Is The Worst Over

'Is the worst over?' This has been a common question over the past few months as Bear Stearns blew up, as Lehman went bankrupt as Fannie and Freddie were rescued. The list goes on. It seems like every time you think that things cannot get any worse wham another hit. One way to answer that question is to compare the current state of affairs with another time history.

From John Kenneth Galbraith's The Great Crash of 1929 page 108 (soft cover edition):

"In the Autumn of 1929 the New York Stock Exchange, under roughly its present constitution, was 112 years old. During this lifetime it had seen some difficult days. On September 18, 1873, the firm of Jay Cooke and Company failed, and, as a more or less direct result, so did fifty - seven other stock exchange firms in the next few weeks. On October 23, 1907, call money rates reached 125 per cent in the panic of that year. On September 16, 1920 - the autumn months are the off season in Wall Street - a bomb exploded in front of Morgan's next doors, killing thirty people and injuring a hundred more.

A common feature of all these earlier troubles was that having happened they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next to have been only the beginning."