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Old 09-23-2008, 03:46 PM
 
Location: Phoenix, Arizona
1,112 posts, read 3,980,173 times
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Question for some of the history buffs I guess;

Relating to the recent US Economy troubles-

Was the market crash of 1929 a sudden event? Or was it a gradual tailspin, like we've been experiencing?
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Old 09-23-2008, 06:30 PM
 
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From a stock market perspective it took a year and a half from top to bottom with a number of short lived upswings. True recovery took 20 years.

Late 20's, manufacturing, especially steel had been on the upswing for too long and speculation took over. When it slowed it caused a credit collapse, massive margin calls, and a run on the banks.

I don't think it is comparable at all. Latest estimation is 1.14 quadrillion dollars of derivatives that have been placed on the real estate of a country that now only manufactures money and even more real estate that no one wants. Taking into account inflation, the amount of speculation and monopoly money right now is hundreds of times bigger than wall street could have ever imagined in the 20's.
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Old 09-23-2008, 06:39 PM
 
Location: Great State of Texas
86,052 posts, read 84,125,061 times
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Timeline of the Great Depression
America's Great Depression: Timeline

Transwiki:American History quotes Stock Market Crash - Wikiquote
From the above:
1929 “The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis.” President Hoover, in a press conference on October 30, the day following the Stock Market crash.


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Old 09-23-2008, 06:41 PM
 
Location: Great State of Texas
86,052 posts, read 84,125,061 times
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Quote:
Originally Posted by snowdogging View Post
From a stock market perspective it took a year and a half from top to bottom with a number of short lived upswings. True recovery took 20 years.

Late 20's, manufacturing, especially steel had been on the upswing for too long and speculation took over. When it slowed it caused a credit collapse, massive margin calls, and a run on the banks.

I don't think it is comparable at all. Latest estimation is 1.14 quadrillion dollars of derivatives that have been placed on the real estate of a country that now only manufactures money and even more real estate that no one wants. Taking into account inflation, the amount of speculation and monopoly money right now is hundreds of times bigger than wall street could have ever imagined in the 20's.
In the 20's the allowed people to trade on margin. Many people who could not afford to speculate did thanks to having a margin account.

Doesn't that sound all too familiar with the subprime mess and HELOCS ?
Lax regulations allowed people to take on debt they really could not afford.
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Old 09-23-2008, 06:42 PM
 
Location: Great State of Texas
86,052 posts, read 84,125,061 times
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As they say, history repeats itself. It may be in a differnt form..but the underlying pinnings are there.
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Old 09-23-2008, 06:55 PM
 
Location: Sputnik Planitia
7,823 posts, read 11,712,702 times
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this is the biggest fear, that the bailout will just drag the economy on like what happened in Japan. Infact our bailout policy is very similar to the Japanese financial crisis. If it drags on then it will be hell for a long time.
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Old 09-23-2008, 06:58 PM
 
Location: Great State of Texas
86,052 posts, read 84,125,061 times
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Actually the bailout plan, along with all the other bailouts are putting us in a soft crash vs a hard crash IMO. They might pull it off though and avoid depression. But at what cost ? hyperinflation ?
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Old 09-23-2008, 07:25 PM
 
24 posts, read 126,387 times
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Quote:
Originally Posted by HappyTexan View Post
In the 20's the allowed people to trade on margin. Many people who could not afford to speculate did thanks to having a margin account.

Doesn't that sound all too familiar with the subprime mess and HELOCS ?
Lax regulations allowed people to take on debt they really could not afford.
A 1 to 1 margin account is fine. I use one all the time. Subprimes are fine. Helocs are fine. MBS are fine. Those are all yesterdays buzzwords and the problem is much bigger.

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.

We should look at the manufacturing slowdown of the great depression with envy.
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Old 09-23-2008, 07:41 PM
 
Location: Great State of Texas
86,052 posts, read 84,125,061 times
Reputation: 27718
Quote:
Originally Posted by snowdogging View Post
A 1 to 1 margin account is fine. I use one all the time. Subprimes are fine. Helocs are fine. MBS are fine. Those are all yesterdays buzzwords and the problem is much bigger.

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.

We should look at the manufacturing slowdown of the great depression with envy.
Yes..but all we have today is GM and Ford and look at them.
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Old 09-23-2008, 07:55 PM
 
862 posts, read 1,042,236 times
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Guess Germany won the war after all.
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