How Is the Current Recession Acting Like

How is the Current Recession Acting like/ contrasted the not bad(p) declensioning off Nowadays, the prudence of the realness plunges into an awkward situation. The entire world meets a global stinting crisis or recession, especially in the join States. After World War , this recession is the biggest recession for the America. Most of wad express worried about this recession absolutely they recall the entrepot about the big Depression which was the most enormous economic crisis in the Ameri batch history.They be anxious because it seems like the united States is going by means of another considerable Depression or will go by another Great Depression. From the history, everyone knows how just the result came out from the Great Depression it baffled human beings development. No one wants to see another Great Depression expire again. However, in that respect are sufficient reasonablenesss to support man stack to worry about the Great Depression will happen again, beca use present recession and the Great Depression, both of them have some resembling characteristics.Meanwhile, both of them have lots unlike points also can set up the Great Depression will not happen again. In this paper, I will compare and contrast the on-going recession and the Great Depression, I will prove the incumbent recession causes the effects will much less(prenominal) than the Great Depression, and the Great Depression will not replay. choke to 19291933, on October 29 1929, the Black Tuesday came to the United States. On this day, American pecuniary world crashed, the tireds determine trim from top to bottom, down 40 percentages from 383, also the Dow Jones linage index fell 22 percentages(Baidu, 2009).From this picture to November 13th 1929, there was thirty billion disappeared in the market place, this outlet mate to the total expenses of World War?. However, the crash of the stock market was tho the beginning of a horrible economic crisis. Even through t he Great Depression began at the collapse of the stock market many an(prenominal) experts fluent thought the influence from the collapse of the stock market was limited, because stock was beneficial a little part of familys property, it cannot affect Marginal appetite to Consume(MPC) very much.However, the Black Tuesday was merely the beginning of the terrible issue, was just toy of the Great Depression. The Great Depression caused a bunch of extremely serious social problem, for example, there were about 2 one one thousand million million million to 4 million students had to drop their school. Even some people could not suffer the pain in the neck from mentality and physiology then suicide. The most significant problem was that 8. 3 million people lose their job the unemployment rate reached such a postgraduate level which was 25%(Xu, 2009).Almost in every city, the poor people who were in line at the food camber as vast as to several blocks. By the end of 1932, totally, there were about 2 million people roamed in the streets, there were no home for them. In September 1932, magazine Fortune estimated that 34 million people had no income this population was 28% of the whole population of the United States. And at least(prenominal) 15 million people were looking for a job, but there was no job offer to them at that time (Baidu, 2009). Change the horizon to the economy.At the beginning year of the Great Depression, since the economy became weakness, it was hard for marge to get back of their loan, and the creation people were anxious so that they went to the bank to withdraw their deposit. Therefore, at that time 50% was closed. The giving medication took conservative measure, lessen the money supply so that more and more banks had to be closed. Consequently, 9000 banks had already closed and 130 thousands enterprises went to bankrupt. The total output of industry and nation income (NI) fall 50%, the trade equipment casualty of goods reduced o ne third and swap trade also cut two thirds (Techcn, 2009).In 1920s, the peoples confidence of the forward economy was expressed in the stock market. From 1921 to 1929, Dow Jones Indexes increase from 75 to 363, average growth rate (AVGR) was 21. 8% which was an incredible number (Su, 2009). Under this prosperous situation hided possibility which can cause the Great Depression. At the beginning of 1929, the stock market of United States of America was crazy, the price of stock raised times by times. As I mentioned before, preferably than say glum one day, I would like to say black week or black month.On October 24th 1929, the market of tonic York exchange suddenly got a crash, the speed of falling stock price too quick to catch up by the ticker. Even though some consortiums and the president came out to try to retain the market, it did not work. On October 28th and 29th 1929, Dow Jones Indexes fell 38. 33, 13. 47% and on Tuesday fell 11. 73% (Black Tueday, 2002). During this sh ort week, American people lose 10 billion dollars in stock exchange. Time went to the middle of November 1929, the stocks price in New York Exchanges fell 40%, lose 26 billion dollars.Millions of public people lose their whole lifes money. During the Great Depression, the stock price of US steel fell from $262 to $22, and the stock price of GM fell from $73 to $8 (Techen, 2009). Gross domestic product (GDP) fell 25% during 1929-1933, and Genuine Progress Indicator (GPI) of 1933 decreased 24. 6% compared to 1929 (Hexun,2009). In economics, a recession is a general slowdown in economic activity over a long period of time, or a business cycle contraction. During recessions, many macroeconomic indicators vary in a similar way.Production as measured by Gross house servant Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and rising prices all fall during recessions bankruptcies and the unemployment rate rises. (Wikipedia, 2009). Th is is the definition of the recession. Compared to the Great Depression, we can ascertain out some similarities. For example, GDP, employment, and investing spending fall in the ongoing recession or the Great Depression. In current recession, GDP fall 2%, unemployment rate is 8. 1%, and Dow Jones Indexes decrease 52 % (Xu, 2009).From these data, we know that in current recession for the society, many people lose their jobs, also many enterprises go to bankrupt as well as some banks. For the stock market, the Dow Jones Indexes can tell us that the stock market do not in a nice situation. For the whole country, GDP fall so that American economy gets into recession. However, if we take a close look at these numbers, we can see these numbers are different from the Great Depression. As I mentioned, during the Great Depression, GDP fell 25%, unemployment rate was 25%, and Dow Jones Indexes fell 89%.These numbers in current depression are much smaller than the Great Depression therefore, these numbers prove that the current recession effect will much less than the Great Depression. basis of the current recession and the Great Depression is different. The current recession is caused by the subprime owe crisis. The subprime mortgage crisis is an ongoing real estate crisis and financial crisis triggered by a dramatic rise in mortgage delinquencies and foreclosures in the United States, with major adverse consequences for banks and financial markets around the globe.The crisis, hich has its roots in the cloture years of the 20th century, became apparent in 2007 and has exposed pervasive weaknesses in financial industry regulation and the global financial system (Wikipedia, 2009). The subprime mortgage crisis happened because of moral hazard. From our textbook we understand that the risk that one party to a transaction takes actions that harm another party called moral hazard. About the reason of the Great Depression, it seems like the stock markets crash take to th e terrible issue, but the real reason is the unbalanced or sore-eyed development of the economy.The strategies from the government to deal with these two issues are different. During the Great Depression, the federal official Reserve did not get the right strategy to deal with the market less liquidity, on the other hand, the current U. S. government decrease the interest, take in some new strategies to activate the market, also try their best to save the economy. Also, the current government takes out 700 billion dollars to save banks and insurance companies.Totally, government plan to use 787 billion dollars to stimulate the economy and increase 3. 5 million chances of employing (Xu, 2009). Consequently, the Great Depression will not replay. However, even we can predict the current recessions effect will less than the Great Depression, we also need pay enough attention to the current recession. In fact, the entire worlds economy is not a good condition, what we need to do is not just the save the economy but also prevent the recession happen again and again.