There could be a trouble ahead - Article Example

THERE COULD BE A TROUBLE AHEAD The article summaries the way the governments reacted to the economic depression and the economic recession of 2008. It tries to compare and highlight some of the interventions by the government in mitigating the adverse impacts of unemployment, low economic growth, high interest rates, and fluctuations in foreign earnings during the two occasions. It further compares the actions of the various governments i.e. that of Obama and Roosevelt in attempting to salvage the economy.

The economic depression of the 1930s provided a platform where economies were able to learn of the mistakes made in trying to gain economic recovery (1936, 1938). From the article, it is clear that different economists have diverse opinion on the way to manage economic crisis. Whereas some argue that expansionary measures are the best to undertake, others view contraction measures feasible in correcting economic anomalies. Whichever the policy adopted, the end result should be recovery of the slow pace of growth (Chinn & Frieden, 2011).

The article further compares the mitigation strategies pursued by different economies and the way they messed in the process. From the article, the author tries to justify his version that the lessons learnt in the 1930s depression helped in salvaging the 2008 economic depression. The author elucidates this by giving figures of the rate of unemployment, interest rates, currency rates, and contagion caused in the financial markets in both the depression and the recession (1936, 1938). From the analysis, it is evident that the expansionary policies that were employed in 2008 recession had better impacts than the contractionary policies in the 1930s recession (Krugman, 2009).

In all instances, monetary policy was important in controlling the supply of money, exchange rates fluctuations and bringing smooth operations of the financial market. Fiscal policies were also crucial in stimulating growth hence increasing rate of employment and investment (2009). Debt management and control must also be checked in managing the depression. The fact that the author has extensively and concisely dissected the comparison makes me agree that the article is right. The facts have been well substantiated with figures and correct economic theories and knowledge.

In my opinion, the periods of recession and depressions demands policies that stimulates growth and controls the level of debt while keeping the financial sector sound. In conclusion, Obama’s administration learned from the failure of the Roosevelt regime thus prevented the economy from reaching a depression.List of ReferencesChinn, M. D., & Frieden, J. A. (2011). Lost Decades: The Making of Americas Debt Crisis and the Long Recovery. New York: W.W. Norton & Co.. Krugman, P. R. (2009). The Return of Depression Economics and the Crisis of 2008.

New York: W.W. Norton. Managing Recession: Strategic Responses to the Economic Downturn.. (2009). San Francisco: Bay Area Council Economic Institute. Spending, b. h., taxes, i., 1936, w. o., 1), 1. T., mid-1937., 1938., et al. (n.d.). Lessons of the 1930s: There could be trouble ahead | The Economist. The Economist - World News, Politics, Economics, Business & Finance. Retrieved March 20, 2012, from http://www.economist.com/node/21541388