Without looking at credit markets (the real origin of the problem – equities were a canary in the coalmine), he somehow determines that the recession of 1931 caused the financial crisis, denying that there was a financial crisis in 1929.
However the bond market in the late 20s was bigger than the stock market, and almost every sovereign issuer ended up defaulting. The private sector didn’t fare so well either. So you might want to look at credit spreads rather than equity prices. Obviously if the market is closed to new issuance and to refinancings, that starts to become a problem some time before the situation gets bad enough to reach the stage of bank runs.
One should also consider the international aspect, since Europe was in many ways the epicentre of the crisis. The BodenKreditAnstalt had trouble financing itself as early as October 1929 when the Bank Austria (central bank) closed the discount window. The forced merger with Credit-Anstalt created the new entity that was to kick off the acute phase of the crisis in 1931.
So I do not understand why you write with such certainty that there was no crisis until 1931. The fire ignited in 1929 but was not noticed till some time later.
To say there was no crisis in the US in 1929 is like saying there was no peripheral crisis in Europe in 2007. The whole thing was one rotten episode that took its time to spread. But in 2008 it was inevitable that the recognition of trouble in the US would inevitably lead to recognition of underlying problems down the line in Europe, no matter how aggressively the ECB eased. The problem wasn’t that the ECB tightened too much, and didn’t ease enough. The problem was that trusting German Landesbankers had lent money at stupidly low interest rates to countries that didn’t make good use of the money nor have an alternative financing source when the Germans awoke. All the liquidity in the world isn’t going to make that problem go away.
and apparently is quite the specialist in frame control…