While this is horrendous, the roaring 20s only lead to a Depression because the inequality was coupled with an isolationist anti-trade austerity government and a terribly inept Federal Reserve that thought contracting the money supply was the right thing to do during the stock market crash.
If the Paulites seized power of the executive, I'd be concerned about another Depression. As it stands, things will just be melancholy indefinitely.
That's what we thought in the Bush years. The Republicans are now trying to force through austerity and with flagging growth in other parts of the world, there could be depressed trade. I guess the only thing that could prevent a meltdown is a D Federal Reserve, right?
I don't think there's much difference between a D and R Federal Reserve. The only people qualified to work at the central bank generally agree on the same basic principles. It's a moderate institution.
Gridlock is actually helping the Fed make decisions. The budget projections and tax code have been set in immovable stone due to it and so there's no worry about making a decision and then rashly the Congress swoops in and changes the environment the Fed was working under.
Most importantly, I don't smell a bubble anywhere. We're now 6 years after the crash. At the 6 year point after the tech bubble burst (Fall 2007) and the housing bubble was ignited to save us from it, we could already see the economic downturn and Bush was beginning to send stimulus packages to the Congress to save his hide. And remember the tech bubble started around 1995, so 6 years is usually when things tumble down.
There is literally no inkling of anything bad happening right now. No companies or banks on the verge of failure. No Bear Stearns canary in the coal mine. That's the silver lining to "slow growth." We may not see another recession this decade at this rate.
