like the Great Depression, this economic crisis is impacting the entire world – and could have effects much more grave and profound than shrinking 401(k)s.

In 1929, the German national elections were hardly the stuff of headlines. No one noticed when a far-right politician and his fringe party captured 12 seats in the Reichstag.
Throughout the next year, German unemployment soared and Berlin found itself on the brink of defaulting on international debt payments.

Riding on promises of a strong Germany, jobs and national glory while placing the blame for his country’s woes on the Great Depression, which he described as a Jewish-Communist plot, Adolf Hitler enjoyed exploding popularity.

In 1930, the Nazis became the second most powerful party in Germany, claiming 107 Reichstag seats.

The world was yanked from the economic slump by massive military spending and a jump start in worldwide industry to produce armaments.

The United States emerged 15 years later as a superpower with the world’s largest economy.

Economically speaking, we enjoyed major benefits from World War II. Regarding national security, however, the rise of Hitler produced a grave threat.

Turmoil begs for scapegoats and is often a catalyst of internal political upheaval.
This can already be seen in eastern Europe.

The Latvian government collapsed Friday after Prime Minister Ivars Godmanis resigned amidst predictions that the Baltic state’s economy will shrink 12 percent this year.

Germany’s rejection of the bailout plan for eastern Europe has caused Hungarian Prime Minister Ferenc Gyurcsany to accuse it of drawing a second Iron Curtain.

Will countries such as Russia, China and India, which are economically powerful but not necessarily politically established, become destabilized?

Obama’s new Director of National Intelligence posed these questions in his annual “worldwide threat assessment” to Congress, along with wonderings about possible humanitarian crises in Africa and new threats of terrorism.

As we focus on our shrinking stock portfolios and Detroit’s bailout addictions, we should not forget the enormous impact this depression is having on the rest of the world.

Inevitably, this will affect us in terms of national security and foreign policy.