BUT I JUST KNOW MY MOMENT IN TIME MUST BE UNIQUE!:

America's 15th financial panic: … and our recovery from it (Jeff Korzenik, July 4, 2011, Chicago Tribune)

The U.S. has a long, if largely forgotten, history of panics. Roger Babson, the pioneering market statistician and famed forecaster of the 1929 stock market crash, wrote a series of articles about them for The New York Times in 1910. He documented 13 panics in American history up until that time — the first in 1791 and the last in 1907.The bank crisis and panic of 1930-1933 was No. 14. That makes 2008 the 15th panic in U.Shistory . The good news, of course, is that we have survived 14 prior episodes, and can survive this panic as well. But beyond mere survival, the question remains: what path will our recovery take?

There are remarkable similarities in the events that trigger panics. A century-old economic text, "A Brief History of Panics and their Periodical Occurrence" noted, "The symptoms of an approaching panic… are wonderful prosperity… a rise in the price of all commodities, of land, of houses, etc, etc…, by the gullibility of the public, by a general taste for speculating in order to grow rich at once, by a growing luxury leading to excessive expenditures…." The book further cited excessive leverage in the financial system, a point taken up by Babson, who likened the creation of new financial institutions to "putting out a flame by pouring oil over it." How easily all this could have described the years preceding the Panic of 2008!

Recoveries from panics also follow similar routes. Fidelity Investments allowed me access to its famed chart room in Boston, where graphs of more than 200 years of economic and financial markets history adorn the walls. The panics of the 19th century looked nearly identical — and reminiscent of our own recent history — an initial period of deflation, soaring unemployment and plummeting asset values. Putting the charts together with other data sources shows recovery periods marked by long periods of private sector debt reduction, extended high levels of unemployment and slow economic growth.

There is no guarantee that our economic rebound will follow the historic pattern. However, the three hallmarks of past panic recoveries: debt reduction (and a consequent weak consumer), slow growth and high unemployment certainly plague our present economy. These factors reinforce each other and prolong the pain of the downturn. Economists Carmen Reinhart and Ken Rogoff studied centuries of experience with financial panics, and they have emphasized the length of the economic healing process. Last year Reinhart predicted an additional seven years of convalescence.

The news is not all bad. Historically, barring major government policy errors, investors have fared well, with stable low interest rates offering stability to bondholders and valuation improvements for stock shareholders. Reducing consumer indebtedness dampens near-term commerce, but sets the stage for sustainable long-term growth. Entrepreneurship remains vibrant, and we have a long history of our greatest commercial enterprises being founded in our most difficult times.

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