Are We In For a Greater Depression? 1929 vs 2008 DJIA

reply to post by LowLevelMason

The public is panicking because the public enjoys panicking ("I was there during the economic collapse") and because the government and media are encouraging it. They want you to be terrified so they can get away with all sorts of stuff. And they are being VERY successful.

Lowlevel is right. People started panicking without doing any of their own research to confirm whether or not panic was necessary. Had they done there own research they would have discovered that the market was not crashing as reported. The market is just correcting its 20 year advance. Often times markets will retrace approx 60% of their advances. We are looking at a bottom at around 6500.

The question people should be asking is why is this cyclical decline being used to create fear and panic?

reply to post by LowLevelMason


i'm listening prove me wrong my friend. but you need to give sources to back up your claims of fact. i really do hate the sky is falling bs. but its happening. i wish it wasn't and i wish their was a magical solution that will stop this tomorrow but there's not.

Note: The figure is calculated by dividing the number of unemployed individuals in the labor force by the total labor force. Technically, Unemployment Rate = (# Unemployed Persons in Labor Force) / (Total # Persons in Labor Force). Persons are considered unemployed if they are able and willing to work but without a job and have actively sought employment within the last 4 weeks. The labor force includes all employed and unemployed individuals 16 years and older. Thus Unemployment could technical alter based on changes in the number of people in the people in the workforce, or changes in the number of people looking for employment.

source

so the official unemployment rate is based on those unemployed that are actively seeking reemployment in the last 4 weeks. the rate doesn't take into effect the unemployed that have given up. so we really don't know the true rate of unemployment. 6.1% is the last official rate which was figured by the above explanation.

Completely different situations. About the only thing is the same is the fear mongering, hysteria, and panic - but that happens every time the stock market drops a lot. Which has happened quite often since 1929, I might add.

yep your right just the only thing is this drop has passed every other drop except the drop seen before the great depression. so i think people have a right to panic wouldn't you?

The problem is that these things aren't happening. There are no "unreported bank runs" - as we've seen with real bank runs, the media loves nothing more than to create hysteria by reporting on them 24/7. Also, UNLIKE 1929, there is the FDIC. Which is why most people are not panicking.

As almost all states require that their budgets be balanced, 31 are not even close to bankruptcy. In fact, 0 of them are close - although many states are still plagued by an inability to manage finances that might make you want them to declare bankruptcy.

yes the FDIC was created because of the 1929 crash. people are making runs on the banks why do you think they just raised the insured limit to 250k to try and slow the runs.

yes states are required to have balanced budgets. however they balanced those budgets on projected tax revenue, which they are coming up short on. and yes there are 31 states that are close to bankruptcy because of the decreased tax revenue.

The public is panicking because the public enjoys panicking ("I was there during the economic collapse") and because the government and media are encouraging it. They want you to be terrified so they can get away with all sorts of stuff. And they are being VERY successful.

the public was panicking while being told by the government and the media that everything was ok. And Bush telling everyone to remain calm is having the opposite effect. every time he talks during trading hours the markets drop!

Then you would also remember the 600+ banks that failed during the S&L crises, that the FDIC covered it all, and that it didn't cause a great depression. So far, what, 15 banks have failed this year? And your ready to declare the economic apocalypse?

As of September 2008, the DIF had a balance of $45 billion.[14] Bank failures typically represent a cost to the DIF because FDIC, as receiver of the failed institution, must liquidate assets that have declined substantially in value while at the same time making good on the institution's deposit obligations. In July 2008, IndyMac Bank failed and was placed into receivership. The failure was initially projected by the FDIC to cost the DIF between $4 billion and $8 billion[15], but shortly thereafter the FDIC revised its estimate upward to $8.9 billion. Due to the failures of IndyMac and other banks, the DIF fell in the second quarter of 2008 to $45.2 billion.

its not the numbers of banks that fail its the amount of the deposits the FDIC has to cover that will bankrupt the FDIC $45.2 billion won't go very far. as i have shown they do not have an unlimited supply of money even though you think they do.

once the FDIC depletes its funds they can get a loan from the treasury yes however the treasury would have to have the fed print money which will cause inflation. which means the fed will have to print even more money until its completely pointless.

Not really, the economy is very different every time financial distress happens. And its a government lie that "deregulation" caused this crises - they want you to believe that so they can regulate you more. As Ron Paul has noted, it is regulation which caused the problems we are in now.

its not a government lie that deregulation caused this. it is very much part of it. and if your going to quote ron paul then don't do it out of context. he said regulation wouldn't help solve this problem right now. BUt it was very much the deregulation of the financials that helped cause this.

Not even close. Although I do agree that lots of people WANT 1929 to happen again because they get some sort of sick pleasure out of watching those with more money than them lose it.

Please get some education on this. You have no idea what your talking about.

no one wants 1929 to happen again but we're not blind and we can see at the very least we are going to be close to have it happen again.

and you have alot of room to talk their buddy telling me to get some education. i think you need to get a refund on those degrees there, because your ignorance on what is happening is off the charts!

you think you know but you really don't. i've researched every possible thing trying to figure out why we are in this mess. i've read the acts that were passed to keep this from happening, i've read the acts that repealed those acts. and all you have done is prove you have no clue.

keep living in ignorant bliss my friend. mean while the rest of us are preparing for this train wreck and trying to understand why it happened so maybe just maybe we'll learn our lesson

[edit on 10/12/2008 by Mercenary2007]

reply to post by harvib



Perhaps because there is a lot more going on than a market crash/correction (however you want to call it). Credit markets feezing, bailouts we can't afford that can't happen fast enough to "fix it", people becoming homeless in droves, G7 Meeting, IMF warning of financial meltdown. It's all over the board, you don't even have to leave ATS to find it.

Yep, some of us are doing our own research and what we're finding isn't pretty. You can't look at just the stock market now and compare it to anything that happened in the past without factoring in all these other things taking place at the same time.

A little bank perspective:

One of the first biggies to fall was listed as a buy one day, then two days later it was gone. How does that happen.

Another thing, the FDIC has an unpublished (for obvious reasons) watch list of Banks that they are ready to intervene on because they are in trouble. It is said to be about 90 banks long. We don't know who's on it, but we did find out this. IndyMac wasn't on the list at all when they blew up.

Panic is being created by lack of trust in the system, not people getting irrational.

Anyone that thinks i'm wrong then i challenge you to prove me wrong. But you better back up your claims that i'm wrong with creditable facts and sources.

i really do hope i'm wrong. But the monster we are facing now has NEVER been seen before.

take the markets falling, the almost $11 trillion national debt, add in the frozen credit markets, bank failures. the emergency bailout plan that was suppose to calm the markets that failed, the G7 emergency meeting, the silent run on banks. and everything else that is happening right now and add it up we are headed for something. a depression i hope not but more than likely so.

I'm going to bed now. some peoples ignorance on here is very tiring

[edit on 10/12/2008 by Mercenary2007]

reply to post by Mercenary2007

its not a government lie that deregulation caused this. it is very much part of it. and if your going to quote ron paul then don't do it out of context. he said regulation wouldn't help solve this problem right now. BUt it was very much the deregulation of the financials that helped cause this.

Really? Do we fall for this every time. I asked in an earlier post why this cyclical correction is being used to create fear and panic. It was a rhetorical question. I was hoping people would figure out that it was being used to pass legislation we would never allow otherwise. We don't need more Government regulation especially of the free markets.

reply to post by harvib


the bailout bill didn't have any regulation in it other than how the treasury could spend the money!

every piece of legislation that was passed after the great depression to keep it from happening again has been completely repealed! there really isn't any regulations that have oversight on the financial sector. there are sectors of the markets that have zero regulation. we don't even know how big they are. so regulation is not the problem its the deregulation and utterly lack of regulation in some sectors that caused this. however the american public is also to blame. Easy credit has allowed us to live beyond our means and now its going to bite us in the butt!

reply to post by Relentless


I think you missed my point. The market was making a healthy correction until reports were issued that the market was crashing. People started panicking and as a result we are seeing a much more dramatic correction. As for the "bailout" it will not have the effect that we are being told it will have and it is not meant to. There should have been no "bailout". There should have been no ban on short selling. These things are counter productive. That being the case I wonder why they are happening?

reply to post by Mercenary2007

so regulation is not the problem its the deregulation and utterly lack of regulation in some sectors that caused this.

Please explain how. What regulation would have prevented the market correction?

reply to post by harvib

What regulation would have prevented the market correction?

This would be a good starting point:

www.abovetopsecret.com...

(I suggest reading the entire article quoted in the OP.)

And, not to mention the repeal of the Glass Steagull Act. You can go right to Wiki for a history on that. But in a nutshell, it took away all the protections that were put in place to prevent the GD from ever happening again - and they did this under Clinton's Admin, not like Bush probably wouldn't have done the same thing if it were left for him.

For shame what they did to this country.

There is a point on the Great Depression timeline which says it all.

1933: US goes off the gold standard.

That was kind of late. A transfusion was needed right from the beginning.

Economic disaster, as the Great Depression was, is now an issue of national security. If it comes to it, the government will go into banking business by itself. If the private banks won't be willing to lend, the government will. Here are the tiny clues:

Combined with the government's takeover last month of the mortgage companies Fannie Mae and Freddie Mac and its huge ownership stake in the crippled insurance company American International Group, the bank plan represents perhaps the largest federal intervention in private enterprise since President Truman's attempt to nationalize the steel industry to avert a strike in 1952 -- a move blocked by the Supreme Court.

The idea of taking direct stakes in financial institutions was adopted last week by Britain, which will in effect partly nationalize banks with as much as $87 billion in capital infusions and an additional $350 billion available for short-term loans. Some of the country's biggest banks have signed up, including Barclays and the Royal Bank of Scotland.

The vision of Great Depression repeating the way it went down is a hallucination. But things will get tight for sure; it's gonna hurt.

In these similar threads, I see so many people saying, "It's not happening here", "Everything seems fine around me" and other rose colored glasses responses. Yet, they seem to think, it appears, that the US is insulated from the rest of the world somehow. That what is already occurring in the UK, Iceland, the EU, etc. is not going to affect us in any way.

We have already heard of California needing an infusion of funds to keep it's state government running, and we have heard that there are at least 12 more states in line behind California.

Well here is what is happening in the UK. And people need to be ready for when it's happening here, which I *think* isn't too far down the road...

It is understood that dozens of the 100-plus local councils that are victims of the Iceland banking crisis use their accounts for the payroll of everyone from the chief executive to frontline staff. Until now it was thought only capital savings, worth £840m, were locked in the failed banks. But the accounts were also used as a quick way to earn interest to pay wages.

And in a fresh blow to the banking industry, The Independent on Sunday has learnt that seven councils are to withdraw a total of £2bn from British and foreign banks because they fear the crisis could claim more victims. The money will be transferred to government bonds, leaving a gaping hole in UK banking assets at a time when the Treasury is struggling to prop them up with its £500bn bailout.

A local government source warned that most of the councils caught in the collapse had invested funds from revenue accounts, used to cover recurring costs such as wages and local services, in Icelandic banks – with terrifying implications for staff and clients. It is not known which councils are affected, but conservative estimates of 50 authorities would cover more than 150,000 staff.

Local government difficulties

Interest rate swaps

In the 1980s, council officers, who were largely unskilled for the task, became involved in a sophisticated form of derivative known as an interest rate swap. Until 1988, when interest rates rose, councils made a tidy profit, but then huge losses were incurred. Hammersmith & Fulham council lost about £200m on investments worth £6bn, but eventually settled with many of its creditors.

Off balance sheet

Not yet a disaster, but there are plenty of critics of councils' – and central government's – habit of taking healthcare facilities and schools built through the private finance initiative off their balance sheets. The argument is that the risk of the project failing is borne by the private sector and so the project should go on its balance sheet. However, even some officials privately admit that it's a smoke and mirrors exercise to ensure big investments do not come out of a local or central government budget.

source

I didn't post the entire article, just some pertinent paragraphs, I do recommend that people follow the link and read the whole article. But... I am finding more and more that many (not all) people here do not bother to follow the links to the sources and read it for themselves

We live in a global economy. But you can take the excerpt above and replace Icelandic Bank with Hedge fund or Bond fund or anything else and it could easily fit what is happening in the US too.

Maybe it is just the enormous size of our country, or that the states for the most part are self regulated, but the effects are starting to show, we see little cracks in the dam that is holding back our flood forming, and small leaks are being felt.

It is only a matter of time

Edit to add: An ABSOLUTELY MUST READ


[edit on 10/12/08 by redhatty]

New York Times has a similar graph comparing all major bear markets. www.nytimes.com...

I wish I could upload an image...

I do think that the media does enjoy inciting panic over this. When I went to CNN over the last week, the front page photo every single day was a picture of someone looking stunned on Wall Street. Covering their mouth, head bowed, staring wide-eyed at the ticker... it's obvious they wanted to really push the "omg we're screwed!" agena. One picture, I swear the guy was just covering his mouth in a yawn, but they posted it as if he was terrified...

I'm not positive why... either to promote "interest" and boost their own worth, or some other more sinistar agenda, who knows. But CNN had a blast last week trying to make it as grim as possible. From photos the headline, using as many power words as they could (plummeted.. free-fall, etc.). It reminded me of many threads I see here..

reply to post by Mercenary2007


The FDIC can borrow as much money as it needs or get money from alternative sources, as it is backed by the full faith and credit of the United States government:
www.fdic.gov...

Its not running out of money. It didnt with 600+ S&L banks, and it won't today when only 15 or so have failed.

yep your right just the only thing is this drop has passed every other drop except the drop seen before the great depression. so i think people have a right to panic wouldn't you?

Totally not true on a percentage daily percentage basis. When you look at the market by YEAR or MONTH or QUARTER or DAY, which are the normal time units, its not even close to any major event. Of course when you look at it by week it might be closer - thats called CHERRY PICKING DATA.

so the official unemployment rate is based on those unemployed that are actively seeking reemployment in the last 4 weeks. the rate doesn't take into effect the unemployed that have given up. so we really don't know the true rate of unemployment. 6.1% is the last official rate which was figured by the above explanation.

Again, your trying to be deceptive with statistics. Its well known that there just ARENT that many people who have just "given up" - the Great Depression had a 30% unemployment rate and it was very obvious. Let me know when your city starts lining up for soup, and then you can declare unemployment to be wrong. Until then, its very accurate. It would be easy to catch those who have given up by looking at other statistics such has homeless numbers - which, surprise, haven't gone up that much.

yes states are required to have balanced budgets. however they balanced those budgets on projected tax revenue, which they are coming up short on. and yes there are 31 states that are close to bankruptcy because of the decreased tax revenue.

Completely false. You are literally making this up. While its true that budgets are based on projected taxes, you forgot that the Governmental Accounting Standard Board requires all government units to have rainy day funds within their general funds, and that fund must be of a large enough amount to cover anywhere from 15-30% of project revenue shortfalls. No matter how bad you want to believe it is, there isn't a single state facing revenue decreases of that much. In the event that some astronomical event occurs that has not yet occurs, governments can sells bonds to make up shortfalls.

the public was panicking while being told by the government and the media that everything was ok. And Bush telling everyone to remain calm is having the opposite effect. every time he talks during trading hours the markets drop!

Wrong. The media and government has been doing nothing but telling everyone to act hysterical and panic since this began.

its not a government lie that deregulation caused this. it is very much part of it. and if your going to quote ron paul then don't do it out of context. he said regulation wouldn't help solve this problem right now. BUt it was very much the deregulation of the financials that helped cause this.

Wrong again. Ron Paul has stated that government regulation was the cause of the financial crises. And he's right.

Stop embracing ignorance. Stop spreading hysteria. Stop fear mongering. Its not based in reality.

reply to post by pause4thought



It is not the banking sector that is solely responsible for the market decline. All sectors have been steadily declining since last year. We don't need more government regulation, we need people to not accept items as barter that have no value. Panic is being created to push through more regulations and controls. When will people stop asking to be parented and begin to take responsibility.

reply to post by harvib

We don't need more government regulation... When will people stop asking to be parented and begin to take responsibility.

Hi harvib

I know what you're trying to say, but I have to disagree with the analogy. Young people need moral guidance from guardians, but society requires them to conform to a legal framework as well. When a youth commits a crime you bring in the police, not the parents. Asking the markets to take responsibility is like asking a young person to find their own way and just hope they'll find a moral compass. It's somewhat naive and a recipe for delinquency, if not downright criminality - which is, in fact, what has been increasingly evident in the stock market since the legal checks and balances were relaxed. (And whereas a young person can learn from their mistakes, their mistakes are not going to endanger the stored wages and pensions of an entire planet.)

And the fact that the legal framework is now so weak means there are grounds for believing the lawmakers themselves are delinquent, or even mafiosi.

Panic is being created to push through more regulations and controls.

Yes, but political regulations and controls, not financial ones! And the panic has been created as a result of the financial shenanigans that were only possible because legal regulation has not been strong enough to discourage shabby dealing and rule-bending.

...we need people to not accept items as barter that have no value.

You mean the end of the dollar?

reply to post by pause4thought

Asking the markets to take responsibility is like asking a young person to find their own way and just hope they'll find a moral compass.

I think you are confusing the free market with the corporation. Corporate reform I would agree is needed by deregulation of Government protections.

The corporation has developed as a rouge nation who has bought protection from the nation it depletes. The ability of "corporate america" to be protected is through Government Regulation. Of which we are constantly coerced into giving more.

A free market is a natural extension of a free society. As you can't have a free society when you impede on the ability to freely barter. Control of a nation always begins with this fundamental acquisition.

Individuals have become completely reliant on their Government. Where people used to use their land to grow produce or maintain livestock they now grow "lawns". It’s absolutely absurd and makes it very easy for supply to be controlled and coercion to be extreme.

If people are looking to avoid these same pitfalls the answer is going to be to take responsibility of their own needs. If people choose to be reliant on another then they must accept that they are subject to their provider’s whimsy.

Yes, but political regulations and controls, not financial ones!

Financial regulations are political. Are they not?

You mean the end of the dollar?

Does the dollar have real value? If it does not, then yes the dollar would be included.

reply to post by harvib


I agree we may be talking slightly at cross-purposes in some places. However from this reply you made earlier I understood we were specifically discussing regulation of the financial markets:

Originally posted by harvib
reply to post by Mercenary2007

 

its not a government lie that deregulation caused this. it is very much part of it. and if your going to quote ron paul then don't do it out of context. he said regulation wouldn't help solve this problem right now. BUt it was very much the deregulation of the financials that helped cause this.

Really? Do we fall for this every time. I asked in an earlier post why this cyclical correction is being used to create fear and panic. It was a rhetorical question. I was hoping people would figure out that it was being used to pass legislation we would never allow otherwise. We don't need more Government regulation especially of the free markets.

(emphasis added)

I am therefore not referring to corporations, and in fact I agree that there are big problems with the way governments can regulate to protect corporations at the cost of others' rights. I disagree that this is evidence for the need for less regulation, however. 'Bad laws' is not an argument for 'less laws' - or for 'no laws'.

I get the impression you are trying to extend the concepts of total "freedom" and "liberty" to the financial markets both as a high moral principle and in terms of what you believe to be most effective. However a society based on freedom and liberty but which had no laws to govern it would be anarchist. You might see that as an ideal, but in the real world human corruption means such a society would be characterized by abuse and oppression.

Likewise in the realm of financial markets, insufficient, inept or ignored regulation plays into the hands of those who would systematically abuse the system no matter what the cost to others. And that, I believe, is what we have seen. (c.f. the previously quoted article).

When I said the undesirable laws being brought in on the back of panic were political, not financial, you said:

Financial regulations are political. Are they not?

-Only to the degree politicians of different persuasions would argue for differing degrees of regulation. It would take an anarchist to argue against the need for a legal framework for financial deals and investments. All the more so when the financial vehicles being employed are sometimes so complex they can all-to-easily couch dodgy practice in a haze of smoke and mirrors!

Financial regulations are therefore inherent to the principle of the rule of law. And that too is a high principle.

Originally posted by harvib
reply to post by pause4thought

 

You mean the end of the dollar?

Does the dollar have real value? If it does not, then yes the dollar would be included.

Seeing as you agree with me, I will go further. Currency per se that is not based on something of universally-recognized intrinsic value also needs to go!






[edit on 15/10/08 by pause4thought]