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Originally posted by grimreaper797
Anytime you create a system with the idea that the two parties will coexist and work with each other for equal prosperity, it will fail. If their is the possibility of somebody being taken advantage of, it will happen. Somebody will come along and do it.
Reciprocal altruism works in animal communities where the cost to the benefactor in any transaction of food, mating rights, nesting or territory is less than the gains to the beneficiary. The theory also holds that the act of altruism should be reciprocated if the balance of needs reverse. Mechanisms to identify and punish "cheaters" who fail to reciprocate, in effect a form of tit for tat, is an important mechanism to regulate reciprocal altruism.
Originally posted by babybunnies
Most economic historians will tell you that the current crash since September 2008 mirrors almost exactly what happened in 1929.
What most people don't realize, is that almost 2 years after the 1929 crash, in late 1931, there was a second crash after a brief market recovery, caused mostly by the Federal Reserve contracting the available money supply. The first crash caused the market to drop almost 60% in 1929 (I was telling people when the dow was still at 9,000 heading down from 14,000 that according to 1929 the 2008 crash would bounce off about 6,000 back up and was almost exactly correct).
In 1931, the crash was actually worse than the one in 1929. There was also a major crash in 1907 - sounds like timing is almost exact with the crashes of 1987 and later 2008 (1907 - 1929 = 22 years, 1987 - 2008 = 21 years). Therefore, another crash about 2 years later (IE NOW) would make sense if the bankers are using the same model (which I think they are).
Just another heads up - France and Germany both admitted today (Sunday) that they won't be able to service their current debt to keep their AAA credit ratings unless either (1) programs are cut back (France) or (2) taxes are massively increased (Germany). These are the two biggest economies in the Eurozone.
Expect the European markets to do some "correcting" on reaction to this news on Monday. I believe the US markets are closed for Memorial Day.
If the 1907-1929-1931 model is being followed by the 1987-2008-2010 model for what I think we all know by now is a crash engineered by big banks (as it was back then), the DOW should eventually crash to about 4500 this time.
After the false rally for several months until about early 1931, the DOW lost over 80% of it's value on the second crash, meaning if we were to see the exact same model we'd see a drop to about 2200 (20% of 11,000 - we got to just over 11,000 on the bounce after Sept 2008). I'm gonna be generous and a bit conservative and say we'll bounce off about 4500, as computerized trading should kick in and stop the selling when the DOW drops too far in a single day - something that wouldn't have happened in 1931.
Something else very similar to 1931, the cash supply is being contracted right now as well - reduced by about half a trillion dollars in the last 3 months alone. It's the biggest contraction of available cash in the market place in such a short time in US history.
At the end of the Roman Empire, the available cash supply was massively contracted by the money lenders, and led to 800 years of the Dark Ages when the Roman Empire subsequently collapsed.
[edit on 30-5-2010 by babybunnies]
[edit on 31-5-2010 by babybunnies]
Read your own post. The second crash in 1931 was created by the fed raising rates and pinching liquidity. If Bernanke is truly the foremost authority on the great depression then it certianly won't happen again this time around. We will have japan type interest rates for the next decade at least.