Ask Mike: What Caused the Great Depression?
Hey Guys,
The financial mess on Wall Street is all anybody seems to be talking about these days. Some are even wondering if we could be entering another “Great Depression.” I did a little research into the causes of the Great Depression to see if the circumstances are similar.
I always assumed the stock market crash of 1929 directly led to the Great Depression. But, as it turns out, that’s not necessarily so. An article from about.com lists the top five causes of the Depression, and while “Black Tuesday” is on the list, it wasn’t the only factor that triggered the meltdown. There was “a combination of domestic and worldwide conditions” including massive bank failures, reduced consumer spending, an ill-advised economic policy, and a horrible drought that caused many farms to go under. It was truly the perfect storm.
A blog explains that before the Great Depression, the stock market was artificially inflated due to massive speculation. Eventually, the market fell apart, and that event, combined with the unequal distribution of wealth among Americans, had a huge part in starting the Depression. During the 1920s, wealthy Americans whose income was among the top 1%, saw their disposable income rise 75%. Meanwhile, the per capita rise was only 9%. Not exactly a level playing field and certainly not a sustainable figure.
Times have, of course, changed. In the 1920s, there was far less government regulation. The stock market was much more a “wild west.” Everybody was playing, but there weren’t very many rules. A Yahoo! News article explains there are significant differences between the Depression and the economic crisis of today. During the Depression, unemployment was around 25%. Today, it’s around 6%. Economists agree that things could get worse (they always can), but something on par with the misery of the 1930s is unlikely.
What do you guys think about the events of the past few weeks? Have they changed the way you invest? Are you more cautious or more aggressive now that prices have dropped? Please leave a comment below.
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I think it just reinforces the wisdom of diversification. I like a nice blend of high-risk, blue chip, and low-risk investments, in lots of different venues. Single investment choices may occasionally make you more money, but it does nothing to equalize your losses.
I’m more cautious. Despite low unemployment across the board, some counties where I’m from have unemployment figures as high as 10-15%. I’ve also seen the stories about the tent cities that are eerily reminiscent of the Hoovervilles of the 20’s to me. I’m actually pretty nervous about at least the next couple of years. On the other hand, I’m glad the days of responsible lending may have finally come again.
To be honest,
I consider myself now more stupid-
I don’t understand much of what happened…
For the stock market, it’s a good time to buy long-term stocks, and a bad time to sell, for the most part (my husband met with a financial advisor today).
My advice is, pay off your debts (which will free up your income in the long run, with less bills going out), stock up on canned goods and water (you never know what you’ll need it for!), and save some money. It doesn’t mean I don’t go shopping anymore (I was at the mall today!), but we need to have back up plans for unexpected losses.
Both the lack of liquidity and the Federal Reserve was not acting fully as the “lender of last resort”.
Interestingly and contrary to popular belief, FDR’s New Deal did not fix the problem. Numerous studies and complex analysis of statistics have shown that changes to banking regulations did the most to improve the economy. The new banking regulations provided much needed liquidity.
The day before the Federal and Treasury officials announced that they are going to bail out Freddie Mac, Fannie Mae and AIG was the best time to buy stocks since they were at rock bottom prices; some even 40% below the shares’ net worth. We saw a huge surge in prices last Friday, September 19, after the announcement were made on AIG.
Shrewd investors do not normally buy and sell on a daily basis and always keep a portfolio of healthy stocks that regularly provides cash and/or stock dividends and other stock options. They also have a sizeable cash on hand for times like these.
I am willing to bet that there is a number of investors that made a killing on the exchanges last Friday. Some might still be holding back a percentage of their purchased stocks until Monday awaiting a follow-through of Friday’s climb.
Smart investors are usually aggresive but also cautious in the sense that they know which and when to buy, and which and when to sell. Timing is the most important. Can you imagine if someone with inside information about AIG’s bailout invested $1 million in stocks last Tuesday and Wednesday and unloaded the same last Friday?
I think you’re missing the parallels.
Causes of the Great Depression (per your article):
1 – Stock Market Crash (Parallel: Real Estate Market crash.)
2 – Massive Bank failures (Parallel: Same today. IE: Lehman Brothers, IndyMac, etc)
3 – A horrible Drought (parallel: If you look back in time, you’ll see that the current bubble burst started with Hurricane Katrina… A horrible hurricane). Several disastrous hurricanes in 2005 caused a “pause” in the Real-Estate markets in the fastest growing areas: Florida (especially), Nevada and California were particularly hard-hit. This pause was enough to start a minor panic which grew into the wide-spread real estate crises that we see today. Many think that the real estate crisis that we see today is a direct result of the sub-prime loan crises but really it’s the other way around:
This country has seen a loss of value in the dollar consistently since 2001 with an uneven stagnation of income increase. Most American’s, to make up the difference, have been living off their home’s growing equity to maintain the lifestyle they were accustomed to. For example: A family making $50,000 per year living a $50,000 per year lifestyle in 2001, found that lifestyle costing them $60,000 in 2002 (even though their income may only have been raise to $55,000 or not at all). Many of those families turned to the equity in their home (through either refinancing or taking out new equity lines) to supplement their income so that they could maintain that lifestyle. Of course, in 2002, this probably was compounded and so on and so on until, when that same home-owner went to get that supplemental “income” in 2005, 2006, 2007, etc and found that now, they no longer had any equity, more and more of those homeowners could no longer afford their mortgage payments and foreclosed. The banks who now owned those foreclosed properties were quick to short-sell them in a fire sale manner (at 80%, 70%, or sometimes even 50% of the current market value) causing everyone else’s equity to fall accordingly creating an even bigger problem. Add a Fed who continued to lower rates to make this even more enticing, more creative financing from the banks (negative am products and ARMs and lowering the bar to the ground on who could qualify) and this made an already unstable market like a brick house made on a paper foundation (excuse the pun).
4 – Wealthy Americans whose income was among the top 1%, saw their disposable income rise 75% – Among the wealthiest Americans are Oil, Insurance and Bank executives. Oil speaks for itself (been to the pump lately?) but the Insurance and Bank executives continue to prosper even though their companies post record, if not catastrophic losses.
5 – You talk about 6% unemployment but there’s one thing missing in this formula: The self-employed… Those who can’t file for or get unemployment… Those self-employed (arguably a significantly larger percentage of the work market especially when you consider many companies “contract” out now where they used to have “employees” saving themselves great expenses in benefits and unemployment insurance) who are “out-of-work” do not count in this number. Who knows what this number is really?
Ok – having said that… I’m not really a doom and gloomer (I know I may sound like one) but I think it’s important to see the mistakes we have made and learn from them. Recession and Depression (defined by the economist) are (in most cases) discussions of GNP and by-the-book definitions exclude us from both for the time being. But the impact on consumer confidence and the continued trickle-down effect throughout the economy will not change until someone, somewhere (in the public eye) acknowledges that we’re having problems and need to do something about it… Unfortunately, it took a Presidential election to do that (which in and of itself is a sad commentary on our own humanity).
If you’re in to such things, Napoleon Hill in his book “Think and Grow Rich” blames a great deal of the Great Depression on a master-mind of gloom and doom perpetuated by the media. He argued that this created a downward spiral of all of the things you spoke of, each feeding one another and fueled by the media exploiting the misfortunes of those “fallen victim” of the times (thus creating a greater stress on market confidence and so on and so on). I think there is some validity to this theory as well so I want to be careful to point out that I don’t want to perpetuate this.
The best way out of this (which is not the current path we are taking with all these government bail-outs) is to get back to basics economically starting at home. Work for what you make, don’t spend more than that and let your demand (what you can afford to buy) effect market pricing rather than printing more funny money when you can’t afford the demanded price. If buying would have slowed down a little back when this all started, it would have caused a minor recession, sure, but we would have been long recovered by now and back on track.
By the way, I really liked your article (can you tell?)…
Sorry for the long response. By the way, I’m not an economist (which may be obvious, I don’t know) – just a regular working Joe like everyone else.
We are currently seeing bank failures, insurance company failures, stock failures, mortgage failures and an increase in unemployment. The only thing that’s keeping our economy from falling apart right now are the government bailouts. Unfortunately, the U.S. is having to borrow the money from other countries to finance the bailouts as the U.S. is seriously in debt. This, in turn, will seriously impact the value of our dollar which is already worth much less than the euro.
My personal belief is that we are not going to be able to dig our way out of this and we will plunge into a full blown depression within the next 12 months. Because we are the international consumers of the world this will crash everyone’s market as we won’t be able to continue to spend on a consumer level.
Let’s hope I’m wrong.
Banking failures limited liquidity and economic expansion. It was the Federal Reserve that fixed the problem.
“Several papers have examined the relationship between bank survival and economic output. Bernanke (1983) argues that bank failures increased financial intermediation costs and restricted output growth in the Depression. Calomirisand Mason (2003a) find that states that had larger declines in bank lending during the early 1930s had slower income growth in subsequent years. Anari, Kolari, and Mason (2005) show that the accumulated stock of deposits at banks that were being liquidated reduced economic output. They argue that the liquidation process, which took six years on average, kept resources from being used productively.”
http://www.federalreserve.gov/pubs/feds/2008/200807/200807pap.pdf
haha this sucks
I find two major problems occured before Black Tuesday: massive credit and mergers. These two problems have surfaced in todays realm.
CEO’s making millions and getting rewarded even when companies’ stocks fall.
The real start of the Great Depression was when the banks couldn’t handle the people coming to get their money when it wasn’t there. Banks make their money but loaning YOUR money and collecting the interest. Most ofthis comes from mortgages. When banks can’t get their mortgages, they collect assets in the form of businesses and houses that they cannot sell, due to the market. Their “cash” is now in in assets. When cash flow runs low, they cannot make money through loans via interest. Hence, the damage credit can do when it is mixed with banks with unsellable assets. If a panic occurs, the banks can’t retrieve the money for the bank accounts, due to it being loaned out and not returned via foreclosure.
The government only bailed out in hopes of a return. If the money isn’t returned, we face a deeper hole.
The American International Group is suffering from huge losses. The effect varies from country to country. In some countries, the customers are lining up to salvage whatever they can. It is not surprising if many countries are suffering from financial deficit. For example how do you financially manage a war that goes on and on for years or spending on programmes that need a lot of money ? From where would you generate that kind of money and money here means a real big sum ? Actually if we read a bit of history, it is gold that has its’ value.I think we have to read a bit of American history to understand how money comes about. Then for that amount of gold is the equivalent to the sum of money. These days, how do we value a thing or a service ? If we are to pay in gold, is there enough to go around ? Money are just papers but the quality of the paper is unique and different. We can see, touch, smell gold. While money is just paper, the value of the thing or a service is not something as tangible as gold. I am no expert but it would not be surprising to find out that everyone is owing everyone else money.
Under the 1938 rules, stock purchasers could build “cardhouses” of phony or very shaky collateral which depended upon the market of the roaring 20’s to continue to rise enough to make the payments on stock purchase. When the drought hit worldwide, a crash was unavoidable. Restrictions were put into place to prevent such “buying on slim margin” from causing another crash. But recently, these restrictions were removed, and automatic shutdown of the market put in their place, as though a day’s cooling off will fix everything. Clearly it has not, but merely spreads a crash out in time. Regards, Larry.
My teacher said that the stock market back then is in the same situation as the real estate industry now.
People are investing in houses, but don’t have the money, and values are dropping.
i was just thinking about this a few days ago….
I don’t get why some people have a ton of money in this place and then someone is living on the streets the next. Can people just give a little?
The great depression is what bankers did to get more of our money.. rockerfellas,morgas,rothchilds.. ect… all a scam..
WOW
ACTUAL unemployment is around 10-12%, and that’s not counting the almost 1% of the population that’s incarcerated.
Since hurricane season isn’t over yet, THAT natural disaster factor isn’t in the equation yet, although damage from the last two are in the billions.
i remember hearing a story about some big broker who got advice from his shoeshine boy on what stocks to by, and he immeadiately got out of the market and thus escaped the Great Depression…and speculation today is almost as fervent!
People who missed out on the dot.com party saw Google go to over $300 in a day, from a $75 IPO…and then there’s the “Flip This House” phenomenon—everybody wants to make a buck without working—the ol’ dollar and a dream mentality.
i’m forseeing a LONG recovery with things getting a lot worse before it get’s good enough to be merely termed “bad,” and it won’t be as sudden as the Great Depression…but THINK what a really cold winter will do to most people this year.
It’s when sheeple can’t afford to PlayStation and do unlimited texting that things will REALLY get ugly
I think People that speculate create depressions. The markets aren’t based anymore on the true value of a company. All this so the very few can get rich. just my quick 2 cents
I’m lucky in that I’ve been unaffected by the current mess. My stock investments have lost some value, but thanks to the great real estate crash I’ve been able to finally buy an apartment as an investment. I’m lucky enough to live in a big city where home values have held steady, and I walk to work so I don’t have to deal with any rise in gas prices
Seriously puts a hurt on the 401k. It certainly can become a depression but not the way one would have felt it 83 years ago. The measurements have changed over time. People aren’t losing farms but houses. 100 more banking institutions then just a few. So how do you measure?
The Smoot-Hawley Tariff Act was a major contributor to the Great Depression
Am I right that the stock market rules are being broken? Government regulations aren’t being upheld. The folks selling the stocks are artificially inflating the market – just as was done prior to the Depression.
And there is, in fact, an ill-advised economic policy.
Also, in response to your point “…unequal distribution of wealth among Americans had a huge part in starting the Depression” – this is also the case today. There is 1 millionaire to every 100 middle-poor class Americans. Is this not an unequal distribution of wealth? The gap between poor and rich people is widening quickly.
There is also reduced consumer spending, and a huge jump in foreclosures which is having a very negative affect on banks. In fact it has been predicted that there will be over 1,000 bank closures in the next few months!
And I think the last point that you made was that there was a horrible drought that caused many farms to go under…well, my dad is in the agricultural industry (and I know many farmers personally) who have been forced out of business due to, you guessed it, drought!
Just my thoughts.
The Great Depression was caused by too little capital in the banks. Capital is the lifeblood of all Financial Markets (like water to plants) Our Private Federal Reserve via Paul Warburg did a test run of how they could control the capital in the stock markets just like a fireman controls a hose during a fire. Winston Churchill was given a demonstration by James Paul Warburg…Sure enough he was able to create a false panic. The Depression was caused to keep the Central Bank in place and our Fiat currency afloat and in play This will happen again very soon…Our “Private” Federal Reserve Notes are printed at fairy tale levels and soon the Fed will have to eliminate the excess or put in place a new currency. Some suggest the Amero. But don’t worry, the Rich and well connected will be buying Gold and hard assets at a feverish rate before the next crash comes!
“Give me control of a nation’s money
and I care not who makes the laws.” Mayer Amschel Rothschild
“We shall have World Government, whether or not we like it.
The only question is whether World Government will be achieved
by conquest or consent.” James Paul Warburg
We cannot continue to pretend we can cover al the debts..made by re-packaging mortages, and covered by the US govenment into the hundreds of millions………….Bush has less than 4 months to his Presidency, so everything is going to be the next President”t problem..
including the total LACK of LEADERSHIP for people who”ve become victims of natural disasters…so if a hurricane, tornado, flood, or earthquake hits your area, you’re going to suffer, while empty foreclosed houses you’re subsidizind with your taxes just sit threre empty.
Where is the LEADERSHIP here?
The current economic situation makes me nervous. I never have been much for keeping a lot of money in one bank account or investing. I have heard too many stories from my grandparents (both sets married in 1929) to trust the economy right now. The FDIC money for failing banks is below the recommended minimum amount. Things may not be as bad as in 1929, but it’s scary.
ok, im glad im not 18 =D
BTW FIRST POST FTW!
future tripping caused it hoping tomorrow would be better than…
future trippin…
No I have not with all this talk about it going down in flams; I have just simply turn around and keep doing what I always do wake up go to work (Wamu) get out of work look over my stocks(Wamu) maybe even buy a few here and there, than go and buy as many things as I can at the store down the street, My thing with this is that it would not get so bad if people did not went around doing anything and every thing the media is telling them to do (Take your money out of the bank, Dont spend to much money) This is what is making companies go down and banks what happens when that happens? Hello!!!!!!
Thanks Mike!
Very Informative!
My concerrn is, how and whatz gonna happen to the employees how they going to get a speedy new job and how they can survive in that kind of high society life.
The Great Depression was caused by the Federal Reserve’s act of inflating the money supply. This created a bubble that burst, requiring the market to correct itself. Because Herbert Hoover and Franklin Roosevelt refused to allow the market to clean up the mess that the government had caused, the Depression ended up lasting 15-20 years instead of 1 year. This theory was articulated by economist Murray Rothbard in his book America’s Great Depression.
If the Austrian Theory of the Business Cycle is correct, than the “mainstream” economists are as absurdly wrong as their spiritual predecessors were in the 1920s. As the Federal Reserve has created a far larger bubble at the moment and it has become politically correct (for both Democrats and Republicans) to advocate government intervention to “fix” the problems, the possibility of a 2nd Depression exists. The best thing for the government to do would be to abolish the Federal Reserve. It would also help if they would repeal the 16th Amendment, killing that economically destructive income tax and if they would stop wasting money on disastrous “programs” and “services” such as the American Empire and the War on Drugs. There will be no end to the business cycle as long as We the People permit the government to create money out of thin air for the benefit of wealthy bankers and defense contractors.
No, I have no money to spend anyway. I figure now everyone will get a chance to experience what it’s like to be poor. Except for the rich, as usual, but hopefully they will lose some money in the process, yay!
Big things were 1)Dust bowl 2)No federal insured bank accounts 3)banks loaned money they didn’t have so when people wanted to get their money and the bank couldn’t produce it – it caused a panic and everyone took their money out 4)It was world wide
Had nothing to do with distribution of wealth as you alluded too.
1929 and now, short trading by high roller insiders. Including Fannie Mae and Freddie Mac, Obama’s good buddies.
What made the great depression “great” was the mis-management of the money supply. The Federal Reserve allowed the money supply to shrink by one-third from 1929 to 1933. The other factor was the Smoot-Hawley Tariff Act (enacted June 17, 1930) which worsened the depression by seriously reducing international trade and causing retaliatory tariffs.
You missed the two biggest factors.
Yahoo, I would love it if free speech were allowed on your site. I hate getting reported for innocent questions, yet vile questions remain posted for days.
Oh, but I forgot that you guys don’t care about what I want. Well I don’t care about you either, thanks.
Do you mean “a horrible drought”? I don’t think nasty drinks or unpleasant currents of air in Britain were contributory causes of the Great Depression.
It’s true that the circumstances leading to today’s economic crisis are not the same as those which preceded the Great Depression. Still, wouldn’t it be remarkable if every detail were identical? We have much to learn from the past but, even when history repeats itself, we cannot expect it to do so verbatim.
As you mentioned, financial markets are more thoroughly regulated today than they were in the ’20s. But the economy is also far more complex than it was in those days.
Economics is not at all an exact science; its theories are based in philosophy and its methods are more statistical than empirical. Also, business managers are innovative, and the best among them are continually inventing ingenious and ever more abstract investment schemes–derivative
Lacking historical data, economists can only speculate about the effects of these newfangled financial instruments–and, as any investor knows, speculation has its risks. Even New York Fed CEO Timothy F. Geithner said, in regard to the mini-crash of 1997-99, “There is a lot we do not understand about these challenges …”
This is not to suggest that economists are negligent or clueless. They diligently collect and analyze their data, and they know how to learn things from it. (Geithner went on to say, “… but we know more today than we once did.”)
It’s just that the market is a complicated and chaotic system. Sure, there’s a delay between the introduction of each innovative financial instrument and the availability of data by which it can be evaluated–but worse, the mathematical tools and computational power necessary to model its cumulative effect–as all these derivatives and abstract funds interact–don’t exist.
If economists can only make educated guesses about the economy, then it’s unreasonable to expect them to devise completely adequate regulatory mechanisms. Sooner or later, they guess wrong–and then bad things happen.
Like all of us, I hope that the current economic crisis will turn out to be less dire than the Great Depression. However, the fact that the unemployment rate is at 6 percent (noting that the percentage of adult men who are not working is more than twice that figure) seems like a flimsy mast to cling to during this storm.
Darn, I wish this blog would allow edits!
Your info was interesting, but I am such a cynic when it come to this issue. I even reached to point were I don’t even trust research to be unmanipulated or altered to fit the people who are in government. The media, both viewed and written has been given to us in manner that is acceptable to the upper level of government and the fiancally well off. We are told what they want us to know, presented in a manner that reflects their agenda. We still aren’t given all the info on things that happen decades ago. Look at what they created thru out the last eight years. I’m not a socialist either, I believe both parties are just as corrupt. Of course we could have been well on our way to this horrible situation long before this. I really wonder how much money or whatnot THEY lost during this time. I’d bet that even tho the state of the stock market came as a surpise for the average Joe or Jane, it wasn’t a big surpise for them. I would even go as far as to say they made sure their assets where protected before it hit us. As far as the “rules” that are in place now that were not there back in the 1930’s, I think it a big joke, a laugh at 90% of the U.S. population. The stock market has been made to be a corrupt instrument that is no longer what it was intended to be. Its turned into a devise that gets the rich, richer and takes John Q. Public’s meger investments and looses them with unethical trading tactics. Short selling? Please someone tell me how this is an investment and not a way to just “bet” on who is going to be a loser sooner or later. “Investing” in pink sheets? We continue to allow buying of shares in companies that don’t even exist 60% of the time. I recently heard someone refer to it as a casino where the house wins 90% of the time. I really don’t have a indepth knowledge of the great depression, but I do know the misery is very real for many of us, and was long before this weeks activities. I have been telling anyone that cared to listen that we haven’t been in a recession, we are in a depression, I don’t care what the measuring stick for that is. I lived thru recession, and it wasn’t like this. As far as this being as bad as the 1930’s, I think alot of us are one step away from the soup line. I also don’t hold out much hope for the bandaid they applied to do any real long term repair. I hate to sound so unhopeful, but I beleive it can not be fixed. They would have to burn it down, and start out fresh. The chances of this happening is slim and none, since the very ones that would have to do this rebuilding are the very ones that created it to start with. Why rebuild something that is working so well for them? As far as the conditions being as perfect as they were then I wonder if we are living in the same country? I believe that all the conditions are as perfect for the storm as they were then. I’m thinking about my neighborhood and I see three unemployeed people out of ten. That would equal 30% to me, I suppose it could be a just a fluke, but since I don’t trust the numbers the government give us I think 6% might be an understatement. But they can’t contrive statistics or polls or numbers…….can they? I really enjoyed your post, but there is a saying about “don’t believe everything you read”. I wasn’t always so distrustful of our government, but this started for me back when we “elected” our first dictator, Bush. I won’t get started on this since it is a whole other issue entirely. I know some might think I am some far left democrate, but I’ve always been a republican. That is til the evening after I voted, and watched the events fold out in Florida, ect. I am now an independant, and what a waste of a vote Anyway I am getting off track. I’m no economist, but if it looks like a duck and quacks like a duck, it’s a duck. I do continue to pray for all those who have had a hand in this mess, and those who’s hands are going to go into it. Mike thanks for the info, and let all hope your right, because I really want to be wrong. Please excuse any spelling or grammer errors as that is not my area of expertise either!
See you in the soup lines (LOL)!
Read “The Creature from Jekyl Island.”
Only then will you truely understand how the Depression occured and its ties to our current situation.
The more your government interfers with free markets the more we will have taxpayers paying to keep companies going that should go out of business.
My mother lived during the depression, she said this is the worst the economy has been since that time. We will see how much more stress this country can handle. I believe this is only the tip of the iceburg and the worst is yet to come
I would suggest you do some reading about the Smoot Hawley Tarriff Act of 1930 which ignited a worldwide trade war. It’s right out of Senator Obama’s “bring American jobs home” playbook.
Then you need to read about “leverage” as it applies to Wall Street. It was leverage that caused the “crash” of 1929 and it was leverage that brought down Bear Sterns, Merrill Lynch, Lehman Brothers and is about to bring down other investment banks. When you leverage $30 or $35 for each actual $1 of investment capital it’s a disaster waiting to happen, if the market turns against you, and that’s what these guys did.
Actually, I was unaware of these late happenings and kind of had to look for them on the internet but that shows me that I’ve learned to tune them out. Every single news broadcast there is always talk of high gas prices, the stock market losing points and unemployment. It’s a bad thing but I’ve put a deaf ear to it because I’m sick of it. That’s all I hear and I wanna hear something good in difference.
I have to tell you though, I was wondering if we were going to enter something similar when I read the title of the blog, it’s scary but it’s a little possible.
Well actually some of the factors that were positive as the US entered the great depression are negative now. Back then we had a budget surplus. Now we have a budget debt that is around 9 trillion dollars and increasing rapidly. Back then our currency was backed by precious metals; now it is not. We had a trade surplus then and we have a trade deficit now.
Our government merely has delayed the collapse by buying up, forcing the sale of or aiding ailing banks. They know if the banks fail then the assetts will be reevaluated or sold and then it will be discovered that the assetts of our banks are even less than thought.
The housing bubble is far from over… prices have a long way to go down once the credit crunch hits.
In the last depression the dollar was still the major world currency with no large alternative…. but now there is the Euro.
So something on par with the 1930s is unlikely… probably it will be worse.
The communists are laughing in thier graves. The state is controlling capital markets in a “democracy” worse factors seem evident as global warming ruins harvests inflating food prices. The soon to be super powers China and India need fossil fuels increasing demand on oil, inflating prices. Depression of thirtys coming to us now, might not be as far fetched as we believe.
GREED, just like what is the root cause of most problems with the economy. One person or group found a way to take advantage of others and chose to do so.
Toss all the lying and cheating corporate executives in maximum security prison general population for 20 years when they get caught. Let them feel the pain investors feel for a while.
“a horrible draught ” would be a WIND! you mean a “DROUGHT”…
“Times have, of course, changed. In the 1920s, there was far less government regulation. The stock market was much more a “wild west.” Everybody was playing, but there weren’t very many rules.”
You obviously don’t know much about what US legislation (brought in by McCain’s cronies) was passed in 1999 that ‘poisoned the well’ by undoing many of the safeguards brought in after The Great Depression then…
Do much for your ‘erudite study’…
And I’m JUST a non-USA person…
Think that’s where we’re heading now. Basically, it looks like the government has no choice but to bail out all these banks by paying all their bad debts. Where are they going to get the half billion to 1.5 trillion to do this?? Print money and then dip into our savings accounts. Basically we’re headed for a crazy inflation and our money is going to be worth about as much as monopoly money. Get ready to see crap hit the fan.
It may not become the great Depression, but we certainly are going into a dark period finacially. and the hurricanes southeast and floodings in the Midwest don’t help much. I believe this is the worst gas prices and milk prices. If I could I’d buy a cow and stock in futures for building nuclear plants.
During the great depression it seemed no one had enough money, so the banks said “Hey! lets just print more!” they did, so there was all of this cash flying around, but no gold in the banks to back it up.
this led to inflation, prices had to go up because the dollar wasnt worth one hundred cents any more,
this led to wacky behavior, like citizens burning money in their fire places because it was actually cheaper than buying fire wood.
=]
i havent really been paying attention to the economy of today, but i can tell you that i just spent like 3 months trying to find a job that would pay my $8 an hour!
Interestingly, the sense that things are different now and “something on par with the misery of the 1930s is unlikely” adds another parallel to the Great Depression. Financial analysts at the time were largely optimistic throughout the worst years of the Depression. Every few months they claimed that the worst was over. (http://www.iraq-war.ru/article/120692) The Assistant Secretary of Congress even proclaimed that the Depression was over in 1931; in actuality it was about to head into one of the worst years.
Of course, there are many differences between today and the 30s that make a repeat of the Great Depression unlikely, as you said. But the sense of optimism during both economic crises is striking.
Actually, the Great Depression was caused entirely by government monetary, tax, trade, and regulatory policies.
In some ways you may be right. In other ways the experts may be totally wrong. Being grandchildren who had grandparents who lived through it I’ll say a few things: 1). We don’t have family farms, land, gardening space to survive by ourselves 2). Credit crunch 3). Soon a falling dollar 4). Most people don’t ‘own’ their homes. If you owe 1 cent on mortgage and don’t have ‘Title’ in your hands you don’t own it. I worked for mortgage loan company. 5). Interest rates are really legalized extortion. 6). Inflation has only just begun on small goods, the large goods like house and auto have been inflated beyond what people will ever be able to pay off. Again, no ‘ownership’. 7). Government itself 10 trillion in debt and counting…. 8). Laws in place that protect banks and finance and very little for average american. 9). Power in hands of ‘haves’ vs. ‘have nots’ 10. American people owe everything and own precious little. Keep adding this and much more and yes, WORSE than a great depression. However, better because we’ll have food, clothes, and roof of some type over our heads.
Your comments are on the mark for pertaining to the crash of 29.
Today we are builiding the same house. Placing money that is artifical is going to reap its ugly head 2 or maybe 3 fold. To encourge spending of what we don’t have or able to pay for is only going to make this situation more devastating and longer to recover.
You have to remember that credit in the 20’s on consumer spending was generally site specific. Meaning Ma and Pa Grocery, direct store purchases etc. Credit cards are Global which compounds your analogy of World Crisis.
The Fed is currently 500 billion before these bail outs in the red. Printing more money, (what Eureope did in the 20’s) led to disaster.
The saying if we don’t learn from History we need to repeat it.
President Reagan pushed for Goverment deregulation the problem of today did not happen overnight. Giving or not watching or restricting these Barons of great wealth was the worst thing we could do. The idea of making the Rich Richer and it would trickel down to the poor was the biggest bullshit idea ever sold to America.
The current crisis seems to have stemmed mostly from the efforts to provide affordable housing coupled with low interest rates and the ease of institutions to dump bad or ill-advised loans off on Fannie Mae, (FNM) & Freddie Mac, (FRE) because the Gov’t would guarantee these debts. FNM executives where interested in raising earnings for the sake of their own bonuses, they where inflating their balance sheets and they where lobbying congress heavily to expand their lending capabilities, which they recieved because who wants to look like they are against affordable housing?
Throw in low interest rates and you get a rush of people borrowing easy money and buying homes. A rush of people buying homes makes home prices rise which makes it easier to borrow against the equity in your home, (more easy money). Inevitably, the growth cannot continue, the bubble bursts and the US Treasury department is the only place to turn when a FNM & FRE start to lose steam. Companies like AIG, Lehman, Bear Stearns etc. where all deep into the sub-prime market in one way or another and this failure was directly what lead to their hardships, demise or cheap takeover. The Gov’t had little choice but to do what they did and hopefully they can make the money back with interest for the tax-payers. My concern is that the problem gets addressed properly so that the mis-guided efforts to give everyone a mortgage whether they can afford one or not, and the guarantee of the US to pay for FNM or FRE’s bad decisions can be curbed.
I agree that the Great Depression was caused by a number of factors. Those you listed look like they were written by a socialist/historian.
Speculation in the stock market caused the crash. The bubble burst just like it did during the .com runup in the 1990’s and the housing runup in this century.
Too much government interference in private enterprise, and too much government intervention, after the crash, caused and extended the Depression.
Government is usually the problem when things go wrong. Government is never the solution after things go wrong.
Great post! Everyone throws around words like depression as though it’s the same now as it was almost a century ago. I’m happy to know that we’re unlikely to experience another crash.
Two things
If we were still using 1929 metrics for unemployment the unemployment rate would be about 15% (not 6)
And, in 1929 our national debt was not 4 times our GDP during a time our currency was based on gold, not a fiat money.
While we wont see soup lines like 1932, we are already seeing massive dispair where food banks are now being overwhelmed by people who once donated to them. The same element of people who suffered in the depression will suffer during the coming collapse. Today, we just have more people who fall into the class of people who didn’t suffer during the depression.
hi
Mike, a little more research is needed. The Great Depression was also a direct result of WW1 (also known as “The Great War”. People back in the day were simply happy and money was no object to them. The inevitable crash resulted. Partly due to wild spending and speculation, and partly due to government policy.
Best bone up on your history Pal.
John McCain predicted this 2 year ago.
What most people don’t know is Barack Obama has surrounded himself with people from the Black Congressiona Caucus, Fannie Mae, Freddy Mac and ACORN who manipulated and pressured Congress to NOT reform Fannie Mae and Freddie Mac.
People are correct when to question Obama’s judgement.
McCain:
“I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.”
Source: the Congressional Record.
As crazy as it may sound, the Federal Reserve which is a completely private entity accountable to no-one, created the circumstances and in effect caused the great crash on purpose. It was a deliberate act to seize assets and intentionally cause havoc. When you control the worlds money supply, who can do whatever you want. At least, that’s the clearly stated view of current Fed Chairman Ben Bernanke.
Read this article for just one perspective from the current Fed Chariman. http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=59405
The Federal Reserve Bank is a private corperation that prints our money and charges us interest to use it creating eternal debt and their biggest profit is WAR. They have called in the loans and interest causing resession. Watch zeitgeistmovie.com
and DARE THE TRUTH Peaceout
The only thing I can afford to invest in these days is my gas tank. And that comes at the expense of my refrigerator.
Mike, wealth isn’t distributed, it’s earned. Other than the typical liberal class warfare against the successful, your post is okay. Not great, but okay.
I am not as agressive in my buying but an agressive in finding out who are the parent companies are. This is just the beginning of a push to regulate the markets and move us more towards goverment control. That is not good. Some people think so but I have seen goverment control other aspects of life and the price always goes up and freedoms always go down. This is only the beginning of controls that will not allow us the freedom to invest our money as we want but as we are told.
Modern Definitions: RECESSION is when your neighbor loses his job. DEPRESSION is when you lose your job..
Great information – I enjoyed reading and learning some things I didn’t know. I’m definitely more caution now. This whole situation has me quite nervous, not that I have that much invested, but still I’d hate to loose the little I’ve gathered. What does everyone feel this years presidential election has on the current market situation, if any/
Cautious
i still invest the same ive been doing by putting my money in gold and silver. Because of the banks leverage the government is inflating the dollar so they can bail them out. Which makes your money go down
hay white sup
It has always amazed me when people think the Crash of 1929 caused the Great Depression. The stock market is nothing more than a mirrored image of the economy with future expectations built in. People who believe this must also believe its the mirrors fault for my sister being ugly. DONT BLAME THE MIRROR!!! There were many,many things that went wrong during this peroid that caused the depression. The concentration of wealth, the farm draught, lack of government regulations and zero help for the unemployed all weighed heavily during this timeframe. (There are more). If you truly want to compare todays crisis with that of the 1930’s, you have to remember inflation rates DECLINED about 25% during the early 30’s. Today people complain because prices of gas, food, everything for that matter is getting ever more expensive to purchase. Back then prices were falling, falling, falling on everything and still nobody had any money to purchase things. BIG DIFFERENCE from today and the Great Depression.
I am more careful because we don’t know what the future holds. I have a family member who is about to buy his first home in Calif. I advised him to seriously consider waiting 6-12 months because the public still doesn’t know how this bail out will affect real estate. I have heard it said that possibly next yr. the foreclosures could be sold for 30-50 cents on the dollar. If that’s the case, I believe property values will further correct themselves and if they open up the possibility of the public buying these foreclosures for that reduced price, it will be a really good bargain and healthy for the economy.
I totally agree with you Mike.
this book will tell you why?
Bankers recalling penny stocks all at once.
Penny stocks were something u could buy by putting down a small % then sell but the bank at any time could it back in.
they need to get gas prices down, DRILL NOW
For over six months, I’ve been predicting (on this YaHoo! forum) that Americans will see the worst economic depression in its history by October, 2009.
With the government’s latest of $700 billion bail-out to avoid home foreclosures, we have seen corporate welfare at its most heinous. No government can continue to ‘bail-out’ its banks, mortgage lenders, stock brokers and market specualtors; and it’s obscene and unethical to do that while providing little assistance to people in this country who are poor, sick, elderly, underprivileged, disadvantaged, disabled, homeless or hungry. Our Constitution is dedicated to “we the people”, not “we the corporations”.
Alexander Tyler once said: “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, followed by a dictatorship”. Tyler also noted that the average age of the world’s greatest civilizations has always been about 200 years. The U.S.A. is on year 232, and we are staring despotism in the face, as a handful of wealthy elitists, industrialists, oil barons and power brokers aim to become wealthier and more powerful.
FDR said: “The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than the democratic state itself. That, in its essence, is fascism – ownership of government by an individual, by a group, or by any controlling private power”.
We are now entering the final stages of such an economic catastrophe, where the power will be in the hands of a government controlled by private interests instead of a government controlled by its citizenry.
Thomas Jefferson once said: “When people fear the government, it is tyranny. when government fears the people, it is liberty”.
We are slowly relinquishing our liberty to an elite community of wealthy and powerful individuals or organizations. Within a generation – if something doesn’t change – our grandchildren and great-grandchildren could be living in the same kinds of conditions we now see in the Dominican Republic and Haiti. -RKO- 09/20/08
Mike another factor and i’ve read is a major factor was our protectionism. Greed was certainly a problem but always is like my Grand Father always told me no matter what is being offered by any one or a promise just follow the money trail. You might have also added the Government had little influence on ending the great depression but it was the start of world war two that brought a end and a national debt much larger in comparison than we have today.
Well, I hate to be a naysayer, but from what you found except for the unemployment rate, which by today’s standard I’d have to say we’re pretty much headed for another depression and especially if Obama is elected! I remember my elders talking about the Depression and what the middle class all felt caused it. Same thing, different time.
I suppose like millions of Americans, I’m very nervous and suspicious. When I see financial advisors on the evening news saying not to panic, we’ll ride this out, it makes me wonder where they have their money. It’s not just the events of this past week, either. I’ve seen changes over the past 6 months or more that have made me stop and think “hmmm, that can’t be good…” I’ve been predicting we’re going to see another depression, hopefully not as bad as the one of 1929, but a bad one none-the-less. I sure hope I’m wrong…
The base cause is the same today as it was then.
Too much of the total wealth concentrated in too
few hands.
Look for a devaluation of the Dollar in some form.
Grease up! Your savings in dollars are toast.
hey nice one… Have u read ‘The Great Crash’ John Kenneth Galbraith
Well that’s good to know…
I am on my “wait and see” mode on all these things. I have high expectations on the next USA President. That he will be able to come up with solutions with the least pain on all sectors.
This was a very informative article..I knew some, but not all of your data.
The last month has been one of great turmoil in our great USA. With the hurricanes that struck and the ones that missed, and now the Economic Crisis, we all feel as though we have been through the Wringer.
Am I worried? Yes! I have to be. I only have 10 years to retirement. I can’t afford to loose my 401K, Pension, Job, Medical Coverage, or even Social Security!
Deregulation in concept is fine, but it didn’t work in the Financial Arena. The reason is GREED! Look at it this way: A store is never locked up at night because the owner has faith that no one will come and take what isn’t theirs! The police are called, but by then it is too late. All the money has been taken!
This is what happened! Regulation has to come back so we are never again Robbed Blind!
I always thought it was because my mom was born. Since 1929 , when she was born, the whole world has been depressed..lol
The events of the last couple of weeks are no surprise. They are actually a couple of years overdue.
The reason is the similarities between now and the 1920’s.
Greed is at the center of it all. There was excessive credit issued in the 20’s just like the last couple of decades. Since assets seemingly climb in price forever, bank officials then took depositors money and gambled it in the market. When it crashed, deposit money was lost. Same thing now- only difference is deposit money was bet on housing. The govt is trying to hide the severity of it by spreading the problem around. There is no free lunch- we will pay for the corporate deceit and greed, and individual stupidity, with both deflation and inflation. Too many liars in govt and federal reserve. Bunch of thieving scumbags. Its going to get worse.
Interesting, and I do believe things will get worse before getting better. Buffet has been right on about this coming for some time. BTY the spelling is drought.
Yeah but the rest of the world was underdeveloped or mirred in Communism now with the global economy, the United States doesn’t carry the same weight today.
i think that history is repeating itself
but i really hope that this economic crisis does not turn into another Great Depression
With classic hindsight I bemoan not listening to that little voice that said “get conservative! Re-Balance” back in October 2007, Dow 14,000. Gad it’s been a year now. I did throttle back by Spring – put a little back cash but substantially remained in stocks.
After the events of the past week I’ve finally gone back “all in”. Albeit now I’m weighting with an eye on Dividends thinking that – at least there will be those (cross fingers) even if the underlying stocks still swing some more.
I guess – that’s finally back to my normally aggressive posture.
I see the reports that say the GDP continues to grow – not even a recession. It’s hard to believe that however, reading the headlines and watching the news.
My time horizon is still long – and so am I.
In summary, I’ve ridden it out, mostly, and expect to continue same.
A lot of job anxiety though.
Since the stock market crash of 29, the rich has gotten richer while the poor has gotten poorer.
The volatility of our economy is still based a lot on projected earnings. Look at what Enron did, and of late the American Italian Pasta Company. (I believe they call it “cooking the books”.)
Most poor people don’t feel large companies book cooking affects them. When they see CEO’s falling and fortune 500 companies going broke they say “no better for them”, but, they need to care. These corporations and special interest groups directly effect how much we pay as consumers for goods, not to mention how long we will have to pay the exorbitant prices, for gas, food education, housing etc.
When stock prices drop our retirement and 401 k’s, money markets are all negatively affected. When banks fail, it is harder to gain access to credit. When homes get foreclosed on, it directly affects your property value, since property values are determined by what the most like property sold for within the past 12 months. Example, I bought a home in 2005 and it apprasied for 205,000.00 at time of purchase. When I got ready to refinance my home in 2007 it apprasied at 150,000.00, because several homes within a 1 mile radius of mine were foreclosed on, and the banks sold them to investors for way below marklet value, just to get them out of their portfolios.
I’ve spoken to some of the over 50 crowd who although diversified in their holdings, were sweating bullets last week. Heck the very day the Dow opened at – 400 some decided to move investments around, and some decided to liquidate completely. Older people don’t trust banks as much as the younger set. Why ?, Bcause they remember the depression, or have a relative pretty close to them who does. Some of these people still have mattress funds. It doesn’t matter that the FDIC is now in place to protect you. What happens if you have over the amount that is insured by the FDIC they ask?
We are mainly focused on the economic impact the stock market has on us, but what about the sociological impact? When Merrill Lynch was purchased by Bank of America, a lot of those highly paid Merrill Lynch employees are going to be either demoted or let go completely. Everyone knows banks are big on titles but don’t pay very much. When your income decreases, your lifestyle will have to decrease to meet the newly lowered income. Voila! The rich are no longer getting richer while the poor gets poorer The rich are now getting poorer too!. We have more depressed Americans than ever before. Stock hasn’t dropped very much in pharmaceuticals has it????? Remember …during the depression some investors were leaping from high rise windows in
dispair. The more you have, the more you have to lose WE MUST not forget the past or we are bound to repeat it.
So far we have a volatile stock market, reduced consumer spending, uneven distribution of wealth, and bank failures due to the housing crisis.
(Opinion here) I think there’s recovery ahead but it’s going to be at least another year. It also depends on our next president, too.
I thinks it is really sad that America is falling in to the deep treads that we finally crawled out of. Ironically, I am homeschooling, and the section of my curiculum I am in currently working is on the Great Depression, and it is very creppy! People don’t understand the impact of their actions and need to take things more serious. I know, I don’t know all of the stories, I mean, I am only 16, but that is pretty sad when a 16 year-old is more worried about her economy than the adults around her…
It is no joke that history repeats itself, sadly…
To many people LIVIN’ HIGH ON THE HOG when they could not really afford it. People in LENDING POSITIONS should try and PROTECT THE STUPID. My one lesson when I was young was this I HAD A RICH UNCLE (made his money during WW 2 and after in the coal stip mining business in western Penna.) I ONCE ASK HIM FOR A LOAN,,HE SAID I WILL HELP YOU BORROW “DOUBLE” WHAT YOU CAN SAVE UP FOR YOURSELF!! I was at his house right after Pres.Kennedy got shot and I was all down about it. I’ll never forget what he said to me.’HOW DO YOU KNOW THAT THEY DIDN’T HAVE SHOT THAT S.O.B.” I ask him to explain and he said someday IT WILL COME OUT.
I don’t think there’s a big crisis as for our economy. I do believe it could be better. However, we’ve been used to have a well and high established economy from the year 1998 or so . For the past 6 years it has been dropping. But, this doesn’t mean that we have a bad economy, now, or that we’re going to a Great Deppression. It is because the economy was getting higher, that people could buy their houses easier, and spend with more frequency. Now, this is getting down, that people may freak out, thinking that we’re on a crisis. If the economy keeps going down, then I do believe that we’re getting in a crisis. But, as for now, we’re at a point of a normal economy, and we think is bad because we are used to a better one. We have lived the years of the best economy ever, and now that it is going down we think it is bad. We have to get used to the normal, but not freak out. Although it can be higher, and even higher than we have seen. Hope it gets better.
No mention of margin? No mention of the Federal Reserve, the head of the snake?
Rubbish.
Mike,
GREAT TOPIC!! I have been arguing this point with many people over the last few months and I am ecstatic to see this posted here. The media is married to the use of hyperbole’s because that’s what sells. It is common sense, if the media was to come out and say well you know this is just the nature of the beast that we live in, capitalism is cyclical, and it has its ups and downs people would click off their TV sets and go about their business. But when they start using words like “great depression” or “worst financial crisis” or exaggerate as much as they can people stay glued to their tv sets. Again great topic!
I think it will be worse than the great depression, and anybody who thinks otherwise should take off the rose colored glasses they have on.
Being depressed is a medical condition that requires treatment not available in the 1930’s. Today, there is medicine to alter the effects of being depressed. Get with the times.
I am still trying to figure it out. I just don’t know how we can keep paying for the war and all these bailouts.
I can tell you one thing good about the great depression that I recently learned. I was listening to a history channel report. The KKK was gaining much influence just before the great depression, and then when it hit, combined with laws that were being formed to battle this menace to society, they pretty much were obliterated except for the few die hards that still think that ideology of hate is somehow good. If it hadn’t been for the great depression, there is a possibility the KKK might have kept growing and might have more influence then they should over governmental affairs.
The party is over ..
cool.
i live in Deutschland, but it must be tough for americans?
Yahoo should have acted on our behalf………………
wow that’s kinda what’s happeneing now makes you wonder
A “horrible drought” surely? I know beer can be bad, but it’s hardly cause for a great depression!
I agree with you totally and believe that the stock market “crash” was more of a symptom of the sick US
economy at the time. What we see now is no doubt a result of the federal govt starting to offer a “guarantee” on mortgage loans an idea that backfired. Naturally it created a set of conditions(and persons) who abused that situation by their greed & immoral actions. Those men who are always there, ensuring that the poor stay poor (& get poorer) while the rich will stay rich & get richer). When in the history of capitolism has the federal govt stuck its snout so deeply in the business of what should be a “free market economy”. Thanks to the feds, we are now seeing conditions of a very sick economy again – being increased by the feds bailing out the very companies who took advantage of feds guarantees on mortgage loans up to where it stands today, that NO bank will issue a mortgage unless they can get a guarantee from the feds. At the grocery store I purchased grapes, a pint of strawberries & a loaf of bread – and the total cost was over $12.50. The Asian countries (esp China) are freaking out because American spending IS going to cease while we’re getting killed with a massive inflation.
I’m glad someone finally wrote about this. My brother and I were actually discussing it over lunch the other day and trying to figure out the differences or if we should be concerned.
Thanks for shedding some light on the subject, now I know where to begin my research.
This might seem like a partisan attack but so be it. I get so tired of the repeated inaccurate, partisan cliches that are arrogantly thrown out by the Republican right wing. “Democrats are a bunch of socialists who want big government bureaucracy to hold back small business.” That is just fear mongering that ignores the consequences of what happened during the great depression. In theory, little government and economic freedom sounds great but before the great depression economic instability and undue hardship has been a reality. Since the great depression, a F.D.R. did dramatically increase the bureaucracy but despite all the negative vitriol that has been expounded, it has benefited us greatly. Since deregulation has occurred in the late Reagan era, we have repeatedly had financial crisis. I think deregulation is good but the consequences never get mentioned. Even now, Republicans refuse to equate their ideology with the economic troubles of today or the cause of the great depression and how we have been able to advert another one since because of regulation and Keynesian economics.
The 1920s had seen Harding’s Teapot Dome, then Coolidge ’s isolationist policies, then finally, Hoover’s blunders. Three presidents in a row with different, but nearly equally bad economic policies.
In the last few decades have seen similar situations by similar presidents (Reagan, Bush 41, Bush 43). Clinton was able to raise the U.S. out of debt for a while, but the trend continued right on when Bush resumed the Reagan tax-cut/millitary spending economic policy.
I hate to sound partisan, but the Republican track record on economic policy is dismal. Ike was in fact, one of the best of any president in terms of economic growth. But he did inherit a very strong economy. But as I always say, results are results, and therefore I still believe that Ike was a good president (and he was, in most ways.)
i think the markets have been crashing since janurary and in july again we hit more lows and then just last week we hit the worst since 1987 i believe were headed toward another depression and what the goverment is doing now is only a temp solution and we will be faced with a crashing market once again the goverment cant do anything to stop this we might as well save every last penny now cause later we will need it to survive this world crash of all markets
I blame Prohibition…over $13 BILLION in lost tax revenue and 600x increase in spending by the ATF.
Mike,
I would suggest you research the progressive era. The American Dream is all about private ownership rights. A person that cares enough to go to college deserves greater reward than the high school dropout. Investors deserve to have rewards for the business they own and the service they provide. Very few Americans are still sustanance farmers. Things have changed ofer the last 150 years.
That said, when the gap between rich and poor is so wide that poor people can no longer afford to purchase food or fill up at a gas station, when the middle class has vanashid, the rich no longer can profit either.
It is wonderful the federal government is willing to bail out AIG and other large corporations, God knows I want to be able to insure my assets. I don’t know what I would do if Walmart goes under or any other large corporations. As a private entrepruner do you think the government will make a deal with me?
Who is going to pay for this bailout? I hope it is not the taxpayer that has already lost his home. If the rich want to stay rich the only way is if the working family can buy goods from their corporations and institutions.
There is always something to compare to. But the fact of the matter remains, that this is a totally different situation.
Yes there was a 25% unemployment rate, but the population was much smaller, so the numbers have to be adjusted. To top to that, the wages were a quarter an hour, since unions and labor groups were “Red”. The fact is is that people could not live off of the puny wages they were getting. So it’s not that the unemployment rate meant there were no jobs. There were plenty, but you had to be four miles beyond desperate to take them.
Secondly, the world was in a stagnant or lowering situation. When the entire world is experiencing a decrease as we are, then you can call it a depression. Because our well-being depends on Global Trade. Basically if China starts to stumble economically, call me.
And thirdly, it’s very scary when we owe 10 closing in on 11 trillion dollars to nations around the world. Back in the GD, we were only licking our own wounds. Imagine what would happen if China decided it wanted its money back. Then you could call it a Great Deperesion.
So except number 2, this is a far worse situation than the Great Depression. Why? Because we are blind as to what could happen. In the Great Depression people knew how bad it was. Right now, many people don’t even know that America is this in debt, and basically broke.
When the government decided to bail out those mortgage companies, they were in essesnce paying a mortgage bill with a credit card loan from another credit card.
The national economy has no money. And that’s why it’s scary. All it would take is for China to say, “we want our dough back right now” for our entire country to crumble economically.
Sure people are still living a happy life in comparison to the GD, but its the bigger picture that could hurt us. Just like the Housing Market was overlooked, and then came back to bite us, so too can happen now. Many people don’t see the global debt we owe, and it could be too late before it lashes out at us.
Nowadays the economy of the U.S. is much more closely linked to those of China, Japan and the E.U. Also, in the 1930s, there was no OPEC so the U.S. could depend on the flow of oil. If there had been a huge increase in the price of oil in the 1930s, things could have been even worse. President Roosevelt was not very successful at pulling the U.S. out of depression with his socialistic policies. He finally resorted to war with Japan to get our energies aroused and our minds off our petty economic troubles.
One additional factor is that in the 1930s, no other nation was prepared to knock the U.S. off its pedestal but today, China is chomping at the bit, prepared to walk over the U.S. I think the U.S. will have a couple of years of faltering economy and perhaps war with Iran and Russia (who are strong allies). If that happens, the U.S. will sink pretty low. If the U.S. can get out of the conflict in Iraq and keep out of other conflicts, happy days will return. If the U.S. has further wars, its economy will be devastated and the U.S. will drop very low in the pecking order, beholden to none other than China which will rise to the level of the absolute, undisputed single super power in the world.
The U.S. have always operated at least partially on the policy of aid to the downtrodden with some greed and corruption on the side. China operates solely on the policy of what is good for China. That is the secret to their rise. Nothing can stop them from world economic domination.
I think the last few weeks have taught me that the Bush Administration will put forth a plan to bail out the biggest, greediest, and formerly most profitable institutions in the USA, and place the burden on the already burdened taxpayer. Investments that shouldn’t be guaranteed/insured are getting just that. Meanwhile, people like me that have, in addition to stocks, put money in savings that is FDIC insured (and gotten smaller returns) are getting the shaft.
As for investing, I’m staying on the sidelines. I continue to dollar-cost-average with my 401(k) retirement, and keep it in stocks (I have 20+ years to go)… and I’m also sitting on cash that is FDIC insured. Though my government isn’t encouraging the latter at all.
things are close to the same instead of drought in large areas we are getting an over supply of rain however in some areas there is an drought. next a lot of companies are not laying off because their taxes have not gone up. but the Demo party wants to raise the taxes that companies pay increase them 200% if that happens then there will be alot of layoffs and an depression can happen.
I think wall street will stay afloat as long as the fed keeps pumping money into it, but prepare to see gold reach $2000/ounce in the near future.
I do agree that the second Great Depresion will come eventually, but I don’t think that the recent economics trouble will cause a world wide depression.
Well it definatley has me a little worried about how save our money is anymore. i will not be doing any investments in the near future. Right now I am waiting to see what is going to happen Washington Mutual, my bank. From what I hear, Chase might come in and buy them. I am though a little scared as to what might happen to my investments with them.
I think that America is going into a Great Depression. Recently, as of 9/20/08 banks and insurance form giants have went bankrupt. Stocks are down. People only buy 1.5%+ in 2008 for holiday shopping as in 2005 it was 3.5%. Banks such as Chase, WaMu, HSBC, Lehman, and the insurance firm giant AIG had to be bailed out by Feds. Also the order in which events happened that lead to the Great Depression are very very simmiliar, if not the same as the one’s duing the 1920’s. American’s must hope for help as they turn their attention at the current 2008 election, with the candidates Barack Obama and John Mcain.
‘The Great depression was caused by the cold’
war…
Our historians give very little in-depth reasons- for fear that the public will sense another depression coming around the bend.
the price of paying for war and rebuilding was immense and our gold standard being threatend by foul democracy..
In turn america’s republic foundations being shaken
by the peoples demand left our foundations for being a country
leaving the country to the demands of the people
caused our great depression.being involved and making our country a global police for other countries’ (problems)- left us in the same symptom shifted onto our country leaving us “no way out” complication..
It is not our goverment,it is the demand to the goverment of the people to navigate the decisions.
the amount of money we spend on war..instead of rasing our people up and maxiumizing our coutriespotiental..MCcarther,Our General was reported of saying this from a cold war friend of mine
MCcarther Patton was a brilliant general of our time
MCcarther Knew when to withdraw,His plans were not inhumane because those that object to using guns were told to withdraw..
.
The video at this link,put it all together on what caused the Depression.Very detailed.A must see.Of course it was Greed behind it all…..
http://www.zeitgeistmovie.com/
The stock market crash in both cases was caused by to few people having most of the money, leaving the rest of the people not being able to pay the bills.
We have the same conditions as the 1930’s, more farmers are growing fuel crops, not food, hoping for better profits. Banks would be going under if the government hadn’t saved them, and the stock market is being manipulated in the same ways.
The buy-outs that the ailing companies are hoping for are compounding the problem, by creating even more monopolies and therefore consolidating more of the money. Like portfolios, the U.S. ecconomy needs to be diversivide and the wealth more evenly spread amongst the people. Until that changes, the U.S.A. is going to continue to suffer.
Then we were feeding ourselves. Now we do not have the means to feed ourselves….That is not good.
Many more people survived the depression because they were able to grow a chicken and let the chick forage on wild food, this provided feathers for mattresses and pillows, stuffing for coats.
The eggs provided a income and food
The chickens were always butchered when they became unproductive to save food for the productive ones.
This to me is the difference of now and then.
People were allowed to have chickens even in the cities like chicago and new york.
There were things to eat.
Now the population is larger and we are not growing as much food.
We are in deep doodoo
One of the big causes of the great depression was that too many people were buying either consumer goods, or stocks, or houses, or cars, etc. and couldn’t afford them. So they took out loans and mortgages. All those loans and mortgages caused all the banks to take loans from other banks and basically, the whole economy crashed.
we will not have a second great depression, stocks
will recover. more is known about the stock
market that the 1920,s we have safeguards in place
now that did not exist then, plus the government
is willing to do what it takes to avoid a meltdown.
the rich were too rich and the poor too poor. Thus, there was too big of an extreme in the status quo.
Many of us in the midwest remember the “thirties”. FDR saved the day..Many went to bed at night hungry. My parent’s lost their money when the Bank closed. FDR’s programs establized banking controls, but many distrusted banks. FDR’s programs provided work.building National Parks etc. FDR’s commodity programs provided food for many. I remember receiving commodities at our rural school. Farm Programs were established to purchase livestock & grain. Loans were made available to purchase farms
Farm Programs still exist. Programs provided payments to farmers for conservation practices, tree planting, & erosion control measures. In some areas of the high plains, you can still see where dust accumulated on fence rows. The high plains in KS, NE, OK, Tx, Co & Wyo, were called the “Dust Bowl”. The clouds of dust blackened the sky, many children died of dust pneumonia. Car engines wouldn’t operate in the dust storms, the static electricity was so strong & the dust plugged the engines. FDR’s work programs were the WPA & the CCC. they provided work & income.
I was born in 1932, at the height of the Great Depression. My wealthy paternal grandfather’s general stores went broke a few years later because of it. He overbought because stock was cheap. His rural customers couldn’t settle their debts because of drought and collapse of the commodity markets, and others to whom he had loaned money without interest to help, just melted away. I believe greed, which drives consumer economics, also wrecks it. Curiously, the GP was solved mostly by World War 2, with all its wastage! This time the answer lies in attacking climate change – but that will happen only when there’s a visible profit in it. Stupidity and avoidance are second only to greed! Look around.
With all things considered It would be globally refreshing (financially & morally) for the world to start from the beginning again it would be such an even footing that trade (already established) would be more or less equal and we’d all have a larger piece of the pie.
No more wealthy 1 percent of the nation has your money anymore as time moved on you would be able to earn your way to the top, in a fairer and clearer way.
So a few years of hardship so-what, that would be nothing compared to what the world would be like to live in, when 3 percent of the population own All the global money, and begin to totally rule the poor peoples life completely, not for me thanks very much!
So bring on the depression, level the playing field, start afresh, we’d all learn to adjust.
My only hope is that possibly we’ll remember this time with a world with the power greed could do to destroy us, and never forget the pain that greed and the sheer selfishness of the rich can do to make us all suffer.
Will we remember?
Probably not!!! Once the spin doctors get going again the masses will begin to act like the herd in a field of cattle, and secumb to the wishes and wills of the rich and continue the process all over again.
And like a bag of idiots we call this humankind, you’d think we be far more evolved by now, obviously not, the caves we came from are not that away from us even after all those centuries.
Why can’t we ever seem to learn?
I just hope things get better, one thing back then is that poeple cared about everybody and not just them selves and they were allways willing to give that helping hand that is what my Grandma said and she was in the great depression oh and never buy anything you cant pay with in cash and in full
and treat everything you have like its the last thing you every get.
Honestly, I think that FDR’s New Deal, and the original creation of the Federal Reserve was a big stink waiting to happen.
It didn’t solve a problem, it just put a bandaid on it that equaled the visible social scale, while debt festered just beneath the surface at a now, MORE alarming rate. We’re all getting richer than we should on inflated capital that is going to be the ruin of us.
When the government says that they’re going to bail out several large corporations so it’s investors see their retirement funds to the tune of 7 billion, that really means that WE are.
Honestly, how many of us are going to have to scale back on our retirement plans or totally scrap them if this happens and the government actually taxes us to fund it?
And, if they DON’T tax us to fund it, what impact will this have on our children when our Country’s “creditors” finally either just quit lending to support our habits, or come knocking down doors because they’re sick of us not paying up.
Honestly, I’m sick of seeing so many people ignore the financial crisis we’re in, and continue to get credit cards, bad home loans, etc… while thinking that they’re socially conscious because they have cloth shopping bags and drive a Prius.
Our debt is a bigger problem than global climate change at this point, In my opinion.
Those that make bad decisions (investors, those that get bad loans, CEO’s of the corporations that MADE the loans, etc…) should suffer the consequenses without a massive societal bailout, and forcing all of the rest of us to pay up too. We’re heading to communism at 100 mph.
No soup lines this time? Ha! ALREADY MATIE!
You obviously don’t know about the current “Tent Cities” of those who have already lost their homes – Police issuing colour coded bracelets to sort out those that will be fed from those that will be driven out of the cities…
Google ‘tent city’ in the news reports…
There’s no way we could fall into another state of such economic distress as the Great Depression because today, we have certain safety plans and systems set up by the government to fall back on.
I think the government is just trying to hide the obvious from us, like always.
I don’t really feel this is even an option. The Depression was during a time of mass espansion, confusion and over all quick fixes. The time have changed drastically. With technology, we can only make a big turn around. Not to mention, the rest of the worlds economy is on the up and up. People are always going to see doom and gloom in life, it is eminent. The twenties and thirties were a rough time for the United States. There are so many more job fields in our modern era not to mention, the rules and regulations are tighter then ever. Another depression will never happen in today’s economic playing field.
Arm your yourself America we are going down the tubes and you may need to protect your family and home! We need to take the oil in Iraq to pay the debt that they owe us for all the billions we have spent. Look at history all empires come to a end ours is nearing!
My take is this! Today as then, it was the clever and immoral greed-driven rich or wanna-be-rich people making money by chasing money rather than making it by providing real goods and services needed by human beings and making society work for everybody!
In both cases the people in gov’t failed to act before the pyramids and ponzi schemes all built on shadowy leverage schemes and OPM (”Other People’s Money”)
Hopefully, this time the crooks, like the ones we saw at Enron and Worldcom will be brought to justice by the media, if not the law courts. And laissez-faire free marketeers will accept the need for wholistic regulations based on the promotion of the common good now and long-term.
In both cases, our expectations and our personal demnds exceeded our economc means and our ethical maturity as a nation!
There are several explanations for what happened but the most obvious conclusion is that it was the confluence of several shortsighted and commiserating factors. Three main themes emerge: historical factors, central bank policies, and political decision making. For the purposes of this discussion the focus will be on the United States.
The US in the 1920’s: Buying into the Boom
The 1929 stock market crash marked the beginning of the Depression. Prior to the crash the stock market had been an important source of funding for industry; thus the crash itself was a contributing factor to the downturn as well as a harbinger of things to come. Since stock prices are based on estimates of future earnings potential, the stock market performance of the 1920’s tells a story of runaway optimism for the future. When it peaked a few weeks before the crash, The Dow Jones had risen 597% over the previous 8 years. It was soon to become a symbol of runaway pessimism.
The freeing of capital from government use to commercial use following World War I caused commodity prices to inflate. In 1920, Ben Strong of the US Federal Reserve Bank of New York raised interest rates sharply to prevent inflation. This caused a recession and the stock market to fall. Once hard assets like commodities and real estate were no longer rising in price, money began to pour into stocks and bonds. The Dow started climbing from its low at 63.90 in 1921 and rose 150% over the four years to 1925.
According to Ron Chernow, in “The House of Morgan”, It was in 1925 that Ben Strong made a secret commitment to Montague Norman, Governor of the Bank of England, to help England reinstate the Gold Standard. This action would later be shown to have undermined the British economy but the Pound had been the main medium of international exchange at that time and it was felt to be in everyone’s interest to have it be exchangeable for gold. With moral support from the US Treasury, Strong chose to help strengthen the value of the Pound by depressing US interest rates. This depressed the value of the US Dollar and caused the already robust economy to boom.
It was suddenly cheaper to borrow money to invest in the stock market (called margin investing). Since the Dow had risen steadily since 1921, “small investors leapt giddily into the stock market in large numbers”. The margin requirement at that time was only 10%, meaning you could buy $10,000 worth of stock with only $1,000 down, borrowing the rest. With artificially low interest rates and a booming economy people and companies were more apt than ever to invest in grandiose business expansions and over-priced stocks. Mergers and acquisitions soared.
In 1927, Britain ran into trouble with its gold standard again and Ben Strong lowered US interest rates in sympathy for a second time. This ignited the boom into the speculative frenzy that brought the market to its peak on September 3, 1929. It was like pouring gasoline onto a fire – the flames rose up, no lasting fuel was added, but the economy sure looked great.
Ben Strong died in October 1928. George Harrison, his successor immediately lobbied for higher interest rates to cool the speculative fervor. Rates were finally raised 1% in August of 1929, but by then it was way too late. The Dow peaked at 381.17.
The market and the economy had buoyed itself from one source of hope to the next for a whole decade. First it was the end of war-related inflation and booming exports for war reparations, next artificially low interest rates in 1925 and 1927 and booming exports due to a reduced value of the Dollar vs. the Pound. There were major tax reductions instituted by the Republicans under Hoover and finally in June of 1929 an international accord was struck with the Germans (albeit short-lived) over the financing of war reparations, a major issue of the decade.
By Monday, October 28, 1929 the Dow had fallen 20% to 300. It fell 40 more points that day and another 30 on Tuesday (Tragic Tuesday) to reach a temporary bottom at 230.07. It was down 40% from the peak 56 days earlier.
George Harrison bravely stepped in to provide tremendous amounts of credit to the banking system. This action prevented immediate bank failures and bankruptcies and a total collapse. The market recovered a good bit of ground but began to fall again before year-end. By mid-1930 this liberal credit policy was to be reversed affecting the money supply crisis discussed below.
In early 1930, there were 60 bank failures per month in the US but when the Fed tightened its purse strings, things got much worse. 254 banks failed in November and 344 in December of 1930. Among these was the Bank of the United States, with 450,000 depositors it was the fourth largest bank in New York. Although it was a private bank, “The biggest bank failure in American history, the Bank of the United States bankruptcy fed a psychology of fear that gripped depositors across the country.”
In spite of further tax cuts, public works programs and optimistic speeches, spending and thus economic activity just kept going down. The stock market would make temporary recoveries, sucking buyers in, only to free fall again. The Dow finally hit bottom at the level of 41.22 on July 8, 1932, 10.5% of its peak three years prior.
Interestingly, various bankers, government officials, and academics chose this three-year period to expound righteous advocacy of personal, corporate, and governmental frugality and restraint. “Leadership” that was so lacking when it could have helped in the frenetic 1920s. John Maynard Keynes, the famous British economist whose economic stabilization theories would greatly influence the recovery in years to come, however, warned such austerity would only deepen the depression. As we will see, truly it did.
most people think the most comon is that the grate depression was caused by a marcket crassh just like the one know. this happens because we are a consumers marcket.
I believe it would be prudent for one and all to stay the long haul with our investments to assist in maintaining a stable economy. It may also be wise to learn to live within our means as our lifestyles and liberal financial resources available to each and everyone of us tend to get us in over our heads finincially. Gotta know when to say “no”. “no” to credit card offers, “no” to buying things such as car’s and homes without knowing we can afford them. Start saving more of our resources and living frugually. Diversity is in my opinion a key factor here. Don’t place all of our eggs in one basket. Create an even mix and have quick access to more than one resource should problems arise. Don’t feed into the chicken little syndrome. It causes mass chaois in the marketplace.
Lol@Kyoto on the top 4 ish messages.
I feel a little more stupid because I knew our economy was starting to get a little sour,
but my struggle to get a job and bank closures
have kind of opened my eyes to what it means.
i am more cautious on my spending and cleaned my bank account just in case, stupid move i heard..
Keep in mind also our method of tracking unemployement changed in the 1970s. We used to track to the best of our ability the people without jobs. Now we track the number of people on unemployment, which means we don’t track anyone unemployed longer than six months.
THE BANKS DID IT
This is not going to be a second great depression. In the first great depression 30% of the nation was unemployed, now only about 6% is unemployed.
You need to do more research. This was not just an American wall street event. The Great depression was a world wide depression that America got caught up in because of the factors you listed. Stock markets crashed everywhere.
Now is the time to invest but invest wisely. Now is the time to buy a home, you will never get a better deal, but buy wisely.
It was the liberal view that everyone should be able to buy a home that got Congress to mandate that Banks take bad risky loans in the 90’s. Thus so here we are today with millions of home loans that no one paid on and a system that is brought down by the ever accumulating burden.
Banks want good loans not bad so if you have good credit right now the world is your plum.
I have already put my money where my mouth is and invested 2 days ago. I am quite pleased with the prices I got. America will grow again. As long as the Democrats don’t screw Paulsons plan and try to politic with it.
Mike: I think you are absolutely correct! remmember.who the politicion fears the most?asw——>a well armed citizen! OUT OF MY COLD DEAD HANDS!!!
…wow, dude, you really didn’t know all that lead to the Great Depression?
I learned this in eighth grade social studies.
The stock market crash was simply what made everyone realize that they were screwed. It alone was not the cause of the Great Depression.
The answers you were given about the Great Depression: “a combination of domestic and worldwide conditions” including massive bank failures, reduced consumer spending, an ill-advised economic policy, and a horrible draught that caused many farms to go under. It was truly the perfect storm” are disingenuous, as other than the drought, THEY ARE ALL CAUSED. What CAUSES bank failures?
For instance, $700 billion is being given to a company to “bail it out.” Will I be bailed out, because I’ve been out of work for about 3 months? Of course not. But if that $700B was distributed equally to every person in the US, about 300 milion of us, we’d all get about $2,333. My son and I COULD bail ourselves out.
One place to get some background is the movie “Zeitgeist” at zeigeistmovie.com. There are references at the end for the sources, and the quotes are attributed, not just flung about.
Bear in mind: the instant you hear that the Federal Reserve is doing ANYTHING with interest rates, you know that the money is being manipulated, played with, stolen. And not to our benefit. And what IS that prime interest rate, anyway? Maybe the interest the Fed is charging us to be allowed to have our country’s currency?
“It ain’t paranoia if they’re really after you.” I don’t have an immediate solution; but knowing this is going on is the first step.
Do your research. You decide.
the great depression was casued because the stock market dropped and the prices of products went up too high.
If history repeats itself, then stop looking to the depression. Look to the S&L crisis or the dot com bust. We just saw the cycle and the crescendo into mass economic hysteria. Both presidential candidates expressed their lack of knowledge about macroeconomics and so have most of you. Turn your computer off and go do something mroe productive. Ingenuity and productivity will heal these wounds. Are you the next Bill Gates?
It looks like we are headed for another depression to me. According to the events that led to The Great Depression. It is happening again. Events are cyclecal. It is time again for a depression. Sigh.
Mike post 6.37am:
>>>We need to take the oil in Iraq to pay the debt that they owe us for all the billions we have spent<<
What? Are you a typical American ignorant ? not knowing Iraq war is a well-known illegal act?.. look at US ‘prosperity’ now. Thievery does not bring prosperity – how ever much you would want to deny that!. Americans are greedy, look at how they spend without any due consideration. How can a debtful country prosper?. Their greedy banks also gives out loans for the sake of short lived profit. And then they wonder why they are now suffocating.
Thumbs up to Paul (from 19 Sep)!
We are all wherever we are because of the actions, or lack thereof, we took in the past. IF I had done a better job of managing my finances in the past, better understanding and utilization of past situations, I would now be in a position to take advantage of the current situation. Then tomorrow I would be closer to being in the “top x%”, as the envious call people who are better than most at playing the rules.
It’s sad how those who don’t want to learn the ropes then blame the world for their lack of understanding and the bad decisions this leads to. Those people are like the kid who breaks his toy and then runs crying to mommy for another, except in this case it’s running to Big Brother.
“We have met the enemy-and they is us”–Walt Kelly
*I* have made mistakes.
These are *MY* mistakes; *I* own them.
*I* can learn.
*I* can make a better life for myself and those around me.
*I* am willing to bust my ass do better in the future.
*I* will man-up to these basic facts of life, and not blame some god, government or society for what *I* did.
The Great Depression was the latest of a series of these financial crises, following the Long Depression:
http://en.wikipedia.org/wiki/Long_Depression
by about thirty five years. We went into a period of regulation after that and the growth of socialism (as shown by the IWW –the Wobblies — who were quite numerous until essentially they were suppressed. Labor regulations the introduction of a progressive income tax and similar innovations came out of the period between the Long Depression and the Roaring Twenties. Which of course as you have pointed out were a period of growth in income at the top not in the middle. We have had a similar imbalance in income growth, and a roll-back of working conditions caused in part by the determination that supervisors must not be unionized. These days most jobs are supervisory in the old sense, as automation has cut the semi-silled jobs, so most people are not allowed to join unions and there is no one to fight for their rights. Further, while Keynes and Galbraith may not have known everything those who have been making policy for the last thirty years can hardly be described as Keynsian the way those who preceded them were. I certainly did live through that period of inflation and entered the job market during the awful days of the seventies. I can assure you that some things didn’t work. However I have watched everything from Reagan on literally being filtered through the “free market” ideology, and certainly do not consider anything coming out of Washington to be anything but attempts to salvage income growths for the top 1%.
A better understanding of the Depression and the New Deal can be had through a good understanding of the pains of the birth of industrial society. It was not unique and the idea that we can be on our feet in just a couple of years — is not going to happen. We’ve done an excellent job of kicking over the traces of the safety net which pulled us out of the Great depression as “too Liberal” and “expensive” and now we are vulnerable to sustained slowdowns again we are using social issues such as that some of one candidate’s relatives are Muslim to avoid a serious look at how “market-oriented” we have been when we were most successful.
The great dipression was caused the exact same way no different. it all started when people were not able to pay off thier houses. When forclosiors happen the stock market goes down like it is doing now. One of the main reason is the dow (That is a combanation of a bunch of other stocks) almost plummited to zero.
I hope that helps
With all the manipulation of the market by highly educated people with no integrity at the helm, I have decided to invest in other venues. Nowadays when I here someone recommend a particular mutual fund or investment I think its probably a scam. University’s are doing a great job in teaching young Americans to cheat the system at the expense of the tax payers. How about learning to do whats right for a change. I’m sick of the government bailing out dumb asses who make bad or illegal decisions trying to cheat the system. It makes since that the US government would protect cheaters; after all how else would G. Bush have been elected?
I guess the old saying ‘History Always repeats itself” is so true.
Today the stock market is artificially inflated due to massive speculation and as far as the regulations go, most of the stock market is deregulated now.
So, I guess we’re back to square 1 minus the massive drought but we have a thing now that they didn’t have back in 1929 and that would be “short selling” I can’t believe they just but a 10 day ban on short selling. I think it should be banned forever. And oh yeah, I almost forgot … back in 1929 when someone bought a home the home loan or morgage stayed at the bank. It wasn’t sent off to the money hungry con-artist at Wall Street.
An excellent story and great responses. What to do both for our country, communities and families?
My dad has been storing up canned items and water. I’m looking into solar-powered items and glad my son knows how to speak Chinese and Spanish. What’s next?
This Bible verse came to mind:
“Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.”
Matthew 6:19-21
Let’s begin by identifying the social classes in the USA. Let’s be honest do you consider yourself a middle class, higher class citizen? If you are making about a million of dollars a year you may be consider yourself a middle class citizen. For the rest of us, how barely can afford a 300K house my recommendation is to stop giving your money to the rich, pay your debts and if you have a dollar left invested in your children education or simple buy gold.
I have never met a person who actually got profit from the stock market. Let me tell you I know people who bring home 10-20K a month. Consequently, from that perspective stay away from the fallacy of Wall Street.
To begin it is inflated, with money that does not exist. In other words, credit from the future, money that your children in a form of interest will pay.
There is to tangible assets to back up the money.
The use of irresponsible credit lender-borrowers, have created the perfect situation for a depression. Just to think that we purchase a cardboard house for 250k which by the time we pay it off, it is almost ready to be destroyed because of the quality and materials used to built the property; consequently, you have given your life paying for a property that actually does not have the tangible value it should have.
Our jobs are overseas. Someone say we are a society of knowledge workers. How many knowledge workers do we need, then if that is the case why my taxes are reviewed somewhere in India. The negative effect of it is that there is not money coming back to our system and still we have to pay for services, products and more important our credits such are house, cars, etc. This is the main reason we received the incentive package because all our money is running in India and China. Unless our jobs are back it is improbable, our economic system will be regenerated.
It sounds funny for me to hear the fancy word “the stock market close with plus 75 points etc” Those points actually mean anything to me. What it means is that someone who has a couple of millions of dollars to play in the market, have make a couple of hundreds in the efforts and cost of the lower class population.
Now, why do we have to pay to help them out? Because the 700 billion are coming from our pockets, the regular worker, employee, mother who stay at home taking care of the kids, children who actually are not working yet. What are we going to get in exchange for borrowing them the money? What is the interest rate they are going to repay us?
During the time of bonanza, they make the middle class almost disappear with loans of 10% for housing. Credits cards with 28%, and some crazy system call variable interest rate. I will let those bastards to take care of their responsibilities. We “the American people” can make it without them. Let’s stop to injustice, it is enough of crumbs bread.
For all of you who believe that you can become rich at the expense of someone else hard work. Let me tell you that God exist and this life is not subject to his mercy. Eventually all of us will face judgment day. Keep in mind that in the same way we are born we will depart from this misery. There is not difference between the one who gets in the middle of the night to rob a house with the one who still the product of the hard work of an individual. They both are thefts.
now compared to then is NOT similar. investors in the 1929 arena were basically buying derivatives of basic stocks, of which they had no way to verify the root stock, actual company offering the stock, or even if the investment was anywhere near legitimate. A lot of the speculation involved mining stocks, based on sensationalism as a selling point. The buyer in 1929 had almost no chance to make any money based on the outright fraud in the stock markets, whether the stock markets were national, state, local, or municipal.
Enter 2008- unlike 1929, people are on a credit script for currency, and the federal reserve bank (FRB) (about as Federal as Federal Express) oversees the printing of basic worthless paper, and issues to the USA, a sliding credit limit, and an interest rate that can be changed; much like a modern credit card. It’s not the beginning contract that sets the terms, it’s constant changes of the overall contract by the banks and federal reserve system that manipulate the user and consumer. Income taxes do little to pay principal on the national debt, and the FRB, ever vigilant on outstanding debt, lowers the value of currency at a rather steady rate, while increasing interest rates in the process.
The difference being primarily in credit being offered to those who could not ever pay it off, much less, live within their means and not accrue additional short and long term debt. This whole scenario is less of a stock market manipulation, and more of a bank manipulation of the consumer, with the FRB as the root manipulator. what happens if the whole contry crashes? Everything we (the USA) once owned outright, now placed as collateral to the FRB concerns, will fall into their hands, and we stand a good chance of not being a sovereign nation from that point on.
You also have to factor in that WWI ened in 1919 and many, many men came home wounded, crippled and even the healthy ones came home jobless. That also put a huge strain o the ecomony. At that time one the wealthy really good afford to invest in the market.
Greed.
Alexa Fleckenstein M.D., physician, author.
~Thank you for well informed details to a problem, that individually we are unlikely to be able to do anything about.
~ And we can’t take it with us when we die, so saving and planning is fine but, I think too many of us get caught up in the whirlwind of unending details that mesmerize our mind and captivate our attn.
~ outside of voting,with the choices we are given…We pick the best candidate from…pardon my judgement..but sometimes less than mediocre choices…( I think If this process was in the hands of regular American Citizens..and the like..
the choices for political candidates would be a much better selection(not to say all the political candidates are bad choices)..I don’t think average Americans are given that much credit..for knowing anything about anything..And then when all the factors have been mostly weighed in…The govmt wants our oppinion ie,.. voting
-not saying anything bad about the govmt..They help us in some ways, but to view it from our perspective) … true colors really show, once a candidate is in office.. Then for a momemt, we are all stuck with the person we chose..So, the next time we are able to vote…I think many of us are left with a bitter taste in our mouth…. This scenario makes many of us, not want to vote…Isn’t there a way to have a better selection of potential candidates, selected by the people, not by a bunch of higher ups(no offense) who usually have to tlk to us anyway to find out what the real story is..
.And how things really work….couldn’t society, or Congress, or somebody, get together a little committe..that assists us in making a well informed choice..
Where individual tax payers..everyday joe…contribute ideas and even pick out(like a pre collective oppinion gathered from ordinary citizens-towards one particular individual( the next candidate), or several individuals (candidates getting ready to take office)..with the right stuff…( as close to what we need.. as possible anyway..nobodys perfect.
~BUT, I KNOW, IN MY GUT OF GUTS..THERE HAS GOT TO BE BETTER CHOICES ..OUT THERE..(I guess I’m wondering what Congress and the political higher ups would have to do, in order to involve the American People more..in the beginning of the party selection process)…Candidates that we would deem worthy ahead of time, before the process gets to the public, t.v. viewing..where we could weed out the candidates who are gonna likely, cause damage..before they get to the White House!
before they start parading around in front of us….discussing topics that are very important to the actual lifestyles, of the American People…At times, it is as though we are blind sided… with their half truths.. their personality..and lifestyle comes into play..how would anyone be able to make a clear and well informed decision..with all the distorted misinformation coming our way…In my oppinion, It’s gotten so much worse..Half the time, we are not even discussing the issues that need addressing! If it could happen where we WOULD TRULY HAVE…a say in the matter…BUT RIGHT FROM THE GET GO..IN THE BEGINNING OF THE PROCESS…INSTEAD, of trying to decide whose lies are more severe than their opponents….truly suggesting…this as a possibility.
~I think there would be a lot more voters..less government arranging of politicalicy, along with the..The higher ups putting their fingers inthe financial aspect of political finances.
~These combined involvements.. seem to sway decisions regarding politics.-people with financial contributions..
~So, It would seem it’s all about having enough Money, Lies and how well we can deceieve others!
Is this what we want to teach the next generation?.
With this system in place, can we be sure the American People have a say..from a standpoint of truth..and what about active partcipation from us…
~Is It encouraged and welcomed, or seen as unimportant and devalued?
…I know in yrs previous..Abraham Lincoln.. Thomas Jefferson..This was a good system..and it worked..But something that was once proven to be effective..has lost something..very valuable..our input!..The current system doesn’t seem to be very purposeful anymore…In fact, I think It may do more harm than good!…I wonder if anyone out here knows what I’m talking about?
~I know optimists say that we as individuals have impact by our vote and our spending..But overall..One tiny little consumer..does not have that much of a ripple effect…On the entire budget dilemma..that has been going on for many yrs..for some of us, before we were born..depending on our age..
KUALA LUMPUR (AFP) – - The ads promoting “Malaysia: Truly Asia” aim to welcome visitors with a warm smile to a prosperous and modern nation, so the taxi fleet branded “the worst in the world” can come as a bit of a shock.
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Even the locals are not spared the shabby service of unkempt and hostile drivers behind the wheels of decrepit vehicles who refuse to use the meter, overcharge and pick-and-choose which destinations they will travel to.
At the popular KLCC mall under Kuala Lumpur’s iconic Petronas Twin Towers is a typical scene, as a gang of cabbies negotiate with a young Norwegian couple just metres from a signboard warning against “taxi touts”.
“Flat rate, flat rate, no metre,” one driver insists as the tourists try to find a cab to take them to their hotel, less than two kilometres (1.2 miles) away.
Anxious to escape the baking heat, they agree to pay 25 ringgit (7.22 dollars) for a trip that would have cost less than three ringgit on the meter.
“Is it expensive? We don’t know, we thought it is normal here,” said the woman as they piled in with their shopping bags.
More frequent visitors, however, are vocal in their criticism and say that aggressive and unprofessional drivers are tarnishing the nation’s image as a squeaky clean and hospitable destination.
“I first visited Malaysia in 2006 and I was impressed by everything I saw except for the worst taxi service I have endured,” said Kabir Dali, an Indian tourist waiting in vain for a metered taxi at another mall.
“I paid a whopping 260 ringgit (74 dollars) from the Kuala Lumpur International Airport to town and was later told that was twice the proper amount.”
Complaints about taxis are common in many countries, but in Malaysia it has escalated to an outpouring of frustration, on blog sites and in letters to newspapers.
In a survey by the local magazine The Expat, some 200 foreigners from 30 countries rated Malaysia the worst among 23 countries in terms of taxi quality, courtesy, availability and expertise.
The respondents lashed the fleet as “a source of national shame” and “a serious threat to tourists — rude bullies and extortionists”.
Salvation is in sight though, as a number of smaller, up-scale operators enter the market to provide a more expensive but quality taxi service for frustrated visitors and locals.
The uniformed drivers, behind the wheels of smart new multi-purpose vehicles and sedans, switch on the meter as a matter of course and do not refuse destinations — surprising and delighting commuters in the capital.
Abdul Razak, operations manager for Dubai-based Citicab which launched here in January, said that even in poorer nations such as Thailand and Indonesia, taxis are smarter and the drivers far more courteous.
“I would say it is the worst in this region, undoubtedly. I have travelled to all countries in this region and our company operates taxis in many parts of the world. The situation here is the worst I have seen,” he told AFP.
“The vehicles are in shabby condition, the driver will take you if he likes your face — that is, if he agrees with where you want to go for the price he insists on.”
The government has called on taxi firms to lift their standards, but various campaigns have achieved little, and many blame the lack of enforcement on rampant corruption in the police and bureaucracy.
“It is difficult for the roads and traffic department to take stern action,” said a security officer at one city mall as he watched the touts swoop.
“Taxi operators and the company which hold the licences are all linked to some politician or another,” he said. “Drivers here are ruthless because they are unchecked by authorities who are almost non-existent.”
John Koldowski, from the Pacific Asia Travel Association, said that “less than desirable” taxi drivers have an outsize impact on a nation’s image.
“The first contact a tourist gets with locals is often during airport transits to hotels and it creates a very, very strong first impression, either be good or bad,” he said.
“Authorities certainly need to do their jobs and act upon any complaints strongly, quickly and visibly.”
Credit has became a big thing with people buying stuff with money they don’t have but expect to have with the next paycheck .By the time the next paycheck comes, there are more bills becauuse they had gone shopping again. Shopping helped the economy grow and it boosted peoples egos saying that America was the best. Shopping had helped the economy grow but it was growing on non-exsistent money a.k.a. credit. It was even worse that banks were investing in the stock market but the stock market was a gamble, you never know what would happen to the money invested. The banks were investing money that didn’t belong to them so when the stock market crashed they lost other people’s money.
Imagine the economy like a multi-layered cake. The bottom layer is the support for the whole cake. But the economy was building itself on the promise that the money would come through. So the cake was built on the promise of the bottom layer. But it can only stay together for so long without support. It eventually comes apart and the mess needs to be cleaned before making another cake.
It is impossible for another Great Depression. Rules and regulations had been made to prevent it. That’s why our credit has limits and banks aren’t allowed to invest.
I’m not too worried. Maybe that’s because I’m 21 and ignorant, or maybe not. I think we’ve added enough regualtions and safegaurds to prevent another Great Depression. I am moving back home, but that’s only to save money for more plane tickets to see my girlfriend, so I see it as investing more money into the economy. I think as long as people don’t panic and start hoarding, we’ll bounce right back from these setbacks.
Dollar is going to ZERO……………….
In the 1920’s, the market was falling apart. FDR took office and raised taxes. Economy dropped even worse.
If taxes are raised zero-value will be reached quicker.
Right now, it doesn’t matter who takes office because the damage has been done.
We’ve spent way too much.
With Baby-Boomers getting older, productivity is dropping.
Jobs have been sent overseas.
We’re waging two wars we can’t afford.
The dollar can’t buy squat and we’re printing more and more, devaluing it further.
Before 2013, the Federal Reserve will be DEFUNCT, just like the Rubel was in the early 1990’s.
When this happens, if we don’t have our troops home by then, they’re going to have to get lucky to indenture themselves on merchant ships back to the US, again, that’s if they’re lucky.
We’ve bailed the rest of the world out time and time again.
Will the rest of the world bail US out?
If and when this does happen, we’ll be stupid to repeat the fallacies of the Federal Reserve System.
Why should anyone have to pay interest for using Monopoly money?
You buy it, it’s yours, you use it.
You shouldn’t have to pay the creator a percentage for using it.
Congress should switch to printing their own Greenbacks the way it used to.
Mostly, I blame those greedy CEOs who put personal benefit way above their responsibility.
And they have no shame at all!
My personal belief is that we are not going to be able to dig our way out of this and we will plunge into a full blown depression within the next 12 months. If everyone is wise, Be Asking to keep American Jobs, that and only that will save us. Our Government needs to keep our jobs its because of NAFTA that we are in this fix now. Good luck you rich suckers because it will hurt you the most! Not being rich….
the only thing that’s missing in our current situation is the drought.
How many Have seen Fun with Dick & Jane?
Movies imitates Life life imitates Movies. This Movie is even more significant with the recent economy crash. You would think after Enron the lessons would have been learned in this funny movie justice was served, Unfortunately in real life it’s not as easy fix!
Is this Problem really Presidential or Truly the Responsibility of Banks & Companies involved to correct this mess on their own! Everyone else is making cut backs but Just Like Alec Balwins Character the real crooks are on Vacation!
How do we get even with Big Brother?
The Fed caused the Great Depression.
The Fed inflated too much in the late 1920s, fueling the boom, and then contracted unnecessarily from 1929-1932.
From different perspectives, emphasizing different failures, Murray Rothbard in “America’s Great Depression” and Milton Friedman in various works outlined the Fed’s role in causing and prolonging the Great Depression.
Anti-growth, high-tax, high-public-sector-involvement policies from 1932 on, on a net basis actually prolonged the Depression rather than relieving us or “getting us out” – we “got out” with the wartime spending in the 1940s, which was not a sustainable solution.
The Great Depression was the result of a failure of the one part of the economy that was entirely centrally controlled.
But it was falsely blamed on “too little control,” on “unfettered” or “unbridled capitalism,” or “laissez-faire” or factors in the 1920s economy such as “too big a divide between rich and poor” as if income quintiles represented permanent groups (they don’t) or what mattered was the “gaps” and not whether the lower and middle “quintiles” were faring in the absolute (they were) or whether individual in those lower and middle quintiles were moving up (they were).
The present problems were also caused by the Fed’s inflation – contraction interest rate cycle, starting with the NASDAQ bubble that was pricked with the rate hikes of ‘99-00 and the post-9/11 rate cuts (3% was appropriate, 1% was not), the latter of which fueled the housing bubble and exacerbated the commodities booms.
But as with the Great Depression historians with little or no economic background, and politicians seeking to enhance their own power, will falsely claim that there was “not enough oversight / regulation” (even though Sarbanes-Oxley was implemented) or that somehow the policy of letting economies grow naturally by leaving them more of their own earnings to reinvest (i.e., tax rate reductions) causes bubbles – when in actuality the policy reduces the “need” for the Fed to inflate to fuel growth and thus should be a stabilizing factor.
The result will be that a failure of too much control will be falsely labeled a failure of too little control, and we will be brought down the wrong path – again.
Interesting article. I had also heard from people that they were worried another Depression had hit. I knew there was a drought and the post-World War I stuff going on in the world, but I didn’t know some of the other items you alluded to.
Nobody likes or wants the government bailouts.
But remember my grandparents who experienced the Crash, and my parents who were kids during the Great Depression, it was more than a date in a book and a point of discussion. It was far worse than anything the last two generations has experienced in the US.
They are gone but I imagine if you could ask them, they would have gladly mortgaged their future to avoid the catastrophe.
It’s simply the new SYSTEM didn’t work……all you got to do is go back to that old system that works…..
My family and I live in southeastern Michigan….we have been hit hard by the floundering auto industry. Unemployment may only be at 6% for the rest of the country, but in this area, we are in double digit unemployment and have been for quite sometime. The housing market is horrible and you can’t sell your home. Several houses in my neighborhood have either been up for sale for well over 18 months to 2 years or people just take all of their belongings and walk away, leaving the house to sit empty and have the bank take it back. People are fleeing Michigan like crazy and I don’t blame them. We would leave too if we could. My husband has a serious illness and our household finances are not all that great at the moment. Whoever becomes President has a big job ahead of them and the problem is, anything that they do after taking office will probably not be felt by people like us for many months or possible years.
We need to stop sending money overseas to countries that hate us. Start working on producing our own energy. Keep jobs in this country to keep people working. Stem the flow of illegal aliens bleeding our social services dry. Kick all lobbyists out of Washington and make it illegal to accept anything from any lobbyist. That means prosecuting those persons that we have elected to office.
I think that the recent financial events will trigger an event similar to the Great Depression. The end result will be who has investing enough money to survive, who has the sustainable careers/jobs, and how quickly we can recover. I am scared for the money I have investing in my 401K actually losing money that I have put into it because of these events. The whole Treasury Dept stepping in to help is good but then it puts the average joe in a bad place because taxes may go up, prices for everyday items may increase. I am worried about the financial future of this country and the next 5-10 years are going to be trying.
The umployement rate of the 20s and 30s was about the same as it is approaching now. Many of those that were “unemployed” held there own land and grew food for themselves and sold and although the Dust bowl was a big reason for the Depression many of the farmers that used solid farming technigues like crop rotation did fairly well in the adverse conditions. The true unemployment rate was closer to 10 percent although a good number of people that did work could barely afford to live.
You never mentioned any of FDR’s “reforms” a lot of which keep the depression extended. This is what our government is doing. Instead of letting banks that having been performing corruptive exchanges (the housing market for example) take their lumps we are saving them just so they can do it all again… and the more money we, the tax payers give them… the sooner they’ll steal our money again. We are aren’t truly in a depression yet… but we will be soon. Hopefully I’ll be in Canada by then.
One of the big factors were the banks lending money to stock speculators.
The banks at the time were uninsured by the government. FDIC. And they were not required to have any reverses so they had lent out all their money.
When the stock marker crashed the speculators could not pay their loans Which caused the banks to fail.
Actually today the only banks not FDIC insured are the borkerage firm banks we are hearing so much about.
They are actually more high risk investment firms than banks anyway.
As far a 6% unempoyment, it hasn’t been too many years ago that a 6% unempoyment rate was considered full employment in this country.
The Great Depression happened right after the Federal Reserve was made into a Corporation and started printing money.
I would like to point out that the bank crashes was due to the federal reserve. They were handing out loans to just about every bank, then called in those loans, causing everyone to go bankrupt. The fed reserve to me had a very large part in the great depression.
The great depression was caused, i.e. it didn’t just happen. It took a whole lot of reading (that’s many, many books, in laymans terms) to find the root cause: The Federal Reserve kept contracting the money supply, until the economy collapsed. When they finally started pumping money (credit) back into the system, the banks were too nervous to lend, and there were few borrowers with credentials to borrow.
The Great Depression was caused, and was a conscious, deliberate act. There is no possible other explanation. Even Mr Greenspan, has said “You can’t have a depression without a contraction of the money supply, and you can’t have a contraction of the money supply without a depression…”.
Find Bill Still’s documentary, ‘The Money Masters”. Its a good introduction, and does not take a PhD in economics to understand, and it is *true*.
Someone said:
“One of the big factors were the banks lending money to stock speculators.
The banks at the time were uninsured by the government. FDIC. And they were not required to have any reverses so they had lent out all their money.
When the stock marker crashed the speculators could not pay their loans Which caused the banks to fail.”
which is not true. it sounds like a plausible argument, but it is not. The stock market crash was caused by calling in margin (the same thing would happen today, if someone gave the order to call in all margin money): the stock market would crash, then would retrace within a few days or weeks. The depression was blamed on the stock market crash, but it did not *cause* it in the slightest. The depression was caused by Federal Reserve reeling in the money supply. They did this on purpose, and what that purpose was, only a hand full of people know.
The depression was also blamed on a bill passed by congress (can’t remember the name) that put some protectionist tarriffs on some imports. It also did not, in the slightest, cause the depression. You have to do a whole lot of reading to get all of the numbers to support that claim, but it is true.
Why all the failures? Financial institutions make a sweet deal that’s on shaky credit but “reasonable”. They call that an asset as collateral on a loan for them to get more money from the Fed which they use for a shaky loan which is called an asset, which is then used as collateral on loan for them to get money to lend from the Fed to loan to another shaky buyer.
King Bush and entourage had the opportunity for about a year to prevent this from collapsing, but then ultimately this idea was abandoned to bail out the homeowners by buying down the principle to what they could afford and let the loan continue or some other type of investment having the same effect.
Now it’s too late, the government has to save them all and they are so deep in it there’s literally no way out, they don’t have the capital to back the loans and never will since they kept doing this for a long time, over and over on millions of loans nationwide. Lack of oversight is a big problem here, so the “less government” ideal sucks in reality.
So, expect more huge failures that have to be supported by a capital bail-out, they are not even close to being over and after that what do you think the market going to look like? House of cards …
A quick way out is to re-establish light-manufacturing for all kinds of goods that are intended for domestic markets by individuals with a marketing and distribution network geared to serve just this group and giving these goods a tax break for a change and let the big boys go away. They pay less for goods and can sell at a much smaller margin than a small shop because they can buy tons but look what happens to your children’s ability to make a living?
We don’t need more cheap goods from a zillion miles away by ship and truck to pack huge warehouse stores with some college grad working for peanuts selling it while the high-tech jobs are going away and who else can afford a new house?
Maybe time to re-examine the need for corporations to destroy the domestic economy just so they can make tons o’ cash.
We need to make our own, toxin-free toys … but of course banks don’t have much money to loan of their own to a dude with a wife and kids that need a livelihood other than slob wages, and oh, we the taxpayers are supposedly going to pick up the bills for all this genuine fraud, of course having had no part in the matter or how it was caused since oversight is not our job.
So what we want is a plan for the future instead of more of the same because the basic cause has never been addressed and we are thoroughly convinced it will again fail with us to hold the greed deed bag one more time when it gets too heavy from all the fleecing of cash out of the country into the corporate accounts of our corporate debtors who fleeced it under the oversight of our skilled and perceptive government whose greatest concern is the citizen, at least on paper …
If that’s not a depression officially it’s at least psychologically true of far too many average citizens of this country.
Hmm.. Great Depression.. We do have very similar things happening. However, what about this Bailout by the FED? I have a better Idea..
U.S. Government’s Magical Mystery Money!?
Imagine if you will, walking into a store, picking up a few expensive items, maybe some great big 75 inch TV. You make it to the checkout, and the lady tells you how much. You reach into your pocket and out comes……. Nothing but air! You hold the empty air as if it’s the crown jewels.
“Here you are young lady, take this $3000 dollar bailout cash. It’s magical!”
Okay, so I’m sure the people at the store will think you are certifiable and call a cop or a shrink. The thing is, what is the difference between this and what the Government is doing? Oh go ahead tell me about the “BONDS” now…. I’m sure some might say that. U.S. Treasury Bonds. Worth about… Well the same thing as that magical mystery money you want to buy that TV with.
I’ll tell you what, if the Government wants to REALLY fix the economy they are putting the Magical Mystery Money in the wrong hands. Big companies are just going to give themselves a raise, then blow it as quick as they can. That’s what mega companies do. Who says that a mega company needs to stay in business? Oh, that’s right, I forgot, “if the mega company goes under it will hurt the economy.” Well I think maybe, “BS!”
You elite guys in DC want to REALLY help us all out? You want to FIX the Economy and have Money flowing throw the veins of America? Try my plan!
Roughly how many people are there in the USA? I’m sure less than 700 Billion.
So, “SCREW Bailing Out The Wall Street Elite!!!!” They did it to THEMSELVES! Greed and reckless abandon has lead them to ruin. So our wise Government is going to hand the $700 Billion in Magical Mystery Money to the Elite so they can BLOW that TOO!! Great Idea, Elitists helping the Elite! And then WE pay the debt back… RIGHT! I mean our Grand Children pay it back.
You Elite in Washington are so worried about people who are losing their homes in the Mortgage crisis? What about the thousands of people who have LOST their homes already? Your Mortgage bailout doesn’t help them at all.
You guys want to fix it all in one go and avoid giving mega companies, the Wall Street Elite, who have proven themselves as a bad debt, the magical mystery money? I mean, lenders look at credit score, don’t they?
Here is the plan that beats the $700 billion bailout of the rich who waste it…
Put the magical mystery money into the hands of those that will actually fix the economy from the inside out. Think of it as a “National Transfusion, Type USA”.
Give roughly $1 Billion Dollars of the magical mystery money to an actual PERSON! Around 700 Billion actual people could benefit from a Billion Dollars as well. My goodness. What an Idea.
Imagine the effect of this infusion of cash into Joe Public’s pocket. Talk about a stimulus package. Think of it, 700 Billion REAL people buying a home, paying off their debt, LIVING like Americans! Call this the “New, New Deal” or the “Magical Mystery Deal”. Wall street would be bailed out from the inside out. Economic Transfusion
I mean, come on, who thinks this Bailout of the Wall Street elite will really help any of us, the real people. It’s like your rich neighbor gets a huge loan and you have to pay the bill for it. This bailout of Wall Street Elite is a BAD Freaking Idea! I’m sure my future grandchildren will feel the same way.
I am sure the Homeless families in Texas could use a hand after Ike. The hopeless guy who stands near the on ramp near the interstate holding a sign begging for food could use a Billion too. I could use a hand after my Government has failed me and frankly failed my family. At this point the lack of skilled jobs is making havoc on my lifestyle as well. It’s even hard for a Law School Grad to find a Bag Boy job! Come on AMERICA! WAKE THE FREAK UP!!
So, WASHINGTON!!!!! Listen UP! Bailout Plan for the REAL PEOPLE!! 700 Billion Split!!!
Go Go Magical Mystery Deal!!
Maybe it is just a “conspiricy theory”, but there was an article written by the ex-govenor of New York, Spitzer, published in the Washington Post 2-14-08. The article, talks about how the current administration has managed to…well “fix” the mortgage industry. His backround was in the banking industry. He talks about how a 1863 law was invoked by the Office of the Comptroller of the Currency that allows the Federal Government to take over regulation of predatory lending laws. Then, all of a sudden he falls from grace, caught paying a prostitute. Hummm… was a call made to find something to silence him? Well, then the Feds did nothing to regulate the industry and here we are. Isn’t there a guy running for president that is touting deregulation? Taking regulations off of industries, is like taking Faillsafes off a nuclear reactor…you get a meltdown.
The current crisis is a lot more like 1929 than experts like to admit. The present stock market was highly inflated — as in 1929. The current administration had been steadily reducing government oversight and government regulation, purposely removing many of the controls that had been put in place back in the 1930s. This has been a long-term strategy of the Republican party since President Reagan’s term, as anyone with a good memory can attest — they have been quite outspoken about wanting to destroy the legacy of President Franklin Roosevelt. The banking industry has also been largely deregulated, along with most savings and loans, to almost the same state in which this industry stood in 1929. It is rather amazing that economists and television pundits do not remark on this obvious fact. In the 1950s and 1960s, interest rates of 18% and above were considered usurious and monstrous. Only the mob charged rates that high. Now it is common for banks to charge these kinds of rates on credit cards — or more! But no one uses the term usury to describe it. And hardly anyone voices a protest either. No, no, it is all quite all right. We can trust our dear, sweet government to do what is right for us, can’t we? Well, let me tell you, that is precisely what people thought back in 1929. President Hoover once made wonderful promises to the people of this land, saying there would be a chicken in every pot. But did he do anything to put those chickens in those pots? Check Wikipedia to find out.
What I’m most worried about is that the Great Crisis finally ended with WW2. What now!?
The 1920’s depression wasn’t caused by just one spoke getting broken in the economic wheel.
The overall cause was when the overall flow of money came to a trickle, or for some, a stop.
This next depression is going to be different, if not worse. The rich stay rich by not spending money. They’ve paid themselves handsomely and have saved money, by sending money and work overseas.
The problem is, we’ve done so well at that, the US doesn’t belong to us anymore.
We’re worried about $700 Billion to bail-out Wallstreet, but where’s the outcry for the $20 Billion a month that we’re borrowing from China?
Why can’t the dollar buy anything any more?
There’s nothing to back it up.
No gold.
No oil.
No GDP.
All we’ve got is 2 wars.
An aging workforce.
An imploding market.
And our leadership trying to convince them that giving them a golden parachute is what we need.
We are the USSR of the 80’s.
We will soon become the Russia of the 90’s.
Broke A– Broke.
There are still broke Russians in Cuba, unable to make their way back to Russia.
If we continue on this path, we will be in the same boat, only in Afghanistan and Iraq.
People are worried about their future grandkids.
Hello.
The piper won’t wait that long to collect.
Mike – in your second paragraph you mentioned other things that caused the Great Depression other than Black Tuesday or the stock market crash. The drought for instance, yet we have far greater than the drought now. The fires of California, the floods of the Midwest, Central and South, 9/11, Hurricanes Katrina and Ike. We are having massive bank failures and the people are reducing their spending because they can see hard times ahead.
It is time for the American Seniors who are facing a bankrupt social security to stand up and attempt to restore America. The cruise ships and casinos will do without us but the stability of America needs us.
Feeding our families is top priority and the world food supply is suffering greatly. America is going to have to stand on her own feet once again. She has sold her jobs to other countries and some of her bed fellows are her devout enemies. She tolerates everything and calls herself Christian, but her God doesn’t tolerate everything. Her greedy businesses in foreign countries are not ready to lose, but lose they will. If she could only remember from whence she came – America will survive.
There’s no way we could fall into another state of such economic distress as the Great Depression because today, we have certain safety plans and systems set up by the government to fall back on.
Comment posted on September 21st, 2008 at 5:04 am by Rebecca
HAHAHA!! If life today Rebecca, worked just like that, we would’nt be in this situation at all!
But lets see what happens with absolutely NO regulation, and will $700 Biollion solve the problem???
Sadly not,
Read On >>>
$700 billion dollars, lets think about that for a minute…
This is how it would work:
1) Lets say for arguement, it was a trillion dollars.
2) And we know that (minimum) half of American industry is owned by foreign investors
3) And that we are told that(from newspaper and other press articles) inflation in the US is at approx 5.5 percent.
4) That also the stock market in the US suffering from a lassez-faire Bush administration in regards to the stock echanges, ie not much regulation going on here.
And finally…
5) That even mastercard and Visa have always stated (by their rule of thumb logic)that it takes 3 times longer to get out of debt than it took you to get into debt.
So lets add all this up and we get
= MAJOR DEPRESSION
1) Due to the fact that 1 trill would increase inflation that the average US citizen would then have to pay much more for normal goods. (food , utils etc)
So spending would decrease just when the country needs cash to prop it up, then taxes would have to increase due to a sinking economy and rising unemployment.
4&5
Due to missing regulation in the stock market Fanny & Fred still are trading shares even their stock are under water…..WHY????
30 Years ago they would have been told to close any trading of stock what-so-ever, In 2008 nothing/no-one is stopping these trades…WHY???
3)
We are told that the US inflation rate is at approx 5.5 percent but in reality it is closer to 10.9 maybe 12 or 13 percent.
Shhhhhh don’t tell anyone, but their economists changed the goalposts that measure inflation years ago, to something that looks good to show the general public. Certainly not the real figures because there would be absolute panic if that happened now.
FYI: The UK’s inflation figures would be very close to that, or probably closer to 9.8 or even 10%… have’nt you noticed your living expenses getting more and more expensive recently? That would not happen so noticably at 6 or 7 percent.
OOPs I almost forgot number 2), sorry I must have got drunk:)…hic!
Number 2:
More than half of the US economy is owned by foreign investors, that means by year end of 2009 half of 1 trill goes overseas leaving the residents to work with only half a trill, plus min 50% the income generated from the 1 trill hand-out is NOT counted in the US GDP(google that I you have to) so that means expotentially creates a shrinking economy to an even more shrinking economy.
In closing:
IF YOU DO NOT HAVE THE CASH TO BUY SOMETHING…THEN DON’T!!!
Some people seem to learn that later than sooner, funny that…I thought it was always the inverse, but when a whole country learn that later, it’s very difficult to plug the hole when the dam is bursting.
Enter now>>> Black Screen <<<
$$$$$$$$$$$$$$ LEVEL TWO %%%%%%%%%%%%%%%
From the anals of Economics, the “Dismal Science”.
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