The Great Depression II -- or The Greater Depression II?

In the media, the current financial calamity is constantly referenced to problems during the Great Depression. But an article posted by aboutime on LATOC points out, this comparison falls exceedingly short. A much more apt comparison is to the Greater Depression, otherwise known as the Panic of 1873. Read this description of the conditions leading up to the Greater Depression:

The problems had emerged around 1870, starting in Europe. In the Austro-Hungarian Empire, formed in 1867, in the states unified by Prussia into the German empire, and in France, the emperors supported a flowering of new lending institutions that issued mortgages for municipal and residential construction, especially in the capitals of Vienna, Berlin, and Paris. Mortgages were easier to obtain than before, and a building boom commenced. Land values seemed to climb and climb; borrowers ravenously assumed more and more credit, using unbuilt or half-built houses as collateral. The most marvelous spots for sightseers in the three cities today are the magisterial buildings erected in the so-called founder period.

But the economic fundamentals were shaky. Wheat exporters from Russia and Central Europe faced a new international competitor who drastically undersold them. The 19th-century version of containers manufactured in China and bound for Wal-Mart consisted of produce from farmers in the American Midwest. They used grain elevators, conveyer belts, and massive steam ships to export trainloads of wheat to abroad. Britain, the biggest importer of wheat, shifted to the cheap stuff quite suddenly around 1871. By 1872 kerosene and manufactured food were rocketing out of America's heartland, undermining rapeseed, flour, and beef prices. The crash came in Central Europe in May 1873, as it became clear that the region's assumptions about continual economic growth were too optimistic. Europeans faced what they came to call the American Commercial Invasion. A new industrial superpower had arrived, one whose low costs threatened European trade and a European way of life.

While the eventual end effects of the Great Depression and the Greater Depression have some parallels, the entry conditions were far different. To understand what we face economically in this first phase of The Great Decline (our current crisis), we need to focus on prior events where the entry conditions more closely match. If we ignore this prior example, we may not prepare ourselves accordingly for the fallout.