Burnett argued the economy was still growing. After one quarter of negative gross domestic product (GDP) at the end of 2007, the economy has rebounded with two positive quarters. But Cramer said there was a difference between the economy and the banking system.
“Well, one is the difference between the economy and the banking system,” Cramer said. “The economy really picked up in 1936 to ’38 because of armament orders, and World War II turned around the U.S. economy entirely, but there was still, the banking system was still very frail throughout the ’30s.”
Cramer told Burnett he was disappointed in Federal Reserve Chairman Ben Bernanke, who has studied the Great Depression. Cramer added there is a need for another interest rate cut at the upcoming Federal Reserve Board meeting on September 16.
“But you know, look – I hear you on the jobs, I hear you on the economy,” Cramer said. “I don’t really care. I’m talking about a dysfunctional banking system. We don’t want Citi (NYSE:C) to go out of business. We don’t want AIG (NYSE:AIG) to go out of business.”
House Speaker Nancy Pelosi, D-Calif., September 11 mentioned the possibility of another rescue package – this one for beleaguered investment bank Lehman Brothers (NYSE:LEH), based on its impact on the credit markets.
Great Depression references have been used liberally by the media in 2008. Networks have made endless connections to the Great Depression – more than 70 times in the first six months of the year and that’s just on the three broadcast networks..