Toward the end of August, the stock market sold off and business showed signs of slackening. After Labor day the retreat became sharper. Stocks went down fast and far. On the morning of October 19 the market seemed near demoralization, with support for some stocks apparently quite lacking and selling orders pouring in from all over the country....Only the fact that speculation previous to August had been moderate and well margined kept the annihilation of values from having disastrous consequences outside the exchanges. Meanwhile business operations contracted steadily and rapidly. Not until the end of March did the stock market touch bottom, not until May did business do so.
-Since Yesterday Frederick Lewis Allen 1939 Harper Row (dates :1937, 1938 omitted)
The great history of 1930's America by Allen is must read as the financial crisis moves to its fourth year. The 1937-1938 retrenchment is key. Policy took a dramatic shift back toward budget balance. In fact, if not for the "new" social security safety net, the government would have posted a fairly large surplus. The beauty of Allen's history is the record of music, books and social life that dominates the narrative. Americans "act" in a recognizable pattern in times of deep socioeconomic upheaval.
The ending passage need not point the direction of the present troubles. On September 3, 1939, ten years to the day from the market crash, Neville Chamberlain gave his radio address and declared his country at war with Germany. "...With those sentences, spoken so quietly thousands of miles away, an era ended for America and another one began."
Today, the US moves out of Iraq and the incursion started after September 11, 2011- ends. Market actions are time compressed and hyper-volatile but the cycle rolls forward "normally." Things will kinda work out.