Crash of 1929 vs. Today | Forex Factory

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Crash of 1929 vs. Today

  • #1
  • First Post: Mar 7, 2009 2:50am Mar 7, 2009 2:50am
Anything related to the parallels between the 1920's boom before the Great Depression and the recent boom before Great Depression 2 coming our way.

"Jessie Livermoore never had to stop for a red light".

http://video.google.co.uk/videoplay?...+crash+of+1929

I was watching this and saying, wow, things haven't changed all that much...
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #2
  • Mar 7, 2009 5:35am Mar 7, 2009 5:35am
Quoting LasVahGoose
Anything related to the parallels between the 1920's boom before the Great Depression and the recent boom before Great Depression 2 coming our way.

"Jessie Livermoore never had to stop for a red light".

http://video.google.co.uk/videoplay?...+crash+of+1929

I was watching this and saying, wow, things haven't changed all that much...
Las thank you for posting that...

All I can say is that is scary, bloody scary! we sure have the 20-30 year financial memory!

I am rather speechless right now at the end of watching that.
  • #3
  • Mar 7, 2009 6:03am Mar 7, 2009 6:03am
Someone give me Timemachine...
  • #4
  • Mar 7, 2009 3:32pm Mar 7, 2009 3:32pm
History seems to repeat...

Watching and reading about the 1907 & 1929 is very much like today.

Here is a quick video by Milton Friedman with some general info about the gold standard and Fed Reserve during 1929.

Inserted Video


I wonder since the US Dollar is the reserve currency that the dollar strength is related to inflows of funds into the US, which seems similar to how gold used to be brought in...
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #5
  • Mar 7, 2009 3:46pm Mar 7, 2009 3:46pm
Well a lot is different today.

1) Information is rampant today. Internet and 24 hour news make today's investors more informed than the delayed radio broadcasts of the 20s.

2) America did not have the wealth then that it does now. Post WW2 economic boom hadn't happened.


I think the closest parallel to the 29 stock market (which was unregulated) is the recent housing boom. Govies were not regulating people flipping houses, thus the dramatic over-valuation of home prices. Same thing happened in 29 w/ the NYSE.
  • #6
  • Mar 7, 2009 5:39pm Mar 7, 2009 5:39pm
Quoting tdion
Well a lot is different today.

I think the closest parallel to the 29 stock market (which was unregulated) is the recent housing boom. Govies were not regulating people flipping houses, thus the dramatic over-valuation of home prices. Same thing happened in 29 w/ the NYSE.
I guess I was looking more at peoples attitudes. Stocks always go up, similar to what we saw in housing. Home prices only go up, the boom that will never end.

When I was younger and didn't know anything about markets (not claiming I know now either, but more than I did back then) I was all caught up in the Tech boom. I guess how people act in mania's is for the most part the same regardless of the times.

I knew there weren't any credit cards in 1929, but I was surprised how much "consumer credit" there was
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #7
  • Mar 7, 2009 11:32pm Mar 7, 2009 11:32pm
It is all captured in the excellent book:

Extraordinary Popular Delusions and the Madness of Crowds
by Charles Mackay
  • #8
  • Mar 8, 2009 5:37pm Mar 8, 2009 5:37pm
Quoting tdion
I think the closest parallel to the 29 stock market (which was unregulated) is the recent housing boom. Govies were not regulating people flipping houses, thus the dramatic over-valuation of home prices. Same thing happened in 29 w/ the NYSE.
The boom didn't happen because of lack of regulation as much as it did because of too much regulation. Were it not for the Federal Reserve pumping too much credit into the economy in the 1920s or the 2000s, we wouldn't have seen such a huge boom or bust.
  • #9
  • Edited 6:37pm Mar 8, 2009 6:17pm | Edited 6:37pm
One thing that stands out is that businesses spent far ahead of what they could ever afford to repay in the great depression. One could say that the same occurred to home buyers in the current bubble. Also the inflation of resources in current times with the oil epidemic or so called king huberts peak and the huge reliance on oil. Although one could say it's one of manipulation buy the oil industry. The cost of energy is a huge factor on debt since all industries and consumers rely on oil in one form or another. Just pointing out a key difference today.

Back to my point! Sadly in the first depression many corporations and businesses spent 1000s of times of what they could ever bring in, expanding on an unknown future. It was the roaring 20's and nobody ever thought that it doesn't go up in a straight line. Well with the over loose and unregulated business world many were coaxed into buying stocks and making other investments based on huge leverage. Of course the whole system collapsed with no degree of sustainable growth after the huge surge led to a halt on society that over expanded in a short period of time without realistic long term planning. I'm not against growth, there would be nothing without it but it was out of control at the time just as was the housing boom of today.

Can you imagine if people couldn't borrow though. Everyone would have to build their house with one stone lol at a time and have no incentive to be productive for the finer things in life and what independent industry offers unless they were born of a rich family. If everone had to save and save to make a big purchase some would never be able to. A society without free cashflow is a dead one and one without a reason to be productive or a way to achieve independent wealth.
Before Forex I was tall, and clean shaven. Now I am an Ewok.
  • #10
  • Mar 14, 2009 12:29pm Mar 14, 2009 12:29pm
I am stockpiling guns and butter-and the butter is to make sure my guns dont rust!
FF = Forex Faggots
  • #11
  • Mar 14, 2009 2:55pm Mar 14, 2009 2:55pm
Quoting tdion
I think the closest parallel to the 29 stock market (which was unregulated) is the recent housing boom. Govies were not regulating people flipping houses, thus the dramatic over-valuation of home prices. Same thing happened in 29 w/ the NYSE.
well said. bad things happen when the general public is given leverage. if you look at the fact that people had more leverage buying houses in 07 than they did buying stocks in 29, it certainly becomes possible that we could eclipse the great depression.

im not betting that way, but its definetely a risk to my positions imo.
Relax and be happy.
  • #12
  • Edited 10:46pm Mar 14, 2009 3:41pm | Edited 10:46pm
Hey Merlin - what cha up to these days.

How about this nugget:

"More than 9,200 of the loans insured by the FHA in the past two years have gone into default after no or only one payment, according to the Washington Post analysis of federal data".
  • #13
  • Mar 14, 2009 10:27pm Mar 14, 2009 10:27pm
Here is a cool timeline, not sure how accurate it is...

http://www.huppi.com/kangaroo/Timeline.htm

What is interesting unemployment peaked at 24.9% in 1933, in 1931 it was 15.9%.

So what is it currently? Well, Shadow Government Statistic is saying the following:
"February Payroll Loss Was 899,000 Net of Concurrent Seasonal Factor Bias • Annual Percentage Contraction in Jobs at 50-Year Low • SGS-Alternate Unemployment Rate at 19.1%"

Or you can go with the goberment number of 8%.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #14
  • Mar 15, 2009 5:24am Mar 15, 2009 5:24am
yep, after I try forex and learn how devastating a leverage could be.

I trumble every time I look at house market that has yet to fall around where I live.

for most people, it's much safer not to invest anything at all..

Quoting merlin
well said. bad things happen when the general public is given leverage. if you look at the fact that people had more leverage buying houses in 07 than they did buying stocks in 29, it certainly becomes possible that we could eclipse the great depression.

im not betting that way, but its definetely a risk to my positions imo.
  • #15
  • Mar 15, 2009 6:41pm Mar 15, 2009 6:41pm
I looked at your profile and see you are in China. I thought the housing in China corrected already? Maybe that was the stock market...

I think China / Asia will come out of this thing ahead of the rest of the world...
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #16
  • Mar 16, 2009 5:58am Mar 16, 2009 5:58am
Quoting tdion
Well a lot is different today.

1) Information is rampant today. Internet and 24 hour news make today's investors more informed than the delayed radio broadcasts of the 20s.

2) America did not have the wealth then that it does now. Post WW2 economic boom hadn't happened.


I think the closest parallel to the 29 stock market (which was unregulated) is the recent housing boom. Govies were not regulating people flipping houses, thus the dramatic over-valuation of home prices. Same thing happened in 29 w/ the NYSE.
Exactly, and that's what caused the current crisis, markets are different, but same thing happens. People do not learn very well.
  • #17
  • Mar 16, 2009 10:49pm Mar 16, 2009 10:49pm
Home owners I think are more of the scapegoat. Redirect all the focus on them and not look at the real problems. Highly leveraged CDO's, naked shorting, removal of uptick rule, getting rid of the Glass-Steagall Act, I know you folks can add more to the list.

But the average shmuck looking to buy a home collapsing the WHOLE US ECONOMY. Too much of a stretch for me. Couldn't we have purchased all the mortgages with the bailout money be now?

Speaking of which were did all the money go? LOL
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #18
  • Mar 24, 2009 12:30pm Mar 24, 2009 12:30pm
The goverment would stop a crash before it happens & if one should happen a bailout plan would clean it up just as is being done for the banks & AIG. No worries as the taxpayer would be funding the process. The stock market is now TOO BIG TO FAIL.
  • #19
  • Mar 24, 2009 6:32pm Mar 24, 2009 6:32pm

This is an interesting note: John Kennedy once said to a assembled group of scholars in the White House, "I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered at the White House - with the possible exception of when Thomas Jefferson dined alone." Was he actually predicting the future when making these statements? Or is it just that it is so obvious we don't even see it.

The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.


Thomas Jefferson


It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.


Thomas Jefferson


I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.


Thomas Jefferson


My reading of history convinces me that most bad government results from too much government.


Thomas Jefferson


No free man shall ever be debarred the use of arms.


Thomas Jefferson


The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.


Thomas Jefferson


The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.


Thomas Jefferson


Very Interesting Quote:

Banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.

In light of the present financial crisis, and the 1929 crash, it's interesting to read what Thomas Jefferson said in 1802.

Best,

Will

It's me...
  • #20
  • Mar 24, 2009 10:27pm Mar 24, 2009 10:27pm
Our seventh President Andrew Jackson knew well what the problem was. Upon being elected he lectured the bankers:


"Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thusand families. That may be true, gentlemen, but that is your sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of Eternal God, will rout you out."
History is written by the victors.
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