Tuesday, June 23, 2009

World industrial output – tracking the first Great Depression

Almost as an aside, Krugman delivers the bad news at the end of a blog post …

Green shoots, 1930 - Paul Krugman Blog - NYTimes.com

…I thought everyone paying attention to this stuff was familiar with the Eichengreen-O’Rourke work. EO point out that the original Great Depression was most severe in America, while this one is more severe in a number of other countries. So you want to do a world comparison — and if you do, we’re actually tracking the first year of the GD quite closely. Here’s world industrial production …

Nicely is an understatement. By this chart world output is cloning the first 12 months of the first Great Depression. I really don’t think we’re appreciating how bad things are getting in China.

We should all be very, very nice to China.

It took 3 years for world industrial output to bottom out in GD I, falling about 40% during that time. We’re down about 13% judging from the graph Krugman provides.

I don’t think we should be worrying about the stimulus package being too big. (Not that anyone paying attention is worrying about that.)

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