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Cramer: Depression Comparisons are 'Scare Tactics'

     CNBC “Mad Money” host Jim Cramer said on NBC’s “Today” show Dec. 2 that comparisons between the current economy and the Great Depression are “scare tactics.” Maybe he forgot about his own reliance on the juxtaposition.

 

      “[T]hat’s got to be taken off the table,” Cramer told “Today” host Meredith Vieira about comparisons to the Great Depression. “There have been enough things done by this government to absolutely preclude that. I, myself, do not want to use that term ever again on the “Today” show even to compare it. Things are very different. We do need help from Europe; we need help from China. But take the Great Depression talk off the table. That is scare tactics.”

 

     He was right. Comparisons to the Great Depression are way off the mark.

 

     “Remember, we have had declines of unemployment 33 percent in this country in the ‘30s,” Cramer noted. “We're trying to just – we’re flirting with 7-8 percent. That's why it’s important to keep a little calmer head.”

 

     Federal Reserve Chairman Ben Bernanke, a scholar of the Great Depression, said Dec. 1 that there is “no comparison” between the two situations.

 

     “During the 1930s, there was a worldwide depression that lasted for about 12 years and was only ended by a world war,” Bernanke said. “During that time, the unemployment rate went to 25 percent … The real GDP (gross domestic product) fell by one-third. About a third of all of the banks failed. The stock market fell 90 percent.”

 

     Cramer said framing the current U.S. economy in terms of the Depression or saying, as Vieira did, that “some experts are predicting that this could be the longest recession since World War II” was inappropriate.

 

     “I’m reluctant to start talking like that,” Cramer said. “I've adopted a ‘just the facts, ma’am,’ approach, kind of a little bit more of a Dragnet approach, so to speak. Because when we give those characterizations what happens is we can affect things.”

 

     Cramer seemed to echo a warning his CNBC colleague, Maria Bartiromo, issued in February 2008 that “it doesn’t matter if we’re in a recession. We can talk ourselves into a recession, and that seems to be what we’re doing right now and that certainly begets more weakness.”

 

     But Cramer has been among the most vocal scaremongers when it comes to throwing around Great Depression warnings.

 

     Criticizing economists who opposed the $700 billion taxpayer bailout of the financial industry on the “Today” show Oct. 1, Cramer warned the country was “on the precipice of Great Depression II.”

 

     He made a similar claim about the financial bailout in September, arguing that if Treasury Secretary Henry Paulson didn’t find a way to get a rescue package passed, “we are going to have The Great Depression II on our hands.”

 

     On Nov. 11, Cramer supported another proposed bailout – this time for the U.S. auto industry by saying it would prevent another depression. “It’s like look – we got to bail them out,” Cramer told CNBC “Street Signs” host Erin Burnett. “We have to. We have to keep the Great Depression off the table.”