Parallels seen as 1929 crash anniversary nears

The Oct. 19, 1987, loss of 22.61 percent remains the largest one-day percentage drop, though the market's current decline smashed previous record for the largest daily point drop with a 777.68-point plunge on Sept. 29. In an eight-day losing streak earlier this month, the Dow lost a stunning 2,400 points,or 22.1 percent.

Experts have largely praised the government's reaction this time around, and say it should keep the economy from falling into another depression.

For starters, Federal Reserve Chairman Ben Bernanke, a former academic and expert on the Great Depression, has aggressively cut interest rates and pumped billions of dollars in liquidity into the financial system to keep the supply of money from drying up.

The tactic, known as a "helicopter drop," is borrowed from famed economist Milton Friedman. Bernanke touted the practice in a famous 2002 speech, leading critics to sometimes refer to him as "Helicopter Ben."

"The idea is that if people have access to extra liquidity, some portion of that will be spent," stimulating the wider economy, Sohn said.

Another decision that may have averted catastrophe was the Treasury's $700 billion emergency plan to remove banks' troubled mortgage-related assets as well as taking equity stakes in banks in a move designed to get stagnant lending going again. That, experts say, has so far helped avoid the wave of bank failures that preceded the Great Depression and has helped keep credit available if not easy to obtain.

But as these uncertain times show, the government can't fix everything.

Even with the sweeping government rescue plans, stock markets around the globe have continued to tumble, including a worldwide plunge on Friday from Tokyo to New York. Experts say the persistent fear in markets is a reflection of the limitations of American economic power in an increasingly globalized world.

Homebuilder outlook dips despite tax credit   The National Association of Home Builders said Tuesday its housing market index fell by one point to 16 this month, reflecting concern that job losses will stifle demand for new homes. Great Recession spawns biz buzzwords Industrial production rises more than expected Fed likely to leave rates at record low Economy points to recovery; inflation looms

"Today you have the Federal Reserve sending good signals to the market, but there are lots of other types of bad news out there that is hard to control," said Eugene White, an economics professor at Rutgers University and an expert on the 1929 crash.

As an example, he mentioned the banking collapse earlier this month in Iceland, which wiped out investors across Europe and sent waves of worry around the globe.

In the old days, "who would have thought that would be a problem?," White said.

Just like during the Great Depression, he said the current crisis will leave a legacy by forcing U.S. consumers to cut back on borrowing and spending.

"People are going to feel less wealthy and they're going to consume less," White said.

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