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Thread summary:

United Sates economic recession greatest since great depression, state of US economy, great depression far worse than current economy, great depression versus current market

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Old 12-28-2008, 10:38 AM
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Yep, nice tin foil hat stuff.

Probably a good idea to just start the cycle of drinking and suicide.
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Old 12-28-2008, 10:43 AM
Location: Backwoods of Maine
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Let's take stock of 2008.

Bear Stearns, IndyMac, Fannie and Freddie, Lehman Bros, Wamu, AIG, Wachovia, Merrill Lynch, GM, Chrysler...and at least 25 other smaller, "unknown banks"...

Anybody here trying to tell me that all of this is not going to have ANY repercussions going into 2009? Really? The fallout hasn't even started yet. This thing can only snowball. And soon, all the OTHER Bernie Madoff's will be exposed for what they are, as well.

Keep your heads buried in the sand. The best is yet to come, Obama or not.
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Old 12-28-2008, 11:23 AM
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I think I posted the collapse of Enron, Global Crossings, WorldCom up thread. Things like this happen more often than people like to recall.

Similarly the US has seen DECADES of consolidation of "famous name" type companies. Some were done pretty orderly, others were very disruptive. Mergers effect thousands of people every year, some benefit others suffer. There are whole states that have been bleeding jobs for decades and there is no end in sight for many of them, yet the "solution" is that the state government has to downsize and scale back to efficiently provide services and not have some pipe dream that they can keep humming along. The result is not "collapse" it is adaptation. Collapse happens when corrupt cheaters decide to live outside the frameworks of laws OR the the laws themselves are so inflexible /dogmatic that no change is possible. In case no one else noticed, we have had MORE people take part in the recent presidential elections than ever. This is not a sign of people that are turning their back on Democracy, but of becoming more aware and active in it.

My goodness the Senate election in Minnesota is/was so close that a bus or two of people for either side would have won it.

I have no idea what the firms that Nor'easter lists have in common. I mean seriously, WaMu is part of bigger, safer banking firm, as is Bear Stearns.

Same is true for Wachovia, which as most banking insiders know, it was too aggressive a place -- almost the opposite is true of its new parent.

Merrill Lynch is/was a kind of dinosaur that probably should not have have been independent. Its new parent is going to have quite a lot of work to do to modernize the place and get back its investment.

Lehman Brothers is g_o_n_e, and the smart people from the firm landed in better places while the stubborn and clueless are hopefully in places were they will do less damage in the future.

AIG is crazy quilt of firm that clearly is operating well beyond the level of expertise of both its internal risk managers and external regulators. There is clearly a MASSIVE shortage of people smart enough to figure out how to unravel this firm. One analogy that I've heard is compare it to a hyper child spinning a Slinky round& round until it is a tangled knot -- with enough time and an awful lot of care a wise parent COULD undo all the tangles but the 'toy' will be so stretched out it won't work anymore. Instead it probably makes sense to get out some metal snips and carefully cut out the worst knots and try to have a much smaller, less fun, but still partially functional structure...

Fannie & Freddie are operating just as the GSE was predicted -- with not just an implicit government backing but actual REAL government money. Same sort of thing that happened with S&Ls several years back.

That leaves the automakers. Their massive capital intensive business NEED huge credit to function. If we want such firms we have to make sure there are functional credit markets. The current President has arranged some credit facilities, not necessarily a great deal for the tax payers, but better than some unhinged panic. Seems likely the new administration, and the legislators, will be revisiting this decision quite a bit. My guess that eventually there will be something like the "Lee Iaccoco K-Car and Minivans" to spark these firms back to at least sales enough to pay back the credit.

No idea if the time frame for the good news is 2009 or later, but there will be good news.
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Old 12-28-2008, 11:27 AM
Location: Los Angeles Area
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The idea that this event, whatever it is going to end up being, will be like the depression is just stupid in the first place. The landscape has changed so much since the great depression. Unfortunately when people use the word "depression", what comes to mind is the great depression and all of its events. So, if those events aren't occurring, then clearly this isn't a "depression". But that is gibberish.

Its not obvious how a similar decline in economic activity is going to feel like. Will there be soup lines? Unlikely.... The FED currently is using the "how to fight a depression" hand book. The actions are really right out of Bernanke's work on the great depression. So, clearly another depression (in terms of economic decline) is possible or otherwise they wouldn't be trying to fight it so aggressively. Now, the question is whether their actions will work or not.

The line that "people said this in the 70's too, that didn't end in a depression, so this won't either" is completely banal. After all, people could've said the same thing in the 1930's by referencing previous recessions. There is no point in putting your head in the sand and hoping things end well. Even if we avoid a full economic meltdown the financial landscape is likely to be rather different in a few years and this in itself is going to change the ways you successfully invest etc. The people that are putting their head in the sand and pretending the "good days" are going to return in a few years deserve to lose everything....
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Old 12-28-2008, 11:37 AM
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Originally Posted by John1960 View Post
In the Great Depression, many Americans lined up for food and soup. In the current economic crisis, many Americans line up to shop for bargains.

Although political and economic leaders have told us the current recession is America’s greatest economic crisis since the Great Depression, the two events are not comparable.

Mobile Breaking Oklahoma News | NewsOK.com
How can they even attempt to compare something that hasn't even happened yet. We are just getting started.
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Old 12-28-2008, 12:01 PM
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May I kindly remind people that not everyone has a 401k or such? If someone is distressed because their retirement savings are tanked, that's a whole 'nother level from not being able to buy food or medicine or not being able to keep a car on the road to get to work when so many jobs and homes are nowhere near public transport.
And back then, city people certainly didn't have access to gardening, and many many poor people were immigrants living in unregulated poverty and squalor, depending on day labor if anything to feed their kids. And a a lot of those people had their few belongings put out on the street and they were homeless without a weekly rent payment.
Just to say that I do agree that the overall situation is so different from the Great Depresson, when the majority of the U.S. lived in rural areas or small towns, when cars were rare and not necessary for most employment, when so much employment was rural, labor, cash.
I don't know if people will be lined up for soup kitchens. I do believe that not everyone who is hurting or going to be hurting is sitting on a pile of HD TVs or cruises. Some are, many aren't. The loss of blue-collar employment in this country has hurt a wide swath of people before any stock market things ever occurred.
I believe the crash of 1929 didn't *cause* the Great Depression, but was a sign of an absurd (and unregulated) bubble. But bursting bubbles have their own disasters following, and we certainly are likely to find that out.
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Old 12-28-2008, 12:13 PM
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Right with you up to the very last half of your last sentence, humanoid.

Looking just at the "survivor mega banks" there are Chase & Citi with their NY HQs, BofA spread out in NC, Wells in SF. They can all be MUCH more efficient with the franchises / territories they've acquired in this disaster because they've all had decades of experience in absorbing other banks, getting system to interoperate and deciding which customers are worth having. There is evidence that these firms are ALREADY dumping customers that are not profitable. In a relatively short time the ability to reel in credit and use fees to encourage customers to find a new bank could see these banks become hugely profitable. I can think of many scenarios that these mega banks could really use their massive transactions systems to benefit from new regulations and changes in the nation's banking system. Whether the congress critters see these changes as to consumer unfriendly / big brotherish may be irrelevant if the "economic crisis" deepens...

Similar changes in all kinds of sectors are also likely.

I don't see these changes as some kind of retro return to "good all days" instead I see potential for some MASSIVE shifts into a BRAVE NEW WORLD of exciting new opportunities. While I personally have great hope that the "hair trigger" nature of the current economic situation is slowed, that seems unlikely. Computers are getting faster, more ubiquitous, better connected. I really doubt that the "rocket scientists" that came up with poor models for the MBS markets are being told be their bosses "go back to slide rules and graph paper" -- they WILL almost certainly be forced to have more transparent models and other "safe guards" but SPEED will still rule the day and I won't "bet against" that.
For those that think the new administration is going JUST put more "safety nets" underneath the economy I think they are missing some obvious signs that they are smarter than that. Instead of spilling all the beans I will borrow an analogy form the world(s) or open wheel racing. The US is not the biggest market for this, though with CART & IRL it could have been had the rich US guys been a little more understanding of the F1 guys and the whole wacky world of FIA and a little less tied to the Nascar and domestic manufacturers. I know that most of real money guys behind US financial leadership are well aware of who/what could displace them, and they won't let that happen...

Certain kind of change are far more likely than others, I really can't thing of too many instance where financial markets go back to "old ways" and the odds of the financial markets continuing to drive the broader economy are very high.
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Old 12-28-2008, 12:33 PM
Location: Los Angeles Area
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Originally Posted by chet everett View Post
Right with you up to the very last half of your last sentence, humanoid.
Of course not, you need certain things to happen and are going to come up with whatever reasons you can to argue that those things will happen.

If running around mocking so called "doomers" makes you sleep at night go for it. Its not going to help your bottom line though....
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Old 12-28-2008, 01:03 PM
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I think the GLOBAL employment data strongly supports the fact that not just ME but a HUGE portion of the most highly compensated workers on the planet also work in the sectors that I cited -- it is not like I'm arguing that harpoon makers or kerosene lamp makers are going to make out fantastically.

I don't like to cite personal situations too often, because I do post on the Chicago specific forums too, but I have relatives in various sectors that'll be fine too -- employees of municipalities, health care workers, even the broad "food maker/marketer" categories are also very resistant to decline. Certain parts of even troubled segments will hold opportunity for many. Big difference between being a low skill retail clerk and the kind of person with skills in helping a retailer decide on smart ways to manage finances or adapt to changes in the retail landscape. Same is true when comparing some worker with skills from an automotive assembly line and an operations engineer that could take skills from setting up that assembly line and land a great job with a consulting firm that might be advising an alternative energy related manufacturing in how to scale from prototype to full production.

Of course if the "doomers" win alternative energy will be figuring out how tap into the survivalists latrine trenches and capture the methane not the sort of capital intensive high tech initiatives that traditionally flourish in eras of cheap money and economic disruption....

I think I've caught humanoid mention he'd like to shop for a house once prices come down, and I hope that works out -- that is very different than saying they'd like to ride out the lean times in yurt somewhere... Now if your business is yurts that would help out, Rainier Yurts but I think we are in the same broad category of worker, so I think that deep down you're rooting for the same things LONG TERM that I am...
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Old 12-28-2008, 01:37 PM
Location: Sanford, FL
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My grandpa is 80 years old and I asked him what this current downfall is equivlent to. He said he doesnt even remember the ones in the 70's and 80's. In the 70's and 80's he had three jobs and taught co-ed class and helped students get jobs. He compared our current to the one of the 1930's.
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