More than one bloggentator has remarked on the parallel between the Dubai meltdown and the collapse of Credit Anstalt in Vienna in 1931--the latter having morphed a nasty recession into The Great Depression (cf. here*).
All very well, but we needn't be too quick in our comparisons. What really made the Great Depression was not simply the bank failure but the almost criminally ham-handed way the Western democracies responded to it--perhaps most egregiously the British, whose idea of a stimulus was to cut wages and balance the budget. Indeed, it seems to me one of the few topics on which there is broad agreement among macro economists agree on is that he Best and the Brightest just screwed up like Hogan's goat. They may--they do--disagree on what the B&B should have done instead but I can't think of anybody who endorses the actual performance.
We may prayerfully expect that the Best & Brightest bis will do a better & brighter job this time around.
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*Liaquat Ahamed, Lords of Finance, quoting Brad DeLong, "The Economic Foundations of the Peace," but the links don't seem to be working.
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