Crash of 1929 vs. Today

Yeah and you live in Hollywood. Uh huh. Right.

If it is true then the you are where the s... is produced.

Now before we both getted flagged why not keep it PG and not R.

Reality sucks.

People bought homes they couldn't afford. They lose. Banks and mortgage who commited fraud should be brought up on charges. They should lose. I know that is not going to happen. Making statements that empty homes should go to the homeless is ....... nice. Not reality.

I am amazed at the statements that "traders" make on FF. I wonder do they say it would be nice to have a winning trade. Having real money on the line makes it pretty clear. In order for one trader to win another has to lose. That's life too. Now what they do with their winnings is another story. They can keep it to themselves or spread it around. But still the only way to get it was by taking it from someone else. "There ain't no free lunch".

That really wasn't my main point, it was just a side note. The idea to control prices via controlling supply by bulldozing homes is bit out there, in my opinion. A true free market will eventually find a balance without needing to bulldoze whole neighborhoods.

The middle class homeless are homeless not necessarily jobless. There are folks that are working and earning, but just living in a tent city or with family, etc. That is mostly to whom I was referring. Trying to keep the price of a home inflated when it needs to drop (because of supply vs. demand forces) would become affordable to the current wave of homeless middle class folks that still have jobs and can make payments (on a closer to true market price of a home, not a government inflated price).

Price controls have always failed and will always fail. You can never escape the universal force of supply vs. demand.

Your attitude is sadly the norm here in America-no love-no compassion-and no future. I wonder how long before your job ends and you are one of those poor you mock? I used to live in "the freak show state" of Florida(Tampa). Its funny you said "I am amazed at the statements that "traders" make on FF". I was thinking the exact same thing about you. SunTrader-could you imagine for a moment you are one of those poor bastards living under a bridge on Interstate 75? Without family or friends your future is sealed. I hope you (and family) never have to go thru what millions of your fellow Americans have to endure daily. I am curious- do u think our economic situation will get better or worse in the near future? I believe GB(and company) killed America-I also believe the current Administration is residing of her burial. I cant even guess what our country will look like in 10 years?

I'm no fan of GB and I'd take the following with a big grain of salt but it's interesting nonetheless:

Well one thing Florida and California have in common and sadly much of America is people no longer living in the real world. The real world can have compassion for those less fortunate. But it shouldn't be mandated and it shouldn't come at the expense of someone else who happens not to be less fortunate.

I am all for renting empty houses to homeless working families, even with an option to buy. As for home values the market should decide. If the government (in the form of Freddie and Fannie Mac) had stayed out of things we would never have had CDO's/CBO's/CIO's/SIV's and their subsequent implosion affecting the world economy so devastatingly. A prime example of the folks in DC trying to good to make home ownership 'more affordable'. Look what we got in return. Again no free lunch.

I think about a way to "fix" this mess-I draw a blank every time. Now that we are here-what are we(Americans going to do?) Without a job(and much , much worse if you are homeless) the answer is: Nothing. I personally know many people who are one paychk away from disaster. You(and I) are free(so far) to do as we please in this country-I choose to NOT ignore those people begging at every major intersection(not because I have been homeless but because I realize , in the blink of an eye, I could be). I help because I may need help in the future.I help because that random act of kindness may ignite other acts of compassion . I help others because I would want help if I ever needed it. I also have a safety net in the form a loving and caring family(brother and 2 sisters). You know (living in Florida) how things have changed in a very short time.Its actually worse here in the LA area. The average american(the ones that have never traveled outside our country) have never seen the kind of desperation other(less prosperous) countries people live with daily. They have been some of the most giving and friendly people I have ever met. God , I sound like Preacher now . It sounds like we live in the same country yet somehow evolved completely differently. The "real" world is about to come crashing thru all our realities and then the "real" test begins.

Differences between 1929 and 2009:
1) America is currently the largest debtor nation the world's ever seen with a national debt of $11.4 trillion.
2) Quantitative easing, i.e. Europe, Japan, and the US printing billions if not trillions of $ and euros etc. over just a few short months.Huge inflationary implications.
3) Budget deficits of trillions of $ for the US(the world's largest economy) for the foreseeable future. Astronomical amounts.
4) Water shortages around the globe.Interesting to see where this will lead.
5) War. Enormous ongoing military expenditure due to America and her allies' ongoing war in Iraq and Afghanistan.
6) In 1929 the British Pound, not the US$, was the global currency of choice, even though a few countries (China, Russia, etc)have recently suggested a need for an alternative, the US$ enjoys global preference today.

To me, these are the most telling differences between the Great Depression and the Great Recession. Exactly what implications these differences have, only time will tell.

Actually I believe there is a way, in the 80's we promoted small business and deregulation. The professional people were laid off and we gave them incentives to start new businesses. They had the knowledge, experience, and funds to do it. Many small businesses were started and jobs and prosperity followed. As you know that is not being promoted. The Repulicans thinks it is cutting taxes and the Democrats thinks its more government programs will magically create jobs. I dont think either of those are going to work.

As you know borrowing and debt will eventually come back to bite you. It is now our turn to get bit. If I were president I would promote deregulation for small business start ups, tax breaks and credits to do so, and promotion of American products that are made in the USA. I would also promote that the first 25,000 in income made by a small business be not subject to Social Security taxes so the business would have a chance to succeed in the early years. That tax kills small marginal business in their early years. We also need to put up protection import duties on countries that do not float their currencies (like China) and take away their rate exchange advantages against us. China would not have as large of surpluses if their currency floated and was at its real value. I believe in freedom of trade but not at the expense of giving other countries advantage over American made goods. Just some thoughts.

1929 - The Great Wall Street Crash & Depression

looking at those black n white videos tells me they all could still afford hats.

Marc Faber's Favorite Currency remains gold, whose supply is extremely limited. In fact, I am wondering if gold, which is now at around $1,100 per ounce, is less expensive than when it sold for less than $300 per ounce. How could this be? I suppose that, in the same way that a company’s stock could be less expensive at $100 than when it was selling for $10, because earnings growth has out paced the appreciation of the shares and therefore its P/E has declined, gold could be cheaper at the current price than when it was at less than $300 because of the explosion of foreign exchange reserves in the world, zero interest rates, the huge debt overhang, and the expectation of further money printing. International reserves have grown from about $1 trillion in 1995 to over $7 trillion.

Gold’s share in world’s reserves

As a result, the share of gold in the world’s official reserves has declined from 32.7 per cent in 1989 to a current record low of 10.3 per cent. As an aside, I am still puzzled by the deflationists, who cannot understand that the explosion in foreign exchange reserves over the last 15 years is a symptom of a massive monetary inflation. Ergo, I could argue that gold is now actually less expensive than when it sold for around $300 per ounce.

I should add that central banks in emerging economies keep only a tiny fraction of their reserves in gold. Eventually, I would expect them to follow the example of the Reserve Bank of India (RBI), which recently bought 200 tonnes from the IMF for $6.7 billion. The RBI, thus, increased the share of gold from 3.6 per cent of its $286 billion foreign exchange reserves to just over 6 per cent. (Guess who will be out of business first: the IMF or the RBI?)

Now, just consider what the impact would be if China were to increase its gold holdings from presently less than 2 per cent of its $2.2 trillion reserves to 6 per cent or 10 per cent. Each 1 per cent increase in gold weighing would mean gold purchases of more than $20 billion, or nearly 600 tones.

Its intrinsic value

I also find it encouraging that an economics professor, Willem Buiter , recently called gold a “barbarous relic” in a Financial Times blog. (Keynes had used the expression to refer to the gold standard). The good professor conceded that “its value may go from $1,100 per fine ounce to $1,500 or $5,000.” However, he stated that he “would not invest more than a sliver” of his wealth “into something without intrinsic value, something whose positive value is based on nothing more than a set of self-confirming beliefs”.

I am not entirely sure what the professor means by “intrinsic value”, but the fact remains that gold has been a currency for 6,000 years, whereas I am not familiar with any paper currency that has survived for more than a few hundred years. Moreover, it would seem that over time the “intrinsic value” (whatever the professor means) of paper currencies declines, whereas the “intrinsic value” of gold appreciates. (Maybe the professor should take the time to explain to us what the intrinsic value might be of a Gutenberg bible, a flawless 50 carat diamond, or a Picasso or Warhol painting)

Paper money has as much intristic value as toilet paper or fire wood.

Interesting post on seeking alpha.


DJIA 1929 vs. 2010 - Depression Averted Thus Far

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http://static.seekingalpha.com/uploa...iaa_thumb1.png

Is It Déjà Vu All Over Again for the Dow Indu?

Online video
http://broadcast.ino.com/education/d.../?campaignid=3

I think there is one major difference between now and then. The dow collpased because it was spiked up on borrowed money. This time it dropped because people pulled their money out in other words there is still money out there to invest and keep the markets stable whereas in the depression there was no money to put into the market because the banks have collapsed and the so called paper rich had no money to invest. Where I see a parallel though is in real estate. Prices have shot up to where people cannot afford to buy so it has collapsed. Even though Government has infused money and bought off the loans the value of housing has gone down and could still go farther because there are not enough buyers to support it. So I am not so worried about the stock market as to how low can real estate go down. I see 3 dynamics.
1. The baby boomers have purchased their last houses and as a group will not be major buyers of real estate in the future even though their will be individual exceptions.
2. Those that have gotten laid off or are now part time workers or reduced hour workers are running out of unemployment benefits or lack the income to continue to pay their mortgages. This group is still very large and there is a possible large default yet to come from them. #1 & #2 total not enough buyers to support the market at even depressed prices and another round of troubled bank loans.
3. The commercial real estate market could collapse next and is hanging by a thread.

1,2&3 start a death spiral and governments cant borrow enough money to stop the collapse.

Basically what I am saying that if this recession deepens into a depression or economic collapse, I believe it will be caused by crashing real estate prices leading to another spat of bad loans, not the stock martket. If the real unemployment rate is closer to 18-20% then if we dont get 10+% back to work soon real estate will be in big trouble again.

Some good points. It usually takes about a year from the time the mortgage rates reset and the home goes into foreclosure. You have to figure 3 and 5 year arms are resetting from 2005-2007 still. There will be more downside in housing. Plus you still have record foreclosure rates and a shadow inventory. There are a few graphics online that show that all the option ARM resets will pretty much be out of the system around 2012-2014.

A question I have as far as the Dow... If baby boomers are retiring then most IRA / 401k's move funds out of stocks and into bonds and then money starts coming out of the funds to pay out the retirees, so wouldn't that 'cashing in' start to make the stock indices drop?

I see this collapse more of a fiat dollar collapse than anything else. I'm still hoping for the best, but I'm prepared for a Mad Max scenario.

To me there are two keys. One is a stable government most people dont realize that the USA has the oldest government now existing in the world. There are older countries but not older stable governments. China had 3 in the 20th century, Germany had several, Britain still had a monarchy when our country was born, etc. Stable government produces a stable currency therefore we have that role for now. The second thing is we have to pay down this debt. We take all this excess cash we have used to avoid a crash and bring it back in and pay off the loans I believe we can keep our currency stable. If we dont ....................... the problem is can you tell me one politician that is running on increasing taxes and cutting back govt. to bring the cash back in and then pay off or paying down the debt ....................... yup I thought so ............... but to me that has to be done or we will crash at some point .............. I understand not doing that now but we have to do that if we start a recovery. It will be tricky reigning in all that excess money and keeping the economy going. ............. we know our politicians have that one all figured out. RIGHT????

To the retiree cashing out I dont know that much or if that is enough to crash the market. It would seem to me it wouldnt all come at once but in pieces over a long period of time. I would think there still is enough from other sources to keep the market going. I will admit that is just a guess on my part though.

Interesting that this thread started pretty much the day the market bottomed...

SPY closed @ $68.11 on the first trading day following the opening post in this thread. So a 67.5% return.

QQQQ @ $25.74 on thread start...now at 49.01...so nearly 100%.

DIA: $65.44... now 108.32 (+65.5%).

Good stuff...