Those who know their history understand that it was not the Wall Street Crash that caused the Great Depression but the panic reaction that followed.

In particular, the fall in stock prices did not in itself close a single factory. What closed the factories in the USA was the subsequent imposition of tariffs by the Smoot Hawley Act – intended, ironically, to “protect” those same American factories from foreign competition. Retaliation was inevitable, with the predictable result that world trade dried up and everyone’s factories closed.

It is frightening how easily our leaders forget their history – or ignore it – because there is a danger of the same mistake being made this year.

We are overdue for a recession, and it probably has to be a tough one after so much public and private sector borrowing. However, there is no reason to assume that the recession will become a depression... unless the politicians panic again and do something stupid.

They are panicking again – and they are talking about doing something stupid.

The engine of American – and, to an extent, world – prosperity in the late 90s, and its cushion in time of recession, was the North American Free Trade Agreement, NAFTA.  Despite its undoubted benefits, NAFTA has never been popular with American Trades Unions.

Some candidates in the Presidential elections have tried to exploit that unpopularity. At a loss for anything constructive to say about the economy, they have tried blaming NAFTA for the economic woes brought on by excessive borrowing and by lack of competitiveness.

This is not only the complete opposite of the truth – it is also about the most threatening thing any politician can do to the prospects of recovery.