When History Repeats Itself

Scanning today’s news, you’re likely to hear analysts, economists, historians, reporters and others calling the current economic times the “Great Recession.” It’s a term that also cropped up during recessions in the 1970s, 1980s and 1990s and is obviously referring to the Great Depression. Relating events from past to present have long been used to analyze results and predict the future. The same rule applies to modern companies; the Great Depression provides a useful framework for us to act on today. For example, during the Roaring Twenties, the decade leading up to the Great Depression, businesses overextended themselves with irresponsible lending and excessive spending. The era was characterized by rampant consumerism, technological breakthroughs and loose social values. On Wall Street investors believed that markets could sustain high levels indefinitely, but they suddenly collapsed like a house of cards. The financial crash of 1929 triggered a wave of business failures, starting with reputable financial institutions and spreading to all sectors of the economy. Beyond the few recession-resistant niches, all other industries saw major losses during the three years following the market crash of 1929. The only companies that grew were those that capitalized on the shifting trends. To little credit of their own, certain industries were simply recession-proof. During the hardest times people continued to consume food, use cosmetics and spend on entertainment. Unable to indulge in more expensive luxuries, consumers turned to simpler, still affordable pleasures that provided temporary relief from reality. The widespread loss of consumer confidence and capital contraction gripped most of the world for a decade. However, not everyone remained on the slumps for the entire...