Today, the most evident example of history’s repetition is the chain of events that begin with an economic recession in the United States, and end with a crisis in Europe and beyond. In the 1930’s the Great Depression caused a widespread global slump, and today, the global economy has been pushed to the brink of crisis. Most of us are aware of the problems that the US economy has been facing over the past few years, but we are now learning of the possible debt crisis that European nations are aimed towards full steam ahead. The economies of Greece, Italy, and Portugal have nearly collapsed, while the economies of the “healthier” nations of Germany and France are now headed towards the same direction. There is also a great fear that the big banks of Europe will default if these governments cannot afford to pay back their debts. If Europe goes in to crisis, investors will be worried that the global economy will be entirely destabilized as a result.
When the United States first plunged in to what people are now calling the “Great Recession” in 2008, people were quick to assume (or maybe just hope) that it wouldn’t terribly affect other nations economies, like the Great Depression did in the 1930’s. The characteristics of the decades ( the 1920’s and 1990’s) that come before the years that these economic breakdowns take place are eerily similar. Both were times of great prosperity and euphoria, both economically and socially. Both were times where people were so happy and optimistic that they decided to borrow and spend much more money than they could actually afford. And now, both are the decades that lead up to the crises.
If you take a closer look, the United States is beginning to appear to have made some of the same mistakes that we made three quarters a century ago. An article appearing on Fox news states: “The European Union warned the U.S. yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war, the Times of London reported.” The “Buy American Act” is dangerously similar to the “Smoot-Hawley Tariff Act of 1930.” These acts are concepts of protectionism, which basically creates and protects American jobs, by leading Americans to buy goods and services off other Americans. This sounds like a good idea, but actually results in the exclusion of foreign economies, which in turn, leads them to buy less and less American products. Also according to a Fox News report, in 2009, Mexico placed tariffs on about 90 U.S. products as retaliation for the violation of the NAFTA agreement that allowed Mexican trucks to transport goods in to the United States.
We can only hope that our lawmakers, banks, and investors can get it right before it’s too late and we drag the rest of the globe in to an economic crisis, while we are still the worlds largest economy.