Can we all finally agree that we are going to see The Great Depression II?

i like the discussion going on people are concerned but optomistic

there are a couple posts that seem false but sometimes i make statements that aren't completely accurate when i am thinking fast and full of a bit of emotion.

Originally posted by LowLevelMason
As the data and every single credible economist strongly believes otherwise, I would say we definitely would not agree.

be careful what economists you listen to , the MSM economists are RENOWNED for being cheerleaders for the markets , count how many bottoms they have called, they try to manage your perception, banking is a confidence game, and they give "wishful thinking forecasts" and this is UNDERSTOOD should you go to a decent message board to learn about the markets further ( I tulip forums, Market ticker forum, Mish's global economic trends and analysis, etc, etc, etc) They prey on those who let there emotions and hope determine there management of money.

Some conservative guys i follow are starting to use the word depression and this concerns me greatly.

Consumer lines of credit are being cut and so are corporate lines , this is a peak debt issue as well, and there is no way that more debt is going to solve it , especially when this economy is dependent on consumption and to add insult to injury american's have very low saving's on average.

To the poster that said the Stock markets fair value is 30% higher i would like to get a glimpse of your reasoning.

Given the growing unemployment that will continue thru 2009 and house prices still falling, combined with cut backs in consumer credit how do you think Corporate earnings won't dissapoint as it usually does. (The forecasts for earnings on the S&P) are laughed at by nearly all economists that type outside of the MSM cheerleading channels. They will be continually revised downward and what i believe you will see is a rally back to about 10,000 or so on the stock market thru winter and most sheeple's hopes will be up ( as obama's stimulus plan will shift some money from bonds to stocks and commodity's) but then when earnings continue to be dismal and credit is continually cut back, reality should sink in for investors, and we likely will break new lows.

2009 will be worse than 2008 .......i see 2010/2011 period as the big ?

[edit on 3-1-2009 by cpdaman]

People don't believe a depression is possible because they don't have a good understanding of what a depression is. Most people conceive of a depression in a very "dramatic" way -- like most other topics, they have been conditioned by the media to look at it as a series of cinematographic jump-cuts, perhaps with stirring orchestral music in the background. We see grainy old black-and-white shots of bankers plunging from windows, ragamuffins in floppy hats selling "apples: 5 cents," old-timey model-T cars rolling around, breadlines, solumn-faced farmwives in gingham dresses. Or perhaps they conceive of it as a "Mad Max" movie, with motorcyclists in ridiculous 80s hairdoos riding around the desert shooting each other and eating dogfood out of tin cans.

Then they look out the window. The sky is blue, some kids are playing on bikes at the end of the cul-de-sac, the birds are chirping. They have to do the same daily grind as always -- wash clothes, make dinner, etc etc -- they literally can't put this slow, stately, and boring (yet comforting) perception of daily life in the same conceptual space as the dramatic scenes above. So it seems like "it could never happen here."

Well, what people forget is that it took a whole decade for the depression to pan out. You had 25% unemployment during the great depression, which means 75% were going to the office or factory, etc. every day: not great numbers, but hardly Mad Max-land. Things happened slowly, there were plenty of days with blue skies, people continued to get married and have kids, and some businesses even thrived.

The ONLY way to get a grip on what is going on is to look at the NUMBERS and complely put aside any emotion-based analysis rooted in film imagery, or "well my buddy's company just got a ton of new orders so I guess everything is good." The experience of your buddy, one person among millions, has NOTHING to do with overall conditions. We can only gain an understanding through NUMBERS. And its worth remembering that the numbers today are highly "massaged" and manipulated by the govt and companies to make things look better than they really are.

To get the true picture, you have to comb through all the fine print, something that makes people's eyes glaze over. You also have to realize we have had just one bad year so far. We won't know for five years or so whether this is the beginning of something horrific or just a hiccup. I will tell you that my analysis of the numbers and facts suggests this is more than a garden-variety recession. We have seen the entire investent banking industry go up in smoke, and we are only now starting to get the highly disturbing numbers in from the murky worlds of private banking and hedge funds. This has been the worst year for the stock market in percentage terms since the 1930s, and also the only time that housing has fallen nationwide since that decade. Unemployment numbers are reported as being much lower than they really are, because they don't count people who have been without work for more than certain period of time (several months). The dollar is cratering, manufacturing orders are at 1950s levels, retail is having a bad year (although a few companies might report decent sales)...I could go on and on. Then there is debt, derivatives, and other 500-pound elephants luring under our sofa.

All of this will take years to play out so don't expect to look out your window or at your neighbor's lawn and draw any meaningful conclusions. The economy is too large and complex for the human mind to fathom on any intuitive, emotive level, or even through personal experience. All we have are numbers, and for now they ain't pretty to say the least.

reply to post by silent thunder


I agree 100%. It is too big and going too slow for anyone to see what is really happening. And all we have are the numbers to go by and a lot of them have been messed with. It will get worse before it gets better and that is about all that can be said for sure.

The '29 crash started in September, gained through December, and recovered 60% by March '30. They thought the worst was over.

Turned out the fundamentals were still broken. Over the next two years the market declined to 13% of it's rebounded value.


The unemployment rate in '29 was 3%. In '30 it was 8.6%, '31 - 15.6%, '32 - 24%, '33 - 25%. Here's a graph comparing unemployment then and now:

Just as an FYI - Herbert Hoover was president from '29-'33. FD Roosevelt was president March '33, four months before the DJIA bottom (2.5 years after the '29 market crash). By the end of his first term in '37, unemployment had gone from 25% to 14% (in '38 it rose to 19% again). Unemployment didn't drop below 10% until 1941, when we joined WWII and the economy began to recover. Wars can be profitable, as long as they're not fought on your soil.

From Wikipedia: en.wikipedia.org...

When Roosevelt was inaugurated in March 1933, the U.S. was at the nadir of the worst depression in its history. A quarter of the workforce was unemployed. Farmers were in deep trouble as prices fell by 60%. Industrial production had fallen by more than half since 1929. Two million were homeless. By the evening of March 4, 32 of the 48 states, as well as the District of Columbia had closed their banks. The New York Federal Reserve Bank was unable to open on the 5th, as huge sums had been withdrawn by panicky customers in previous days...

The DOW didn't recover to it's '29 peak until '54 - 25 years later.

[edit on 5-1-2009 by Dbriefed]

[edit on 5-1-2009 by Dbriefed]