The Market, Now v. Past Crashes

[Toro]

The market now is holding up better than the market during the Great Depression.

In fact, it is most acting like the rebound in 1938 as opposed to 1930.

 

[Old Rocks]

Well, that would be a very good thing. Of course, our local Obama haters will be severly disappointed to see the economy recover, and come back strong.

 

[Charles Stucker]

Well, that would be a very good thing. Of course, our local Obama haters will be severly disappointed to see the economy recover, and come back strong.

I disapprove of Obama.
I want the economy to snap back stronger than ever.
Unfortunately, Stock prices are not the entire picture - it is looking a bit dicey, though far short of the great depression.

 

[editec]

The market now is holding up better than the market during the Great Depression.

In fact, it is most acting like the rebound in 1938 as opposed to 1930.

the TRILLIONS that the FED has injected into the banking system is the aswer to why we seem to be in better shape.

But to be candid, I think this apparent fiancial recovery is illusionary.

I actually am begining to think that the banks are still so stuffed with dubious debt that the real meltdown hasn't yet happened.

I admit I'm kinda a bear, so take my POV with a grain of salt.

But, still, I see absolutely no evidence of a REAL recovery because in order for this nation to really recover, we have got to put people back to work at a DECENT wage.

And that ain't gonna happen, folks.

 

[Paulie]

Well, that would be a very good thing. Of course, our local Obama haters will be severly disappointed to see the economy recover, and come back strong.

If the Federal Reserve manages to pull off a miracle and avoid high inflation from all their liquidity injections of the past year and we get at least 10 years of something decent in terms of economic stability, I'll be happy.

Obama hasn't really DONE anything, though. You seem to think because he sits in that office he either makes or breaks the recovery.

Everything hinges on what the Federal Reserve does. Obama offered one stimulus package that in hindsight may very well be able to be viewed as unneccesary.

Time will tell.

 

[veritas]

Deflation would be worse than inflation. And if regular people don't keep the flow, the big boys will not start lending again........they all have mounds of toxic debt so lending is risky because they all know they have toxic debt........

 

[Paulie]

Deflation would be worse than inflation. And if regular people don't keep the flow, the big boys will not start lending again........they all have mounds of toxic debt so lending is risky because they all know they have toxic debt........

This is stupid. Deflation has its pros and cons just like inflation does.

If you have a lot of debt, inflation is good. If you have low debt and a lot in savings, deflation is good.

Neither one is really any better than the other one in a macroeconomic sense. Each individual derives their own benefit from each scenario.

Since wages aren't rising with inflation, even IF jobs are added...if we see the huge price inflation that seems to be coming our way in the next year or two, how does that benefit us?

It only benefits those who can use all those extra dollars to pay down debt. Otherwise, do you like paying $6 for a gallon of milk, $5 for a loaf of bread?

Fucking $4 or $5 for a gallon of gas?

Because that's the kind of inflation we're looking at if the Fed doesn't get this thing (so-called exit strategy) pretty much PERFECT.

 

[Toro]

I disagree Paulie.

A bit of mild deflation would be fine. Deflation from technological improvements is fine. Debt deflation is not fine, however, at least not on a national scale, as deflation itself can lead to a change in psychology that in and of itself create a self-feeding mechanism that can be hard to break. The costs of breaking inflation in the 70s was enormous. The cost of breaking a similar deflation would also be enormous and probably more damaging.

We may, however, have no other way out.

 

[Paulie]

I disagree Paulie.

A bit of mild deflation would be fine. Deflation from technological improvements is fine. Debt deflation is not fine, however, at least not on a national scale, as deflation itself can lead to a change in psychology that in and of itself create a self-feeding mechanism that can be hard to break. The costs of breaking inflation in the 70s was enormous. The cost of breaking a similar deflation would also be enormous and probably more damaging.

We may, however, have no other way out.

Well debt deflation is what the bankers are looking at if they don't do something about the inflation potential.

I know if I had a lot of debt, I'd use the extra dollars to pay it down as much as I could afford to while the extra dollars were readily available. And then when the next deflationary bubble burst happens, you're better positioned to weather the storm.

People are deleveraging NOW when they can least afford to, because they realize that in hingsight they screwed up. If there's going to be inflation, deleverage when you HAVE it to deleverage with.

It's obvious the Fed's strategy is create a bubble to fix a burst, and so on and so on. It'll probably never change.

Most will not benefit from it. I will.

 

[JeremyNight]

Well, that would be a very good thing. Of course, our local Obama haters will be severly disappointed to see the economy recover, and come back strong.

That's not a good think IMHO. It looks too good to be nice. After short consideration I'm starting to worry - perhaps there is a second wave of crisis coming?

 

[william the wie]

Obama got in after as even bigger real estate crash in than in the 1920s.
Using the same unemployment measures for both periods (all non-institututionalized people over age 16 without a job were considered unemployed in the 1930s) we have at least as much unemployment now as in the 1933 bottom of the last great depression.
Debt ratios are much worse worldwide now than in the 1920s or 1930s.

Obama and the Fed have the choice of a lost decade, hyperinflationary collapse or deflation internally but they have no control over the EU and Far East. When those bubbles burst there will be no exit. Not much if anything positive could be done in this situation but Obama and Bernancke will be blamed, helicopter Ben correctly. BHO should have thrown the election when he had the chance but he didn't and now the Ds will proceed to the political wilderness for 20-50 years if they survive which is doubtful.

 

[Toro]

Knowing the current situation of the stock market is crucial especially if you have stocks invested in it. It is better to be up to dated to the situations so that you could know the actions to be taken if some changes in the stock market occur as to secure your stocks to lose. Today, the stock market is unstable so we need to be vigilant to the current market conditions.

We are getting bombarded by spammers.

 

[FactFinder]

Well, that would be a very good thing. Of course, our local Obama haters will be severly disappointed to see the economy recover, and come back strong.

If the Federal Reserve manages to pull off a miracle and avoid high inflation from all their liquidity injections of the past year and we get at least 10 years of something decent in terms of economic stability, I'll be happy.

Obama hasn't really DONE anything, though. You seem to think because he sits in that office he either makes or breaks the recovery.

Everything hinges on what the Federal Reserve does. Obama offered one stimulus package that in hindsight may very well be able to be viewed as unneccesary.

Time will tell.

Very generous calling it a stimulus package. More like save the local gov cronies package. Shovel ready projects are capital intensive not labor intensive, hence the very poor showing on unemployment.

 

[FactFinder]

"The market now is holding up better than the market during the Great Depression."

Slightly better than the worst of times. Now that is heartening!

 

[Toro]

"The market now is holding up better than the market during the Great Depression."

Slightly better than the worst of times. Now that is heartening!

Not "slightly" better. The market fell nearly 90% during the Great Depression. We fell less than 60% this time around, more akin to the decline in 1974.

 

[Neubarth]

"The market now is holding up better than the market during the Great Depression."

Slightly better than the worst of times. Now that is heartening!

Not "slightly" better. The market fell nearly 90% during the Great Depression. We fell less than 60% this time around, more akin to the decline in 1974.

Are you trying to deliberately mislead people there Toro? We are just at the beginning of this Depression. The economy is still collapsing, as you well know, just like 1929 - 1933.

 

[Toro]

"The market now is holding up better than the market during the Great Depression."

Slightly better than the worst of times. Now that is heartening!

Not "slightly" better. The market fell nearly 90% during the Great Depression. We fell less than 60% this time around, more akin to the decline in 1974.

Are you trying to deliberately mislead people there Toro? We are just at the beginning of this Depression. The economy is still collapsing, as you well know, just like 1929 - 1933.

Calling this the equivalent of the Great Depression isn't a serious analogy

At no point in 1929-1933 did the economy grow, as it did in the third quarter. Half the banks in the country failed during the Great Depression. Unemployment was much higher.

 

[Samson]

The market now is holding up better than the market during the Great Depression.

In fact, it is most acting like the rebound in 1938 as opposed to 1930.

the TRILLIONS that the FED has injected into the banking system is the aswer to why we seem to be in better shape.

But to be candid, I think this apparent fiancial recovery is illusionary.

I actually am begining to think that the banks are still so stuffed with dubious debt that the real meltdown hasn't yet happened.

I admit I'm kinda a bear, so take my POV with a grain of salt.

But, still, I see absolutely no evidence of a REAL recovery because in order for this nation to really recover, we have got to put people back to work at a DECENT wage.

And that ain't gonna happen, folks.

I agree that the Fed has probably only buffered the inevitable: But isn't this the purpose of the Fed? Not necessarily to prevent financial pain, but to spread it out over time, so that it isn't felt as acutely as it was in 1929-1933.

In this respect, I see the unemployment rate remaining at 10% for quite a while: but I don't see it climbing to 25%. The growth of the S&P 500 does only give part of the picture, but a significant part: Industrial growth IS HAPPENING, but at a graetly reduced rate.

 

[Toro]

The market now is holding up better than the market during the Great Depression.

In fact, it is most acting like the rebound in 1938 as opposed to 1930.

the TRILLIONS that the FED has injected into the banking system is the aswer to why we seem to be in better shape.

But to be candid, I think this apparent fiancial recovery is illusionary.

I actually am begining to think that the banks are still so stuffed with dubious debt that the real meltdown hasn't yet happened.

I admit I'm kinda a bear, so take my POV with a grain of salt.

But, still, I see absolutely no evidence of a REAL recovery because in order for this nation to really recover, we have got to put people back to work at a DECENT wage.

And that ain't gonna happen, folks.

I agree that the Fed has probably only buffered the inevitable: But isn't this the purpose of the Fed? Not necessarily to prevent financial pain, but to spread it out over time, so that it isn't felt as acutely as it was in 1929-1933.

In this respect, I see the unemployment rate remaining at 10% for quite a while: but I don't see it climbing to 25%. The growth of the S&P 500 does only give part of the picture, but a significant part: Industrial growth IS HAPPENING, but at a graetly reduced rate.

One of the reasons why the Great Depression became the Great Depression was because of the inaction of the Federal Reserve, and even pro-cyclical actions by the Fed. In 1931, to stem the outflow of gold, the Fed raised interest rates from 1.5% to 3.5%. That's insane. Total reserves in the banking system fell by a third. Today, rates are at 0% and the banking system is overflowing with reserves. Those are other reasons why comparisons to the Great Depression are specious.

What could make today like the Great Depression is if we have another series of financial calamities. Editec, I think you are incorrect about massive losses in the system. Losses in commercial real estate and credit cards are already known. Losses in prime mortgages are unlikely to match the $1 trillion in losses globally to date.

The wildcard IMHO is sovereign defaults. I think that is something that could possibly take the system down. We had a shot across the bow with Dubai. We had a bigger one with Greece. There could be more coming, and that could be serious, especially in Europe.

 

[Neubarth]

Country defaults? Sure that is a possibility. Still the biggest thing before us is the simple fact that we are losing two and a half million jobs a month according to the UI claims, and most of us who are watching the unemployment picture know that seventy percent of those people do not have jobs four and more months later. We are not creating jobs and one sure way to see that is the reality is look at state income tax revenue as well as federal income tax revenue. It keeps falling and is in proportion to the 33 million who are really unemployed.