I am not indicating at all we are going to have another Great Depression, mainly because today’s policy makers learned the past mistakes, especially Fed’s monetary/credit policy is much more expansionary (also innovative) than in Great Depression. Bernanke’s famous comments were “we won’t do it again”. But one and half years into recession, banking sector is still in a huge mess. I am very worried.

The graphs below compare bear market rallies, then (1929-1933) and now (2007- ).

Great Deleveraging:

Great Depression:

(click to enlarge)