Many people believe that history often repeats itself. Maybe the exact details are not the same, but the two time periods in question share many common characteristics. For example, many economists point to the parallels between the current economic crisis and the period of 1932-33 when President Hoover was in the tail end of his term and about to be succeeded by Franklin Roosevelt with his "New Deal" thoughts about change to get the economy functioning again. As a result of potential parallels between various points in time, some people study various historical events, people and time periods to gain a better understanding of how current events might be handled so as to prevent the mistakes of the past. The history of the financial markets is a case in point.

Economies have had periods of prosperity and contraction throughout all known history. Some of the contractions have been caused by excess supplies of some type of inventory; others have resulted from fears about the availability of credit or fears about the soundness of the banking system. Less frequently, the periods of contraction have been led by a complete collapse in the demand for products and services (like what appears to be happening during this credit crisis). Hence, it is often useful to have a better understanding of historical events and people.

Recently President-elect Barack Obama has been announcing the new members of this economic team, such as Timothy Geithner, Larry Summers and Paul Volcker. As a result, Toomre Capital Markets LLC ("TCM") has been reviewing just what did happen in the Korean crisis of 1997 (and which resulted in the in-coming Treasury Secretary Timothy Geithner rising to the attention of Robert Rubin and Larry Summers)? Or what were the forgotten details of Paul Volcker's "Saturday Night Massacre" in October of 1979 that inflicted large losses on many Wall Street houses as he suddenly raised short-term interest rates?

(As a side note, Lars Toomre recalls that in October 1979 Lehman Brothers was then long much commercial paper, the principal product it then traded in its small fixed-income division. Who was there on the commercial paper desk actively trading trying to minimize the losses? The disgraced CEO Dick Fuld was then head of the desk and one of his principal traders was Joe Gregory, the former COO of Lehman Brothers.)

In reading up on some of these historic events, Toomre Capital Markets LLC came across a previously unknown and truly excellent website with this type of information. That website is part of www.buyandhold.com called Educate Yourself. The truly excellent Wall Street History section can be found here. For those interested in gaining more perspective on Wall Street history, this site is highly recommended. History sure does seem to have a way of repeating itself.

Readers are welcome to leave their own recommendations in the comment section of this post.