History repeats and changes..

Economic turmoil has set economist across the globe debating about best economic system which could immune this world from such crashes in future.Looking into the past suggests us that whichever way of economic administration we follow or whatever theory economist suggest...CYCLE OF DOWNTURN AND UPTURN goes on and on.Free market or Marxist way or Keynesian way to control the uncontrolled..debate will go on.
History is repeating.Great depression, which is the most dreaded event of our economic history about which it was thought that we have learned enough now to keep ourselves aloof from it, is once again in minds of everybody around the globe.
There are many analogies between the GREAT DEPRESSION and 2008 economic disaster as many may quote.

The Great Depression was not triggered by a sudden, total collapse in the stock market. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929 .Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the summer of 1930.

Now compare it with situation today.Stock markets in US has crashed and government is out with bailout packages which may some how resist the current downturn and even help DOW and NASDAQ to take a break from riding bear and move up but next year when consumer would cut their expenditure by 10 percent or 15 percent could lead to another great crash of stock market and with banks and big sectors already faulting at regular basis,commodity prices continuously hitting low and unemployment hitting highs,are we heading towards another Great Depression.Lehman brother could survive great depression but failed to do so in this turmoil.Will situation get worse from hereon???

Certainly Yes,history repeats itself.We may not fall into the lows of that period but things will be difficult in times to come.Cities all around the world will be hit hard. Real estate sector will be virtually halted in many countries. Steel and other commodities have already suffered from price fall by roughly 30 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging too will suffer.This all seems very similar to what has happened around 88 years ago.

But history does not only repeats, it also changes the way this world functions.

The global economic depression of the 1930s had a crushing and widespread impact on Latin America, forcing Latin American nations to change their economic policies away from export-oriented growth and more toward the long-neglected diversification of their economies. In particular, these nations toward an endogenous economic model based on industrialization. The economic crisis and the endogenous reforms that resulted from it led to significant social and political consequences and major transformations of social structures within Latin America.These changes helped US to build better economy and become a economic giant for next 100 years or so.

This turmoil has opened chance for the world again.This is a great chance for developing countries like India and China to shift the economic power towards themselves but that would require more than just the government determination. India and China with large skilled and cheap human capital can make use of this opportunity to strengthen economy.New York can be replaced by Shanghai or Mumbai or Bangalore as economic capital of the world.Developing countries like India have already started getting some benefit from this recession as big companies have started outsourcing more to developing ones in order to be cost effective and save their balance sheets from drought of funds. Asia can come out to become next economic hub when this recession gets over. Unipolar economic world might not remain same in next 20 years.

Let us see will it be US for next 100 years or will there be a replacement this time.