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camistocks (< 20)

a few news headlines featuring the Great Depression

Recs

6

February 02, 2009 – Comments (9)

Oh no, all those depressing news headlines everywhere featuring the word Depression!

 

Here are some typical news headlines you could read in the media today. These are real quotes, they were compiled by Dennis Gartman (taken from Jeffrey Saut from Raymond James) http://www.raymondjames.com/inv_strat.htm

 

“There is no question that this is the worst economic time since the Great Depression” ... “Sluggish economic growth this year will cap the worst three-year period centered on a recession since the Great Depression” ... “Forecasts for a weak recovery in 1992 suggest the period since 1990 will be the worst for the economy since the Great Depression” ... “The banking industry has plunged to its lowest point since the Great Depression” ... “This is the worst retail sale period on record since the Great Depression” ... “This recession is hitting white-collar workers more heavily than any since the great Depression of the 1930s.”

"OK, so what!?" you may say.  You know already that the Great Depression 2 is just ahead.

 

The problem is: these quotes were taken from newspapers in 1990-1991, the last recession, accompanied by a housing and banking bust.

 

Still, the stock market started to rally soon (and even quadrupled until 2000), even if we first had the so called jobless recovery.

 

 

 

Today, with all the money the Fed has thrown into the system and the low interest rates (real interest rates are negative) and the government programs, I think calls for a Great Depression are premature. Remember, back then the Fed raised interest rates and let everything happen, laisser faire. And so did the government, nothing. Exactly what the Ron Paul fans today also want. 

 

But I'm glad to know that today governments and central banks worldwide try to act in a concerted effort. There is no need for hard times since they can be avoided.

9 Comments – Post Your Own

#1) On February 02, 2009 at 9:59 PM, camistocks (< 20) wrote:

Sorry, it should say, remember back then after the 1929 stock market crash the Fed raised interest rates in 1931 and let everything happen, laisser faire. And so did the government. Thight money was the main reason that caused the Great Depression.

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#2) On February 02, 2009 at 10:44 PM, Tastylunch (29.54) wrote:

Ah man the nineties, those were fun times to invest.

geez that chart is pretty crazy when you really look at it. The S&P went up what 500% from the lows?

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#3) On February 02, 2009 at 10:59 PM, kerg01 (< 20) wrote:

Cami the only problem with your analysis is that Herbert Hoover and his administration was nowhere near Laizze Faire....As for tight money, I would agree.  Caused by an inherently unstable fractional reserve banking system.  You would think we would have learned our lesson with this banking system by now.

 

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#4) On February 02, 2009 at 11:51 PM, drummnutt (< 20) wrote:

Cami, your blogs back in December were the first blogs that I read on this site- I then read the rest of yours from August 2008. They were the reason that I joined this site! Thankyou.

On this current blog, I agree wholeheartedly that every recession is built up to feel like we are on the verge of the next 1930's style of depression. I agree wholehartedly that we have learnt much since the 1930's and thankfully world governments do not listen to the rhetoric spun by ill-informed, wannabe economists, Joe and Jill on the street. Protectionism, lack of intervention only leads to make the situation being FAR worse. The bounce in 1930 from the 1929 crash would have been sustained had it not been for (very) poor policy decisions. Banks were allowed to fail en-masse.

However this recession will be a little longer and deeper than that of the 1990's because not only is there a housing bubble and financial crisis, but the scale is greater, mainly due to the scale of sub-prime lending, and also the threat of CDO's and CDS's blowing up (although these have ensured intervention). The reason that this scale is much bigger is because, for the last 8 years, there has been a huge "lake" of money growing in China, India, etc. A large river flowed from this lake to USA. This river was used to irrigate US debt (up to here roughly 1990's), HOWEVER, today that US debt was then passed to MANY sub-prime lending opportunities thanks to lack of lending regulations in US. This is why this one will be deeper and longer than 1990's. You are right that it won't be 1930's, but it will be somewhere in between. Cheers!!

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#5) On February 03, 2009 at 1:28 AM, awallejr (82.72) wrote:

Cami your bullish posts are always a welcome read, whether I agree with them or not. Have to agree with dummnutt's post tho.  Still, that is not to say longterm will never be up. (double negatives).

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#6) On February 03, 2009 at 1:30 AM, awallejr (82.72) wrote:

drummnutt's ;p (pretty funny typo actually heheh).

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#7) On February 03, 2009 at 2:37 AM, drummnutt (< 20) wrote:

Yeah, thanks for the laugh awalleir!! lol.

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#8) On February 06, 2009 at 5:07 PM, d1david (29.51) wrote:

hey cami- good see you are almost out of the deficit of points... you are almost at zero, you got some momentum... hope it continues for you.

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#9) On February 07, 2009 at 7:42 AM, camistocks (< 20) wrote:

Thanks all for your comments and sorry for the delay.

 

Tasty,

 

yeah the easy nineties with easy Al at the Fed wheel. Unfortunately I only started to invest in 1997 and missed the easy times.

 

kerg,

 

OK Hoover built the Hooverdam and more and wanted to help. But the mood in Congress and Senate was against help from the government. Instead the Smooth Hawley Act was introduced. Even FDR ran as a fiscal conservative and only later started the New Deal. Also the New Deal was much bigger in relation to the economy than Hoovers programs. 

 

But it seems Hoover was a nice guy. 

 

drummnutt,

 

thanks for the kind words and welcome to CAPS.

 

I agree with what you write. But as I said, the governments and central banks worldwide are working together, and pull out all sorts of tricks. They are creative, not asleep at the wheel. The 1990s recession was 1 year long and we are now already 13 months in it. So it's already longer. From what I see, it's going to last 18-24 months.

 

awallejr - 

 

yes it's sometimes masochistic to write a bullish (or not so bearish) post. But it shows where the "crowd" is. Everybody is sure that it's going down... Well, maybe, maybe not!

 

david,

 

yeah, it's a strong psychological boost. On Thursday I had even 22 points on the member rating! It was so great to stare at the number... ;-)

 

Also, it seems to show that my themes are again outperforming the Snp.

 

Maybe next week above zero? 

 

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