Thursday, October 29, 2009
"Black Tuesday" Marked Slide Into Great Depression There is some modestly good economic news this morning in contrast to this day 80 years ago when crowds gathered on Wall Street in New York sensing the economic worst had happened. Third quarter GNP growth was at a healthy 3.5% indicating to some that the recession is definitely over and, according to the Washington Post, the stimulus efforts are having the desired impact. Predicting the economy is, however, somewhat akin to predicting post-season baseball performance. I figured Phillies' lefthander Cliff Lee would pitch a strong World Series opener last night, but hardly expected him to dominate the fearsome Yankee line-up. On a cold, rainy night in the Bronx, Cliff Lee was simply splendid and his one nine inning performance may - no firm prediction - have reset the Series. So, in case you are tempted to assume an attitude of irrational exuberance over the apparently improving economic numbers, consider the following quote from the very smart financier Bernard Baruch. By 1900, at age 30, Baruch had a sterling Wall Street reputation and a million bucks - a lot of money back in the day. Two weeks after "Black Tuesday" in 1929, Baruch consoled his friend Winston Churchill with an encouraging note. The future British Prime Minister had taken a bath in the market meltdown and Baruch, counselor to presidents and prime ministers, wrote in a cablegram to Churchill: "Financial storm definitely passed." That was November 15, 1929. So much for predictions. The Great Depression would last another decade. My fearless prediction: recovery to continue, slow and steady, but don't bet on it.