The Other Shoe

| Tue Mar. 15, 2011 12:56 PM EDT

Megan McArdle comments on the stock market crashes that have followed Japan's recent earthquake:

Periodically, you hear students of the Great Depression wondering whether another shoe is going to drop, the way it did with Austria's Creditanstalt in 1931. The economy looked as if it was going to recover from a sharp, but not all that unusual recession--and then Creditanstalt failed and everything really went to hell. Unfortunately, we have a lot of candidates for the next disaster: oil disruptions in the Middle East, the European debt crisis, and now Japan.

Pessimist though I am, I have to admit that "gigantic earthquake in Japan" was not on my list of possible flash points for the global economy. And in the end, I don't think it will be. Still, it just goes to show that you can't think of everything. If the losses in Japan expose weaknesses in the insurance industry, who knows what might happen next?

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