Questions to answer:
1. How did the Great Depression start?
The Great Depression was caused by a number of causes. The stock market crash on Black Tuesday, October 29, 1929 caused stockholders to lose more than $40 billion. In addition to the stock market crash over 9000 banks were forced to close due to debt or failure. Their closures were closed by over-loaning and getting no money in return for those loans. The stock market crash on Black Tuesday was caused because of people heavily investing in the stock market with more money than they actually had (eg. Loans). When creditors wanted their money back the investors went bankrupt, this caused a chain reaction in the stock market which eventually lead to the Great Depression.
2. How did the current recession start?
The current recession was caused by increasing gas prices. With gas becoming so expensive, the economy slowed down and people were less inclined to spending. This is not the only reason why the current recession started; housing prices dipped. There was less demand for houses and therefore less demand for construction. Banks held mortgages at higher prices than the market price for the houses themselves. When people could not pay off the mortgage, the banks would take the hit. There were more foreclosures than what the banks had predicted which meant the banks were losing money. This lowered the available amount of credit out there which in turn hurt our economy and started the current recession.
3. How did the government take part following the event? Were / are they successful attempts?
The government played a big role in the Great Depression. President Franklin Roosevelt proposed the “New Deal” in which the government would implement more programs and regulate the economy more carefully. The New Deal was actually two time periods; the First New Deal in 1933 and the Second New Deal in 1934-1936. The First New Deal assisted with the parts of the economy that needed the most help such as banking and farming. The Second New Deal promoted labour unions, created the WPA and the Social Security act. The New Deal did help with the financial situation, however, it was not successful at completely getting the country out of the Great Depression.
4. What factors are present now that was not present during the Great Depression?
(ie. Banking, online resources, etc.)
The Great Depression and the Current recession are indeed very similar. Most of their causes were loan related. However, the Current Recession presents some factors that the Great Depression did not. The Great Depression was not set in a virtual time period like we are in today; there wasn't any credit card debts or online shopping. So exchange of money and goods was significantly slower. Trade with other countries wasn't fast at all. Financial support from other countries would take a while to get to us. Basically, the Great Depression was slower, it would be slower to drive yourself into debt, but it was also slower to dig yourself out of it.
5. Reflection: In your own words, tell me which one has made more of an impact on the world.
In my opinion, the Current Recession has more of a global impact. The U.S. Dollar is among the strongest currencies in the world, and if that falls then everyone else will feel the change. With the internet becoming more and more used in the world, trading will be affected. Countries are less inclined to invest with the United States and those who have already invested in the United States will see that their investments were a loss. The Great Depression didn't have the exchange velocity that we have today, that's why I believe it doesn't affect the world as much as today's recession.
References:
http://americanhistory.about.com/od/greatdepression/tp/greatdepression.htm
http://en.wikipedia.org/wiki/Late-2000s_financial_crisis
http://www.cato.org/pubs/tbb/tbb-0508-25.pdf
http://en.wikipedia.org/wiki/New_Deal
http://en.wikipedia.org/wiki/Great_Depression
