448 days after the collapse of Lehman Brothers and the launch of the current financial crisis, it is tempting to think that we may be through the worst of it. Unfortunately, these thoughts were prevalent among sufferers of the Great Depression on January, 19, 1931--448 days after Black Monday tolled the beginning of that downturn--but they had a rocky road still ahead. The Dow wouldn't hit bottom until July 8, 1932. In the event that our current crisis follows a similar pattern, our nadir would occur on May 27, 2011.
On Monday January, 19, 1931, 448 days after the beginning of the Great Crash, the Dow fell 0.9%. At 164.94 points, it was well below its September, 1929 peak and still had 120 points to shed before hitting its low point 18 months later in July, 1932. Gold was the issue of the day with France announcing that it would lower its standards on gold imports, a move intended to stop a drain of the metal from London. The World Bank also began discussions on how to encourage redistribution of gold and credit and a gold rush "reminiscent of pioneering days" was underway in Southwestern Australia following the discovery of a single 94-pound nugget. Americans were also eating more, according to a government official. In the fifteen years since WWI, Americans were consuming a third more vegetables and sugar, a fourth more dairy products, a fifth more vegetables and a little more meat. Americans were, however, eating fewer grains.
On Monday, December 7, 2009, 448 days after the beginning of the current financial crisis, the Dow was almost unchanged, gaining only 1.21 points. In a midday speech, Federal Reserve Chairman Ben Bernanke warned that, despite the recent slowdown in unemployment, the economy still faces "formidable headwinds." He also hinted that interest rates will not be raised in the near future, a fact which hurt the dollar, but helped gold recover from an early fall. President Obama also said that the lower-than-expected cost of the TARP bailout program could mean more money for job creation. The closing average of 10,390.11 remains 3,774 points below the Dow Jones' October 9, 2007 peak.
(This feature is from a new business-oriented website to be produced by Atlantic Media and to debut in March.)
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