Quote :

"The economic and financial landscape of 2007 bears striking similarities to 1929. Back then, there were large, unregulated pool operators and other insiders constantly muscling the tape in whatever direction they chose. The public, too, was involved, thinking the country was experiencing a new era. Meanwhile, business began deteriorating in the spring of 1929, though the partying in stocks lasted until the fall."

I haven't used any of my economics since I graduated in 2002, so I'm rusty, but I'd be interested in hearing other people's opinions on this.

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/IgnoringTheLessonsOf1929.aspx

[Edited on July 16, 2007 at 10:39 AM. Reason : .]

7/16/2007 10:39:19 AM

don't they say something like this about every 5 or 6 years?

7/16/2007 10:41:10 AM

there are always the doomers and gloomers out there, economics isn't the Dismal Science for nothing, I'm just interested in opinions on this particular go-around.

7/16/2007 10:42:53 AM

Today is just like 1929. After years of economic progress coupling technology with hard work and international trade to dramatically increase productivity, spreading prosperity wide and far, we have politicians pushing strongly for trade barriers (Smoot Hartley Tariff in 1930) and efforts to make the rich pay their fair share (marginal federal tax rates went from 25% to 56% in 1931) and efforts to squash big chain stores (between 1930 and 1935, states considered some 800 bills to impose new chain-store taxes).

The dates, names, and arguments have changed. But the outcome of these proposals will be the same: reigning in a new age of economic depression.

7/16/2007 10:58:25 AM

see, you're generally more optomistic than I am, so I'm a bit surprised to see that reaction. are we pretty much doomed by the public's ignorance of econoimic issue and the willingness of politicans to pander to it?

Also, having been through one before, do you think we'll act any wiser, economically, after the crash?

[Edited on July 16, 2007 at 11:09 AM. Reason : .]

7/16/2007 11:05:31 AM

^^ Talk about over-simplification and blowing one aspect/cause of the Great Depression out of proportion! The Smoot Hartley Tarriff was just one contributing factor to the Great Depression out of many. Others include easily available credit, the aftermath of WWI, lack of action by the Federal Reserve System, and many others.

http://en.wikipedia.org/wiki/Great_Depression
http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression

As far as efforts to "make the rich pay their fair share" and "squash big chain stores" being causes is concerned, the truth is FDR believed The Great Depression was caused in big part by businesses having too much power, and the administration at the time instituted things like labor unions, minimum wage, prohibition of child labor, and a 40 hour work week in an effort to remedy The Great Depression, so I see no evidence that trying take power away from big businesses was one of the causes.

7/16/2007 11:33:58 AM

this is NOTHING like 1929.

completely different cost of capital scenario, entirely different liquidity environment (globally), and 1/3 of the world's population is waking from slumber (India and China).

the next major downturn will come during the last days of big oil, and the resource wars that will ensue as a result.

too long of an explanation to type here.

7/16/2007 12:16:34 PM

Quote :

"Others include easily available credit"

with a negative savings rate and heavy borrowing against real estate, I think that applies in both situations

Also, some would argue that FDRs programs did little to lift the nation out of depression, an act that was only accomplished by WWII

7/16/2007 12:39:05 PM

Quote :

"Talk about over-simplification and blowing one aspect/cause of the Great Depression out of proportion!...Others include easily available credit, the aftermath of WWI, lack of action by the Federal Reserve System, and many others."

You are right about the Federal Reserve System, but I did not mention that because our federal reserve today is no longer a depression inducing institution. As for the rest of what you mentioned, they are all great at causing a severe recession, but are incapable of preventing recovery as occurs during a depression.

Quote :

"The Great Depression was caused in big part by businesses having too much power"

Such as? How can handing legislative powers to industry run trade associations as was done through the NRA constitution taking power away from big business? That said, how is it possible for business of any sort to spawn a depression? Maybe I am not as read as you are, but I know of no mechanism through which they can do it. They can start a recession, but doing so will devastate their own capital, rendering them powerless to do it again when the economic recovery begins a year or two later. The fact is FDR did believe that, but he was blatantly wrong, and by implementing perverse policies to combat the big-business phantom he and those like him turned a severe recession into a decade long depression.

Quote :

"I'm a bit surprised to see that reaction. are we pretty much doomed by the public's ignorance of econoimic issue and the willingness of politicans to pander to it?"

Absolutely not. As much as today's politicians talk as if it was 1929, they secretly realize it is not. This is why every push to raise taxes ends up coupled with tax loopholes big enough to drive a truck through. Voters love the rhetoric, but politicians are not ignorant of history. Policy makers today realize that government can get away with inflicting immense damage upon the national economy, as long as it is consistent: Neither raising nor cutting taxes too quickly. Regulating a piece at a time. Inflating the money supply, but not too much.

As such, I do not actually believe 2007 will be like 1929. As much as the democrats (and republicans) preach the rhetoric of the 1930s, everyone knows it is just a show. The Democrats are not going to start nationalizing the healthcare system anymore than the Republicans are going to start dismantling social security.

7/16/2007 12:41:29 PM

Quote :

"Resource Wars"

is it going to be like Mad Max: Beyond Thunderdome?

i hope not, 'cause i'm not a good pit fighter.

7/16/2007 4:06:34 PM

Quote :

"the next major downturn will come during the last days of big oil, and the resource wars that will ensue as a result."

I don't know if this will be the next major downturn, but it is certainly a long term concern. This is why I think that energy efficency is not just a environmental issue but a national security issue as well. The less we use, the more stable we will be.

7/16/2007 4:13:34 PM

they didnt even have dishwashers in 1929!!!

7/16/2007 4:38:15 PM

Quote :

"ssjamind: the next major downturn will come during the last days of big oil, and the resource wars that will ensue as a result."

there will be "resources wars" over fresh water long before there are ever "resource wars" over oil...

7/16/2007 5:47:29 PM

or

7/16/2007 6:45:24 PM

^ depends. Plane-crash or ship-wreck?

7/16/2007 10:05:29 PM

I hope so. I need to buy a house in the catastrophic aftermath.

7/16/2007 11:02:14 PM