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Location: Prescott Valley,az summer/east valley Az winter
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In 1929 the US government owed a small national debt to the people of the US ~ now they owe trillions to outside countries and no longer make even a pretense of paying their own way~ this crisis not properly handled will cause the demise of the US~ properly taken care of may see our country survive as long as no new crises are found!!
In 1929 the US government owed a small national debt to the people of the US ~ now they owe trillions to outside countries and no longer make even a pretense of paying their own way~ this crisis not properly handled will cause the demise of the US~ properly taken care of may see our country survive as long as no new crises are found!!
No new crisis found ? Well this hasn't hit commercial RE yet..commercial lags residential by 12-18 months.
What started last summer is working it's way through the system.
Retail and commercial are still in the waiting queue.
In fact, none of those previous products would have caused a major problem if they stopped there. But no, they leveraged 100s of magnitudes larger because the debt was rolled up into CDS insurance policies that were then loaned out at 100 to one which were rolled up into more insurance policies and that fictional money was loaned out. It was debt on top of debt ad infinitum with a micro asset 10 levels back that can never be valued or defined. Its a paperwork stack that owns america many times over but is based off of almost nothing.
In simple terms, it is a house of cards. Wait till all those folks who are still buying groceries and flat screens with their credit cards can't make the minimum monthly payment. Or even better yet, all the retired people who are relying on their pension, government or private, that all of a sudden can't pay out.
Yes, it will likely get as bad, but will take much longer to get there. The main difference today versus then, is our economy has far more branches and apects to it. It is much more diverse and inter-twined with many tentacles. It will take a little longer to implode, but the hand has been dealt us all and we will loose.
Here is the sad thing about all this. Those of us who lived within our means, worked two jobs, saved our money, invested in our 401Ks, paid off our mortgages, saved for our children's college funds are about to be thrust into the same pile as those who lived on credit and $ they did not and never would have. That is the most sickening thing about this entire mess. We shall all pay, for this greedy period in our history. Even those of us who did things right and played by the rules. I, for one, am starting to have a real hard time swallowing that pill being dealt us all!!!!!!!!!
And for those of us who did things right, lived within our means, saved, etc, etc, now they tell us, our $ in the banks we trusted is probably not even safe. SICKENING!
My wife and I both worked 2 jobs for almost 20 years! We sacrificed, paid off debt, paid off our mortgage, paid of our vehicles, loans. We saved a little for our daughter's education coming up and still, we might loose it all. Thanks wallstreet, thanks for nothing!
Was the market crash of 1929 a sudden event? Or was it a gradual tailspin, like we've been experiencing?
The market crash of 1929 was a non-event, not a sudden event.
The US had already been in a recession since January of 1928. It gradually worsened over the next 2 years, although the stock market was soaring.
The market crash was independent of the recession and began in September 1929, culminated in October 29, 1929, then came roaring back two weeks later. The economy continued to struggle.
The government was losing revenues, and in an attempt to raise revenues and protect American jobs, the Republican-controlled Congress passed what was then the largest tax increase in US history, and then in June passed the Smoot-Hawely Tariff. Other countries reacted by enacting similar protectionist tariffs and that shut down world trade, while the taxes sucked what little money was left out of people's pockets.
That threw the country into a depression. The Democrats gained control of the House in the 1930 election and starting in 1931, the House, the Senate and Hoover started getting things back into order.
The economy was in recovery, when the banks started to fail. The Federal Reserve and Congress did nothing to help, and bank failures snowballed. That led to a panic and a run on banks as people tried to withdraw their funds, resulting in more banks closing. All through 1932 states are declaring bank "holidays" and ordering banks to close, the government does step in but it's too late and more banks fail.
In 1933 when FDR is sworn in, despite the bank failures, the economy was getting better and unemployment was down. His New Deal legislation trashed the economy again, it recovers by 1936 almost to the 1927 level, and then it crashes again after FDR introduces another round of New Deal legislation. It starts recovering again in 1938 as the US switches to a war time economy provide equipment and supplies to the UK. For example, by 1939, they've run out of employees at Philadelphia shipyards and have to open a shipyard in South Carolina where they'll have a sufficient supply of labor to build Liberty Ships for transfer to the UK.
The funny thing is that as the economy was cranking away, people in the stock market lost their shirts. It was dismal and finally after losing 6 straight months in a row in 1942, it started to recover.
So during the 1930s the market was down when the economy was in recovery and up when the economy was performing poorly, so it wasn't a very good indicator of things.
If you want to look at similarities, we'd be about 1927 right now, teetering on recession.
By my calculations, the US should be in a very mild recession by 1st Quarter 2009 (about -0.2%), but you won't know that until April, a slow recovery over the Summer then back into recession 4th Quarter 2009. It'll go down hill from there.
The market crash of 1929 was a non-event, not a sudden event.
The US had already been in a recession since January of 1928. It gradually worsened over the next 2 years, although the stock market was soaring.
The market crash was independent of the recession and began in September 1929, culminated in October 29, 1929, then came roaring back two weeks later. The economy continued to struggle.
The government was losing revenues, and in an attempt to raise revenues and protect American jobs, the Republican-controlled Congress passed what was then the largest tax increase in US history, and then in June passed the Smoot-Hawely Tariff. Other countries reacted by enacting similar protectionist tariffs and that shut down world trade, while the taxes sucked what little money was left out of people's pockets.
That threw the country into a depression. The Democrats gained control of the House in the 1930 election and starting in 1931, the House, the Senate and Hoover started getting things back into order.
The economy was in recovery, when the banks started to fail. The Federal Reserve and Congress did nothing to help, and bank failures snowballed. That led to a panic and a run on banks as people tried to withdraw their funds, resulting in more banks closing. All through 1932 states are declaring bank "holidays" and ordering banks to close, the government does step in but it's too late and more banks fail.
In 1933 when FDR is sworn in, despite the bank failures, the economy was getting better and unemployment was down. His New Deal legislation trashed the economy again, it recovers by 1936 almost to the 1927 level, and then it crashes again after FDR introduces another round of New Deal legislation. It starts recovering again in 1938 as the US switches to a war time economy provide equipment and supplies to the UK. For example, by 1939, they've run out of employees at Philadelphia shipyards and have to open a shipyard in South Carolina where they'll have a sufficient supply of labor to build Liberty Ships for transfer to the UK.
The funny thing is that as the economy was cranking away, people in the stock market lost their shirts. It was dismal and finally after losing 6 straight months in a row in 1942, it started to recover.
So during the 1930s the market was down when the economy was in recovery and up when the economy was performing poorly, so it wasn't a very good indicator of things.
If you want to look at similarities, we'd be about 1927 right now, teetering on recession.
By my calculations, the US should be in a very mild recession by 1st Quarter 2009 (about -0.2%), but you won't know that until April, a slow recovery over the Summer then back into recession 4th Quarter 2009. It'll go down hill from there.
Great post. All those moves made by our government and most failed, or prolonged the agony. Makes you wonder if what we are seeing on the news is the same? Bad decisions? My gut tells me it is. I'm predicting we see a run on the banks in the coming two weeks and the DOW dipping below 8000 unless something changes now.
Yes, it will likely get as bad, but will take much longer to get there. The main difference today versus then, is our economy has far more branches and apects to it. It is much more diverse and inter-twined with many tentacles. It will take a little longer to implode, but the hand has been dealt us all and we will loose.
Here is the sad thing about all this. Those of us who lived within our means, worked two jobs, saved our money, invested in our 401Ks, paid off our mortgages, saved for our children's college funds are about to be thrust into the same pile as those who lived on credit and $ they did not and never would have. That is the most sickening thing about this entire mess. We shall all pay, for this greedy period in our history. Even those of us who did things right and played by the rules. I, for one, am starting to have a real hard time swallowing that pill being dealt us all!!!!!!!!!
And for those of us who did things right, lived within our means, saved, etc, etc, now they tell us, our $ in the banks we trusted is probably not even safe. SICKENING!
My wife and I both worked 2 jobs for almost 20 years! We sacrificed, paid off debt, paid off our mortgage, paid of our vehicles, loans. We saved a little for our daughter's education coming up and still, we might loose it all. Thanks wallstreet, thanks for nothing!
Your the same as me. I'm just wondering what I can do to protect myself for the bad years that are on the way. Refuse to pay that percent of taxes that will be going to bail out the multimillionaires of Wall St? If I do that, a bunch of guy's with guns will come and take me away, probably kill my dog too. It's a no win situation.
I realize that there is nothing I can do except resent that I was effectively forced to put much of my money into uninsured 401 investment instead of having a Savings and Loan system in place that would have covered my losses due to inflation. A speculation driven market is as ravenous as a cancer for more and more funds to gamble. The result is pretty much the same in that the economic body is killed by the cancer of rampant speculation. I expect to loose my 401 investments and can only hope a part time job, pension and social security will provide enough money to stay alive and, unlikely, comfortable.
As to the OP’s question – this will take a year or so before the whole worldwide speculation driven structure collapses. Then we will have a serious great depression.
BTW – Mircea’s description is revisionist history perpetuated by the speculators and the neo cons to justify their policies instead of having the government exercise the control needed to stabilize the economy to provide a decent return for all of us without creating the cancerous speculation that will destroy the world economy.
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~ properly taken care of may see our country survive as long as no new crises are found!!
