The end of Prosperity?

As the Market continues to unpredictably rise and stumble, it is easy to predict perilous times ahead of us. Some, including Sarah Palin, have said there is a possibility of another depression. But to asses the validity of these possibilities, one has to understand what actually plunged the U.S. into a depression in 1929 and if there are any parallels today. Niall Ferguson of Time magazine attempts to do so by checking the parallels between the two. Ferguson links the drop in prices of stocks to the drop in house prices today. But the similarities do not go much farther than that. Fortunately, the Feds learned from history and are taking action today and as soon as possible unlike the Hoover administration. The most obvious difference is that funds rates have been cut repeatedly from 5.25% to .25%. The Treasury is also much more active today than it was in the great depression. Back then it was believed that the government should balance the budget even if it meant raising taxes, which has been said by many to be the farthest from the right thing to do. Famous economists have said that deficits are good in recessions, and with the Bush administrations huge deficit from prosperous times, it wouldnt be unlikely a larger deficit is in the future. Ferguson says there is still hope to save the U.S. from a depression, and the difference between todays government and that of Hoover administration is like black and white. As Ferguson says of the bailout bill, "If nothing else, it would signal to the world that - unlike in 1930 - the U.S. is doing what it canto avoid financial calamity and sidestep Depression 2.0"