1) How did the great depression start?
The start of the great depression was directly connected to the collapse of the U.S. stock market in 1929. On Tuesday, October 29, 1929, the U.S. stock markets crashed unexpectedly causing many to call that day “Black Tuesday”. The depression gradually spread worldwide as people were afraid to invest and had many loans to pay off due to careless investments in the roaring 20’s. Bank Failures were also a very big thing during the Great Depression of the 30's. People’s savings were uninsured , thus when banks failed, they lost all of their savings.
2) How did the current recession start?
The current recession started when the United States started giving out sub-prime mortgages carelessly. People were not able to afford their mortgage payments due to rising interest rates. Housing was such a hot commodity in the United States at the time, where people who had no business in buying a house were able to acquire mortgages. Bank's were bringing in clients each and everyday. This was known as the "housing bubble" which eventually popped and exploded all over the bank executive's faces. Now in the present, nearly 4 years after the first signs of our current recession, banks are still foreclosing homes with no buyers in site. All of this eventually lead to a decrease in spending and lack of investments which further lead to a deeper crisis. The rest of the world caught on to the trend. Many people around the world were pulling their investments which caused some countries to eventually file for bankruptcy protection.
3) How did the government take part following the event? Were and are they successful attempts?
Following both the great depression and the current recession, the government stepped in with new employment opportunities for citizens. During the great depression, the government tried to increase employment opportunities as much as they could. During the current recession, the government handed out massive bailouts to large companies to keep them afloat. One thing that helped out during the great depression that we have not seen so far was World War II. This allowed for a large amount of people to be employed and then deployed for war. The attempts in the present day don't seem to be working quite effectively as they first initially thought, but only the future will tell.
4) What factors are present now that were not present during the Great Depression? Ex. Banking, online resources?
One of the most misused items in our present time is the credit card. The credit card can be a very useful tool if used correctly. If not, the person responsible for payments will have to be disciplined. The most common thing would be high interest rates and a hit to your credit score. The internet is also a very resourceful tool in our society. People are able to access records of their investments, spending and many others. They can access trends of the current stock market and research based on data posted online.
5) How did these two affect the United States GDP?
The great depression and current depression are quite similar in many ways, but also very different in many ways. The GDP, during the great depression was especially low because many were unemployed and could barely afford necessities and luxury goods. During our current recession, many people have cut back on spending but are still able to afford some luxury goods because of the wages that we make today compared to the 1930's.
6) Reflections: In your own words, tell me which one has made more of an impact on the world?
As of right now, I would have to say that the Great Depression has made a bigger impact on the world. The depression of the 30's lasted more than 10 years compared to the current recession that has only last 4 years. People in the roaring 20's were so optimistic about the future that they basically put everything on the line to save for the future. Some even took out loans to invest. Our current recession started when the housing bubble burst, with banks and mortgage companies giving out careless loans. People, knowing a bit about the previous depression then pulled out large investments which ultimately led to the failure of many large scare corporations of all kinds around the world. Although it has only been a fraction of the time compared to the great depression, this recession may ultimately have a bigger impact on the world when it's all said and done.
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