a research on the differences between the economic crisis in 1929 and 2008

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A research on the differences between the economic crisis
in 1929 and 2008.

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Economy is a cornerstone of any country it is an area of the production,
distribution and trade, as well as consumption of goods and services. In
general, it is defined as a social domain that emphasize the practices,
discourses, and material expressions associated with the production,
use, and management of scarce resources.
However, there was some periods where the world was facing what we
call an economic crisis.
An economic crisis can be defined as a sharp deterioration in
the economic state of the country, manifested in a significant decline in
production; violation of existing production relations; bankruptcy of
enterprises; and rising unemployment. The result of the economic
crisis is a decline in the living standards of the population and a
decrease in the real gross national product.
And of course, economic crisis is different from one period to another, in
this article we are going to talk about 2 different eras and compare
between them to clarify the differences.
The comparison will be in 5 main points which are:
1. What was the cause of the economic crisis.
2. Who was blamed.
3. Who was the most affected.
4. How did people survive during this period.
5. How it was solved.
And at the end we will discuss the governmental efforts to avoid such an
economic crisis in the future.
The two periods we are going to talk about are 1929 and 2008.
Let’s start with 1929.

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The economic crisis in 1929
What was the cause of the economic crisis?
The economic crisis in 1929 is also called “The Great Depression”.
There is Four factors played roles of varying importance:
(1)The stock market crash of 1929, shattered confidence in the
American economy, resulting in sharp reductions in spending and
investment.
(2) Banking panics in the early 1930s caused many banks to fail,
decreasing the pool of money available for loans.
(3) The gold standard required foreign central banks to raise interest
rates to counteract trade imbalances with the United States, depressing
spending and investment in those countries.
(4) The Smoot-Hawley Tariff Act (1930) imposed steep tariffs on many
industrial and agricultural goods, inviting retaliatory measures that
ultimately reduced output and caused global trade to contract.
So, we can say that the fundamental cause of the Great Depression
in1929 was a decline in spending (sometimes referred to as aggregate
demand), which led to a decline in production as manufacturers and
merchandisers noticed an unintended rise in inventories. The sources of
the contraction in spending in the United States varied over the course
of the Depression, but they cumulated in a monumental decline
in aggregate demand.

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Who was blamed for the economic crisis and why?
Consensus agreed that Herbert Hoover the 31st America`s president
was the most blamed for the great depression.
He took office in 1929, the year the U.S. economy plummeted into the
Great Depression. Although his predecessors’ policies undoubtedly
contributed to the crisis, which lasted over a decade, Hoover bore much
of the blame in the minds of the American people.
As the Depression deepened, Hoover failed to recognize the severity of
the situation or leverage the power of the federal government to squarely
address it. A successful mining engineer before entering politics, the
Iowa-born president was widely viewed as callous and insensitive
toward the suffering of millions of desperate Americans. As a result,
Hoover was soundly defeated in the 1932 presidential election by
Democrat Franklin D. Roosevelt (1882-1945).
Who was the most affected?
The Great Depression affected everyone. From the very young to the
old, everyone’s lives were changed drastically by the events of this
period. Many people found themselves out of work and searching for a
better life. Children had to deal with changes in their education if they
could attend school. Teenagers and their parents were traveling to
search for a new life. The middle class had to deal with a life without
money and security. The years of the Great Depression were very

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difficult for those who lived through them and they also mark an
important era in this country’s history.
During this period, most of the country’s African-American population
lived in rural areas and worked on farms owned by white
landowners. Even though these rural African-Americans had known
poverty most of their lives, the Great Depression was a hard hit. Their
living conditions worsened due to the fact that the farmers they worked
for lost their land. Life for African-Americans in urban areas was
harder. However, those in these areas continued to work hard at their
jobs.
How did people survive during the great depression?
Many families strived for self-sufficiency by keeping small kitchen
gardens with vegetables and herbs. Some towns and cities allowed for
the conversion of vacant lots to community “thrift gardens” where
residents could grow food.
Between 1931 and 1932, Detroit’s thrift garden program provided food
for about 20,000 people. Experienced gardeners could be seen helping
former office workers—still dressed in white button-down shirts and
slacks—to cultivate their plots.
Some families maintained a middle-class income by adding an extra
wage earner. Despite widespread unemployment during the Depression
years, the number of married women in the workforce actually
increased.

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Some people criticized married women for taking jobs when so many
men were out of work, though women often took clerical or service
industry positions that weren’t seen as socially acceptable for men at the
time.
Women found work as secretaries, teachers, telephone operators and
nurses. But in many cases, employers paid women workers less than
their male counterparts.
The stress of financial strain took a psychological toll—especially on
men who were suddenly unable to provide for their families. The national
suicide rate rose to an all-time high in 1933.
Marriages became strained, though many couples could not afford to
separate. Divorce rates dropped during the 1930s though
abandonments increased. Some men deserted their families out of
embarrassment or frustration: This was sometimes called a “poor man’s
divorce.”
It’s estimated that more than two million men and women became
traveling hobos. Many of these were teens who felt they had become a
burden on their families and left home in search of work.
How the great depression was solved?
Believe it or not but some people said that WWII seems to mark the
end of the Great Depression. During the war, more than 12 million
Americans were sent into the military, and a similar number toiled in
defines-related jobs. Those war jobs seemingly took care of the 17
million unemployed in 1939. Most historians have therefore cited the

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massive spending during wartime as the event that ended the Great
Depression.
Some economists—especially Robert Higgs—have wisely challenged
that conclusion. Let’s be blunt. If the recipe for economic recovery is
putting tens of millions of people in defines plants or military marches,
then having them make or drop bombs on our enemies overseas, the
value of world peace is called into question. In truth, building tanks and
feeding soldiers—necessary as it was to winning the war—became a
crushing financial burden. We merely traded debt for unemployment.
The expense of funding World War II hiked the national debt from $49
billion in 1941 to almost $260 billion in 1945. In other words, the war had
only postponed the issue of recovery.
Even President Roosevelt and his New Dealers sensed that war
spending was not the ultimate solution; they feared that the Great
Depression—with more unemployment than ever—would resume after
Hitler and Hirohito surrendered.
So, to be honest I can’t tell what was the thing that solved the great
depression but I know that it wasn’t the war.
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Now let’s talk about:
The economic crisis in 2008
The 2008 financial crisis was the worst economic disaster since
the Great Depression of 1929.1 It occurred despite the efforts of the

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Federal Reserve and the U.S. Department of the Treasury. The crisis led
to the Great Recession, where housing prices dropped more than the
price plunge during the Great Depression. Two years after the recession
ended, unemployment was still above 9%. That doesn't count those
discouraged workers who had given up looking for a job.
What was the cause of the economic crisis?
Many factors directly and indirectly serve as the causes of the Great
Recession that started in 2008 with the US subprime mortgage crisis.
The major causes of the initial subprime mortgage crisis and the
following recession include lax lending standards contributing to the real-
estate bubbles that have since burst; U.S. government housing policies;
and limited regulation of non-depository financial institutions. Once the
recession began, various responses were attempted with different
degrees of success. These included fiscal policies of governments;
monetary policies of central banks; measures designed to help indebted
consumers refinance their mortgage debt; and inconsistent approaches
used by nations to bail out troubled banking industries and private
bondholders, assuming private debt burdens or socializing losses.
Who was blamed for the economic crisis and why?
As the last CEO of Lehman Brothers, Richard "Dick" Fuld's name was
synonymous with the financial crisis. He steered Lehman into subprime

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mortgages and made the investment bank one of the leaders in
packaging the debt into bonds that were then sold to investors.
So, The Federal Reserve was to blame for the Great
Recession, because it created the conditions for a housing bubble that
led to the economic downturn and because it was instrumental in
perpetuating the crisis by not doing enough to stop it.
Who was the most affected?
co-authors Hilary Haynes, Douglas Miller, and Jessalyn Schaller find
that the impacts of the Great Recession (December 2007 to June 2009)
have been greater for men, for black and Hispanic workers, for young
workers, and for less educated workers than for others in the labour
market. While the recent recession was deeper than several other recent
downturns, the pattern of unemployment and job opportunity cycles
across demographic groups has been remarkably stable in recessions
since at least the late 1970s. This is the case despite the dramatic
changes in the labour market over the past 30 years, including the
increase of women in the labour force, Hispanic immigration, the decline
of manufacturing, and so on.
Using population survey and national time-series data, Haynes,
Miller, and Schaller find that in terms of job losses, the Great
Recession has affected men more than women. But their analysis
also shows that in previous recessions and recoveries, men
experienced more cyclical labour market outcomes. This is largely
because men are more likely to be employed in highly cyclical
industries, such as construction and manufacturing. Women are more
likely to be employed in less cyclical industries, such as services and

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public administration. While the pattern of labour market effects
across sub-groups in the 2007-9 recession appears similar to that in
the two recessions of the early 1980s, it did have a somewhat greater
effect on women's employment -- although in this recession as in past
recessions, the effects on women were smaller than those on men.
The recent recession was felt more strongly among the youngest and
oldest workers. Haynes, Miller, and Schaller further find that relative
to the 1980s recovery, the current recovery is being experienced
more by men than women largely because of a drop in the cyclicality
of women's employment during this recovery.
How did people survive during the great Recession?
families and individuals struggling with unemployment, financial strain
and lack of housing often also experience poor health, sleeping
problems and mental health issues such as depression, around 3.55
million loosed their jobs
Higher prices make it harder to make ends meet, so individuals often
turn to strict budgets and cuts in discretionary spending. Job loss or
reduction in hours. In a recession, companies often reduce their staffing
levels to save money. You may risk losing your job or experiencing a
reduction in hours.
How the great Recession was solved?
The United States, like many other nations, enacted fiscal stimulus
programs that used different combinations of government spending and

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tax cuts. These programs included the Economic Stimulus Act of 2008
and the American Recovery and Reinvestment Act of 2009
1 By October 2008, Congress approved a $700 billion bank bailout, now
known as the Troubled Asset Relief Program. 2 By February 2009,
Obama proposed the $787 billion economic stimulus package, which
helped avert a global depression.
What are the governmental efforts to avoid the economic crisis?
To counter a recession, it will use expansionary policy to increase the
money supply and reduce interest rates. Fiscal policy uses the
government's power to spend and tax. When the country is in a
recession, the government will increase spending, reduce taxes, or do
both to expand the economy.
In conclusion;
Economic crisis is something exposed to happen in any country at any
era, so it is very important to learn how to survive during it believing that
it`s just a matter of time and everything will get back to normal.

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Resources:
• Wikipedia.org
• IgI Global.com
• Britannica.com
• History.com
• Academic.mu.edu
• Fee.org
• Thebalancemoney.com