We've been here before

As I write, I can hear the sound of credit crunching all the way around the world - truly a slow motion train wreck. The first thing that an investor does when faced with an unfamiliar situation is to ask "has it happened before?" History can often teach us very useful lessons. This time round, faced with an alarming credit contraction, one can ask what happened to economies and financial markets in similar circumstances in the past. Have we ever seen a credit crunch of 2007 proportions before? Of course we have. Not many of us remember the 1930s but most of us can remember the 1980s....