1929 & 2007: An Introduction

Economic policies, monetary decisions and geopolitics have been brought back into the spotlight over the last 12-18 months. From Brexit, Trump’s election, US Tax Reform, Trade Reforms and North Korea-South Korea geopolitical gyrations to name a few have kept financial markets, big industry and policy makers on their toes. This of course creates opportunities for new business ideation, innovation and disruption within our global market place.

With this in mind, the following is an introduction into a five part series of the comparison of the Great Depression of 1929 relative to the Global Financial Crisis (GFC) of 2007. Superfluous amounts of documentation, commentary and findings have arisen since the cataclysmic events of the GFC of July 2007 to June 2009. The purpose of this feature article is to truly determine how effective policy responses were during both events and determining whether the GFC was an unique event.

The periods from 1882 to 2009 are extensively reviewed, and a historical montage is formed in conveying this precise message. Substantial evidence is conveyed to ensure the reader ascertains the patterns that emerge in market-based economies.


Headlines during the Great Depression (L), and the GFC (R)

Pervasive government policies always lead to negative and as will be exhibited have polar opposite effects from their benevolent intentions. Restoring confidence in the global financial system is of utmost importance to this expose, and therefore the policy implications to be presented are aimed toward bringing balance to market-based economies after such a tumultuous Global Financial Crisis.

Part 1 will define and deeply analyse history’s crises, through comparing and contrasting key issues and ascertaining if there indeed is a case for the GFC being unique.

Policy mistakes will be brought into the spotlight in Part 2. Addressing its effects on the US housing & equity markets. Additionally, drawing attention to the decisions of the US Federal Reserve during the period of 1988 to 2009.

Part 3, focuses upon how policy decisions altered economic agent behaviours and distorted market signals in market- based economies across the globe.

Regulatory arbitrage will be spoken of in Part 4, implicating the banking, shadow banking and the financial system, including exploring the policy ramifications for Australia.

Alternate perspectives will be conveyed and assessed in Part 5. Upon conclusion, a concise summary will be offered, coupled with final policy implications in response to the Global Financial Crisis.

Part 1 →