I checked this book out after some recommendations here, and I can't put it down. It really is fascinating to follow through the whole process of how the system broke down, from someone struggling to understand what is going on.
There are parallels with today on every page - in particular referencing how banks lent out short-term deposits for long-term loans such as mortgages (aka duration mismatch).
What I wanted to highlight is the tone of the entries leading up to the second part of the depression in September 1937. The author is cautiously optimistic for several years, before finally becoming convinced himself that the depression is over. Then, suddenly, it all falls apart.
1/2/1937 wrote:It seems to me that the time has come where we can formally and officially announce that the depression of 1929 has ended.Marginal entry added 7/19/1939 wrote:You were wrong. A new depression started Sept. 1937 and is still with us.
After June 1937, there were no entries for several months. Keep in mind, this is a man who has devoted hundreds of near-daily entries from 1931-1937, to cover the Great Depression. After considering the depression over in January 1937, he finally disregards his journal in June 1937, until picking it up again in October 1937:
10/12/1937 wrote:I have made no entry for several months because business seemed to be normal and it looked as though it would continue for some time.
This is a very important point. When everyone becomes fully convinced that the economy is getting better (and no sooner), that is exactly the time when it is likely to get worse.
Try to watch for the signs: if the folks who predicted this crisis are laughed out of town for not predicting "the amazing job growth of the last few years", if those same folks start to doubt their own theories, if even *you* start to have your own doubts after witnessing all the missed opportunities and all the prosperity that you would have to be a *fool* not to be a part of - then is the time to withdraw everything, and hold on for a wild ride!
