When you work in this part of the country, Chicago, you wouldn't even
think that there is a mild recession in progress, let alone a potential
Depression right around the corner. The highways are clogged with
commuters, Ohare is filled with departing vacationers, gas has dropped
a whopping 90 cents a gallon since this Summer... on and on.

I don't know about other parts of the country, but Chicago certainly
doesn't seem to be heading for a Great Depression. It's quite amazing
considering that we have a whopping 12% sales tax and the highest
electricity rates in the nation.
-cwm

reply to post by tide88

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That's not true. The government tried, but their efforts were futile. Hoover and his gov't bought farm surpluses, made emergency loans, raised tariffs to try and bring more money into the system, and pushed out big public works projects to supply jobs.
It just didn't work. Many of his decisions were wrong (Hawley-Smoot), the rest were just ineffective.

Here's a good link with some more information.

If the global economy collapses, I think ten years is really a minimum sentence.... One year ? It took twenty and a world war to bring america back from 1929...

There is more going on than crashing markets worldwide, high oil prices and deflating real estate.

People are frightened and it is this which will lead to a Great Depression worldwide. People who don't have confidence or feel secure will withdraw and their withdrawal is what will, cumulatively, depress the economy.

It is already occurring.

first the government says we are not in a recession only a correction now we're talking about a depression. everybody keeps trying to convince the the people with all their knowledge and experience as financial leaders and forget about the little people who are already in a depression........................no job. businesses closing at a rapid rate. america has no industry, no manufacturing, no farmers and every one seems to have their own place so we no longer have a family unit which is the basis of our economy.

i'm sure the financial wizzards are going to come on and say the same thing all the financial wizzards are saying.............it's going to be ok..............look at the charts..........! ha ha ha ha

I agree if the economy collapses. My predictions are based on the rescue plan working. If it fails then I agree with you. Okay so there was some things the government did that did not work. I stand corrected. However they did not do the same things we are doing today. ONe of the main causes of the great depression were bank failures. Hopefully this rescue plan with prevent that.
source Hopefully the great depression taughts us how to avoid it from happening again. Guess we will all find out. I pray it has.

[edit on 9-10-2008 by tide88]

reply to post by tide88

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Our monetary sytem ensures that there is always more debt that liquidity. You can not create liquidity without creating even more debt. The government is powerless in my opinion, because even a 10 trillion injection to save the banks would only create more debt and more inflation. The money they are trying to save people with is created out of thin air, fresh from the fed's mints and the bankers/traders know this.

We haven't even reached levels seen in the '80s let alone during the great depression....


I think you're overestimating a bit. No, not a bit, a LOT.
Remember the dust bowl? lol


Wow man....
We've had debt since the country was founded.
Could you clarify what you're talking about?


And most people still aren't...


Very false. We're talking about the 1930s not the 1700s. Remember that whole industrial revolution thingy.
And again, remember the dust bowl? Part of the reason why the Great Depression was so bad was because of the failed farming industry.


That a gut feeling or based on something substantial?

Ive got news for you, it takes time to get there. With every passing day everything everyone said against the crash of the US economy goes right out the window. We are almost below 8k now on the DOW? Global markets are crashing? Silent bank runs are happening?

You couldnt be more wrong, you are just an optomist. With to much to lose. You probably made bad decisions and staked a claim in a failing economy. Youll have to face the facts very very soon. Weeks or months. Its all the same.

The mistake far too many people are making is looking at the Great Depression and comparing it exactly to today's world.

Yeah, the banks failed back in the 30s and that was a huge part of the problem. Yeah, no FDIC insurance back in the 30s, so people lost their savings.

We're experiencing some similarities today, but not only are they on a different scale, but there are issues today that didn't exist 85 years ago.

Here's the breakdown. Credit markets are frozen. Banks aren't lending to each other, and if they are it's at extremely high rates.
Banks are very quickly beginning to stop loans to commercial entities. Short term loans, the type of "credit" today's business model relies on. Do you think Target pays with a wad of cash when their stores get a shipment of Halloween goods? Do you think your local grocery hands over a stack of $100s when their bread shipment comes in?
These purchases are made on CREDIT. They get an invoice, and they pay it back in a week or a month or three months. Nearly every business operates in this manner. My restaurant does. Your local JC Penney's does. The corner gas station does. A short term line of credit is extended from vendor to buyer, the buyer has a short term line of credit from the bank to pay the vendor, the buyer pays the bank back when its inventory has sold.

THOSE LINES OF CREDIT ARE DISAPPEARING FAST.
Everything the government is doing is to "open up" the credit markets. We've all heard that on the news. The bailout is to open up the credit markets. The rate cut is to open up the credit markets. The injection of hundreds of billions of dollars is to open up the credit markets.
They're not opening up! The LIBOR has shot up to the highest point of the year, the TED spread has shot up to an all time record. It's not working. The banks do not trust each other because no one knows how much exposure banks have to not just toxic debt, but to the Credit Default Swap market. Dumping over a trillion dollars into toxic debt is NOT going to restore trust. It will not work that way.

Until the exposure to the CDS market is sorted out, we're stuck. Banks will fall. Until the banks fall, we will have NO WAY TO KNOW how much crap they have under their belts. Until we go through this domino cascade of banks falling and CDS contracts coming due, we're STUCK.

Why do you think the gov't wants to make loans to private companies? It's because the banks won't do it! And that puts us into a damned if you do, damned if you don't situation. If the gov't doesn't make those loans available, you are going to see food shortages, gas shortages, clothing shortages, shortages of everything sold retail. Restaurants will close. Big retailers will go bankrupt. If the gov't does make the loans, we'll see the big stores stay open - but as people continue to reign in their spending, less will be sold. And people ARE reigning in, and they WILL CONTINUE to do so because banks are still pulling back on the credit market. Credit cards are becoming more difficult to get, limits are being lowered, and it's going to get worse. People will have to live within their means for once, and that means less spending.
The less spending, the more layoffs. The more layoffs, the less spending. It will continue down that path until the economy rights itself again.

We are headed into new territory here, and comparing the current situation to the Great Depression is short sighted and the complete opposite of correct.

Where did America go during that time? Prohibition ended in 1933. Happy days are here again. We rock!!!

itulip.com...

Here's a great comparison I read recently showing how the 1929 depression is not as closely related to our current situation as the 1870's depression.

reply to post by stikkinikki

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That was ironic, right ?

reply to post by ThatsJustWeird

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I didn't feel like quote-worms so a clean break.

Comparitively we are a far, far past industry production today than then. While GDP is higher remember that we are dealing with far different scales as to what a dollar is in 2008 vs 1930. Today less than 25% (very conservative estimation) is industry producing domestic goods. When in 1930 it was more like 75%. Therefore a smaller rop today is a much larger impact.

Personal investment in the markets is far higher than you are thinking. In 1930 good (above minimum wage) jobs offered pensions. Today you have 401K for retirement. Also look at how profit is divided by a company. Large executive salaries and bonuses versus investment in pension funds and reinvestment and expansion within the company.

Gold standard was alreay gone but the silver standard was not. Then again it was a fairly new transition at the time. Today a dollar is a dollar's worth of labor for many manufacturing hourly workers it is roughly 5 minutes. For management in is a few seconds to a couple of minutes wasted at the coffee pot or surfing the net. Changing the litterbox takes about five minutes so does changing a tire once everything is laid out. If I gave you a dollar for either you would more than likely feel offended, but yet offering $12/hr in a factory is acceptable for many even if the factory does $37 million in sales and could easily afford to pay you more.

In 1930, most people knew how to preserve meat without refridgeration. Sure we can say salt it or smoke it, but do you know exactly how to do that today? Does the majrity of the people? In the grocery store you will pass up hambermeat that is grey on the edges as "no good". Meat naturally greys within hours after processing as the remaining bit of blood drains out and the meat becomes oxidised. Much how an apple turns the brownish-yellow if you take your time eating it. That grey hamber in the package simply did not get enough red dye before being wrapped.


I could go on and on in comparing and constrasting but I don't want to bore too many people. But I will sum it up as this, if it happenes we will make the Great Depression look like a picnic.

[edit on 9-10-2008 by Ahabstar]

reply to post by Ahabstar

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Agree with most of that, but the Gold Standard was definitely in full effect. It was the full removal of the Gold Standard in '71 by Nixon that doomed us to this eventual fate!

True.

We are headed for a global depression.

(Not intended to be a one liner.)

(Really!)

reply to post by HimWhoHathAnEar

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Quite right...I was thinking of Sweden and Britian dropping the Gold Standand in 1931. During the Depression the US bumped the price of gold at $35/ounce (up from $20/ounce) and the rest of the world pegged to the US dollar as the standard after WWII when the US made the $35/ounce a fixed rate.

Nixon nuked the gold standard in 1971 in order to afford Vietnam. While destroying the value of a dollar by pure inflation and lack of tangible value we left the world a complete mess as it became the Petrol-Dollar thanks to OPEC (forced) adoption.

It's foxnews, PERIOD. Blossom Goodchild in fact has far more credibility than Foxnews will ever have. I don't care how many PHD's and laureates they hire to spread disinformation.

Good points good points!

You may want to add a higher population in there too.

I'm even more worried now.

Amen brother, that is what I'm saying. I feel bad for all who are experiencing hardships right now and will in the future, but I personally am cheering every time we get closer to rock bottom. The old paradigm is dead and a new system requires this coming collapse and some birthing pains.