Kenneth Rogoff wrote a book with Carmen Reinhardt, titled This Time Is Different. The book chronicled economic crises around the world over the last 300 years and came to the conclusion that in the run-up to a big crash, everyone says “This time is different!” and that a crash can’t happen.
Then the crash happens.
Ironically, after the crash, governments and big financial institutions try to assure us that this time isn’t different, that this is a common-or-garden variety recession. Sadly, Rogoff informs us all that this time is different. We’re in the midst of an asset-devaluation recession, which lasts longer and deeper than the normal sort of recession. We know it’s different because, three years after the big drop, we still see unemployment at high rates and have had no return to pre-crash GDP. The debts run up by governments that should now be reckoned as insolvent is coming down hard on them and we need to own up to the fact that there are lots of toxic assets still on those bank balance sheets.
Crises don’t happen all at once. They are drawn-out affairs, especially the sorts of crises as the world is experiencing right now. Nobody in 1929 or 1930 thought they were in a depression: most folks started 1931 thinking things would be all right that year. Instead, it was the start of a long slide to the real bottom of the Great Depression, which hit the USA in 1932. The situation in the world is reminiscent of the way things were in 1931, so maybe that’s where we’re headed.