Hey hey HARM,

I have to agree with you, but be careful asserting what caused the Great Depression unequivocally, historians are still to this day debating the reasons.

The similarities between then and now are pretty striking though. There was a huge and reckless boom in the economy, the stock market, and the creation of credit and debt. The economy was "globalized" or interconnected to a very large degree and there was a ubiquitous belief that the future would be bigger, brighter, and better than the present. People got carried away and then...

Something went wrong. The stock market crashed, people stopped borrowing, prices fell, output dropped, credit dried up, wages fell, people were layed off, banks failed, companies failed, and global trade barriers went up and trade went down. Then the situation exacerbated itself for several years. Coal consumption dropped by 30% peak to trough if memory serves.

This time it's a little different. But, like before we got carried away with a huge globalized boom driven by continuously expanding credit because we came to expect the future to always be better than the present so we borrowed heavily from that future.

Then something went wrong. Again the USA started it all off. We started two costly wars and then food and energy prices shot up and the subprime fiasco caused asset prices and debt to over shoot and then falter. Then credit dried up and banks failed. So far that's all we know of the story.

But, huge booms are followed by huge busts. A global recession at the very least, I personally think it will be the second great depression.

Looked at in from an economic perspective oil prices should be going down because the economy is contracting. On the other hand peak oil means that the oil supply isn't going to hold and prices should be going up.

It all comes down to rates of change. The question is which is going to contract faster, the economy or the oil supply? Is this just a pull back or the beginning of a larger trend? Sadly, I don't know. I do know that in the long run peak oil is going to be the more powerful force, but how long before that happens?

-Tim