Talking Points

Second Verse, Same As The First Mark Zinder Action Shot

What we learn from history is that we do not learn from history!

Before we get to the serious nature of these unusual occurrences, i.e., history repeating itself, let's review one of the most commonly discussed coincidences, the comparison of Presidents Abraham Lincoln and John F. Kennedy.

Lincoln was elected to congress in 1846, Kennedy in 1946. Lincoln was elected President in 1860, Kennedy in 1960, and they were both elected by less than 50% of the popular vote. They both have seven letters in their last name and both of their successors to the presidency were Senators with the last name Johnson: Andrew Johnson and Lyndon Johnson. Andrew Johnson was born in 1808, Lyndon Johnson in 1908. Lincoln was shot in the Ford Theater, Kennedy in a Ford Lincoln.

The above makes for interesting cocktail party fodder. But, when considering an economic event like the current recession-or even human behavior, it becomes more than simply entertaining.

For those who aren't students of history, it would serve you well to review the banking panic of 1907, a banking crisis that consumed the lives of most Americans. War was looming, immigration was fueling changes in our society, and new technologies, fueled by the accomplishments of the industrial revolution, were having a huge impact on consumers' everyday lives. America was in a postwar expansion nearly a half century after the conclusion of the Civil War. Without the benefits of a central bank, it was J.P. Morgan who bailed out the failing banks, and that year, 1907, the NYSE recorded a collapse of 37%.

It is not hard to recognize the similarities between what occurred 100 years ago and what has occurred of late. Just like the Industrial Revolution improved productivity, the technology revolution has done the same. America had experienced a postwar expansion that was just over a half century in length. It is also interesting to note that during both these periods businesses were consolidating through mergers and acquisitions. What stands out among the similarities is that in 1907 the market[1] was down 37%. In 2008, the DOW was down 37%. In 1908 the DOW was up 46%. As of this writing-Friday, July 31, 2009- the DOW is up 46% from the market lows reached in March. For those who are curious, in 1909, the DOW was up 15%.

Maybe the reason history repeats itself is because we weren't paying attention the first time around, or maybe we continue to exhibit the same human behavior as did the generations before us. That could be why the Chinese, in their infinite wisdom, noted centuries ago, "If it has happened twice it will happen again."