Monday, 17 November 2008

John Thain: It's like the 1930s

It’s bad folks. Very bad. And according to Merrill Lynch chief John Thain it’s going to be as bad as the 1930s:

The global economy is entering a slowdown of epic prop-ortions comparable with the period after the 1929 crash, John Thain, chairman and chief executive of Merrill Lynch, warned yesterday.

Speaking at the company's annual banking and financial services conference, Mr Thain said that while he was cautiously optimistic about the future of the financial services industry, he lacked optimism about the near-term prospects of the US economy and global markets.

"Right now, the US economy is contracting very rapidly. We are looking at a per-iod of global slowdown," he told investors. "This is not like 1987 or 1998 or 2001. The contraction going on is bigger than that. We will in fact look back to the 1929 period to see the kind of slow-down we are seeing now."

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But do we really need to take his comments seriously? Well probably not. Because if you really want to know what’s going to happen in the future, then the last person you should ask is a CEO of a firm like Merrill Lynch.

After all, it wasn’t that long ago that financial pundits were forecasting US$200 oil.

But what if John Thain is right? And the recession is as bad as the 1930s?

Well, you really don’t want to think about it.

Because in this case a picture really is worth a thousand words:

 Dorothea LangeWhat? No money to buy a playstation for the kids?

This picture became known as the “Migrant Mother” and is one of a series taken by photographer Dorothea Lange of the woman (Florence Owens Thompson) and her children in February or March of 1936 in Nipomo, California, today’s base for many internet companies.

Some years later in 1960, Lange related his experience:

I saw and approached the hungry and desperate mother, as if drawn by a magnet. I cannot remember how I explained my presence or my camera to her, but I do remember she asked me no questions. I selected five exposures. I did not ask her name or her history. She told me her age, that she was thirty-two but she looked much much older. She said that the family had been living on frozen vegetables from the surrounding fields, and birds that the children had killed. She had just sold the tires from her car to buy food.

If John Thain of Merrill Lynch is right then God help us all…