Roaring 20s/90s ... Spookily familiar?

[belgarion]

About two years ago I started a thread called Energy Doom and Gloom. In it I predicted the higher energy we currently have and are likely to see continuing. At the time people guffawed. Fair enough.

At Uni, I studied the history of the Great Depression and associated interpretations of what caused it all. A chance remark by a banker friend claiming that it would never happen again sparked a few dormant grew cells into action. Could it? Are the pre-conditions similar? Certainly one condition is, we are now a generation on from the last meltdown. [}:)]

Read on, this looks eirily familar ... Main Causes of the Great Depression (http://www.gusmorino.com/pag3/greatdepression/)

A site dedicated to it ... The Great Depression (http://www.amatecon.com/gd/gdoverview.html)

Have nice investing day ... [}:)] ... ;)

[zyreon]

it will pass

[trendy]

Belg - Have you not looked at the S&P500 over the last year...it's flat lined hardly anyhthing like the 20's with a doubling of the index here within 12 months. However, it's China that we need to worry about...they have the speed wobbles and it's anyones guess if they can slow the economy down safely without crashing.

[bongo66]

Another bad weekend Bel, can tell by your other posts...

You seem to have done well from your trading?

See a shrink.

B :)

[Stock Man]

Hey Belg,

Who knows when it will happen[?] One thing is certain for sure; it will happen again.

Yes, times have changed, technology allows transactions and information flow quicker, but human emotions like greed, fear, pain and hope remain the same. Thats why the markets work so well[:p]

[lambton]

Having read "America's Great depression by Murray N Rothbard, I can see similarities between the inflationary 20's and the present.
To redicule Belgarion for suggesting such a thing says some people have their heads up the a#se. There's money to be made in all seasons, but most when there is blood on the streets. looking for signs of impending bloodletting suggests wiseness not madness.

[Gryffyn]

"Roaring 20s/90s ... Spookily familiar?"

Dunno, wasn't there.

[lambton]

Difficult to see when your head is elsewhere.

[Placebo]

Belg, just having a look through those sites, one thing that stands out is that the 1929 depression seems to be a coming together of a number of otherwise unconnected elements that resulted in a particularly nasty and long-lasting shock (a "perfect economic storm" if you want). It would seem for this to reoccur, a similar set of circumstances would have to collide. Obviously a lot of international government policy has gone into attempting to ensure this doesn't happen again, but there have been examples of worse sharemarket corrections (and other economic disasters), and long-lasting effects.

E.g. 1987 crash -- sharemarket indices recovered reasonably rapidly, but the number of collapses and the impact they had were felt severely for some years. This is an event that still weighs heavily in the NZ investor psyche, possibly more so than in other countries.
2001 the Dotcom crash -- again, hugely over-inflated prices led to multiple collapses and ongoing reductions in value for most tech stocks. Some have recovered, others sunk without trace.
1992 in the UK, a run on the pound led to a dramatic collapse in property prices that depressed the UK economy for years. UK property prices have rebounded spectacularly in the last few years, but in the early 90s a lot of people were in a negative equity trap.

I've always wondered why the 1929 depression is known as the Great Depression. What was so great about it?

[belgarion]

I've just come accross this gem I'd forgotten about ... THE BUSINESS PLOT TO OVERTHROW ROOSEVELT (http://www.huppi.com/kangaroo/Coup.htm) ... a truely fascinating era of history.

One of the 'causes' of the 'great' depression was the gold standard and the inlexibility of the banking systems. Keynes got his start. Keynes promoted the idea of deficit spending by govt, thereby increasing the money supply, to stimulate an economy. Keynes's idea was that this would stop once the economy had righted itself.

Odd. Since 74, the US money supply (particularly) and that of many other nations has continued to grow. I wonder what Keynes would make of that. Anyway, any 'depression' has has been avoided thanks to the money supply constantly expanding (bit like the universe?).

Or perhaps a more relative way to look at it is that money is constantly becoming worth less and less and a far greater rate than headline inflation would have you believe ... Don't believe me? ... try house prices relative to incomes since 1974.

[bongo66]

Odd. Since 74, the US money supply (particularly) and that of many other nations has continued to grow. I wonder what Keynes would make of that. Anyway, any 'depression' has has been avoided thanks to the money supply constantly expanding (bit like the universe?).

mmm, and economies, particularly that of the US have grown hugely.

Oil aint particularly at a high point now considering history. It would have to reach way beyond US 80 bucks to reach the heights that it did in the 70s to early eighties when you consider much higher demand, inflation and massively bigger economies.

I agree, we are going to have some kind of "crash" but that has happened in the past and will happen again. If you could tell us WHEN I would be grateful.

The next slump wont be because of your beloved USA, like previous slumps(go Bush:D)but it will be focused around Asia and most probably China.


I suggest you cut your teeth on some serious research and thinking.
Like your love of higher taxes to stimulate economies, it just dont make sense.

B

[thereslifeafter87]

Bongo,
You appear confused.
Higher taxes won't stimulate economies, and i have not known belg to argue this.

Deficit spending is what stimulates economies. This can be achieved by either spending more on social services, or by cutting taxes.

You are probably partly right about the next slump, it will be about China - China may stop buying $US debt, then the US currency will inflate hugely. When that happens, China won't be able to sell its products to the states as cheaply, or it will have to lower prices/cut wages which will lower profits/lower domestic spending which will lead to a recession.

The world economy at the moment seems to rest largely on the US continuing to print money, and China and Japan continuing to buy it.

The US dollar has no foundation other than its status as the worlds reserve currency.

[belgarion]

TLA87, The other possibility is that the Fed just keeps raising i-rates until someone does buy the USD. But no, devaluation is looking far more likely ... [}:)]

[bermuda]

In 1989 there were so many "For Sale" signs it wasn't funny.Prices fell through the roof.
In 2004 we have had 2-3 years of spectacular growth and housing price hikes.Concrete and steel have increased by over 40 % in the last year.The number of houses being built or upgraded is truly unbelievable especially when you cast your mind back to the early 90's.

IT IS NOT SUSTAINABLE.The market is now at a top regardless of how optimistic some forecasters are.e.g.Fletcher Building who claim they have full books for the next 5 years...when this market slows the building and retail industries will be hit hard.
Cast your eyes around and compare the activity now with what it was like 10 years ago.Something's got to give.Let's hope it is a soft landing.

[thereslifeafter87]

Bermuda,

As long as the banks are willing to pump money into the hands of people who want to buy houses, and into the hands of those who build them, then nothing will give.

Rising interest rates might see developers who are working on slim margins go bust, and cause people to think twice about buying a new house.

But if the banks keep funding the growth, it will keep growing.

[lambton]

Yeah but banks can and will eventually turn the tap off - then watch the fireworks.

[Kookaburra]

A big difference is that the public have not yet got in on the act. There is not the general euphoria of a seriously overvalued market.

The other major factor to accommodate is retiring baby boomers. Will they want their funds or will they have sufficient to leave them in the market and live off the dividends?

[Cooper]

What made the Great Depression so "great" was a rush to protectionism in order to isolate the domestic economy... this served only to worsen the effects however... sadly there seems to be a general trend back to protectionism in the US at the moment... hope that doesn't continue.

[Packersoldkidney]

Last night I was down at the Speakeasy, doing the Charleston with some flappers, when I went over to the bar to get myself some more moonshine. It got me thinking: have we been here before? What is time? Is it incessantly repeated over and over?

As I gazed at the silent film going on over the background hubub (Charlie Chaplin twiddling his cane), I thought about it more deeply, and I decided that I agreed with that great Greek philosopher of the 2090's (BC) Hirocletus: man can only dip his toe in the same river once. After all, the river like time, is ever changing. Time never repeats.

Then the band changed tune, and launched into some Dixieland jazz, and I swilled me down the last of my moonshine (a penny a mug), grabbed me a flapper, and we danced until Bugsy Malone's boys walked in, and wanted to clear the place for some roulette.....

[Burgerbun]

quote:Originally posted by bongo66

[i]

I agree, we are going to have some kind of "crash" but that has happened in the past and will happen again. If you could tell us WHEN I would be grateful.


B



Belg has been saying that since OCT/NOV 02!!!! and look what happened to indexes after that date.

this is the kind of prediction that is WORTHLESS, of course there will be a correction, of course Mr Idiot...

The sharemarket crash of 87 as mentioned above looks like a blip now, the tech rally of 99/00 forced up the Nasdaq in a very NARROWLY defined rally and the subsequent bear market was strange indeed with ALOT of money made on traditional stocks long forgotten with low PEs.
We, history has been through all this before, Wars, Oil shocks, Asian meltdowns, Depressions, Crashes, Recessions, hyper inflation, deflation, Bubbles, tulips, property crashes, savings and loan crisises (watch out Freddie and Fannie:))...assasinations, SARS, BSE, OMG!![:0]...where is that ROCK[B)]

Yet, Economies grow, our goodies get cheaper and indexes expand LT...and little ol Belg can now fly to the States on his beloved 747 in half a day...



ONE DAY ROGER FINCH, ONE DAY[xx(]

so what if you have balanced investments!!!!
the IDIOT fears

[Capitalist]

Krugman is a partisan puppet who gives new meaning to the words asshatted economist :D:D:D. Yep, he has been consistently wrong for years.

Anyway the asteroid Toutatis is going to destroy the earth on Wednesday :D:D:D

[Gryffyn]

Cap - most economists have their colours nailed to one post or another.

[Gryffyn]

Asteroid Close Encounter Coming Wednesday

John Roach
for National Geographic News
September 24, 2004


Tumbling through space like a fumbled football, a peanut-shaped asteroid named 4179 Toutatis is expected to pass within a million miles (1.6 million kilometers) of Earth on Wednesday.
"The September 29 … approach is the closest in this century of any known asteroid at least as big as Toutatis," said Steven Ostro, who studies asteroids at NASA's Jet Propulsion Laboratory in Pasadena, California.

Radar images of the three-mile-long (4.6-kilometer-long) asteroid suggest it could be composed of two or three space rocks held together by gravity. But to know for sure would require drilling through the object, Ostro said.


The 3-mile-long (4.8-kilometer-long) peanut-shaped asteroid 4179 Toutatis will come within a million miles of Earth on Wednesday. The approach is the century's closest for any asteroid of similar or greater size.

Toutatis makes an elliptical four-year trek around the sun that takes it from just inside Earth's orbital path to the asteroid belt between Mars and Jupiter.

Scientists say the asteroid also has one of the strangest rotation states yet observed in the solar system. Instead of spinning on a single axis—as do most asteroids and the planets, including our own—Toutatis wobbles around two.

The asteroid rotates around one axis once every 5.4 Earth days and, in turn, rotates around the other axis once every 7.3 Earth days. As such, "the orientation of the asteroid never repeats exactly," Ostro said.

Impact Risk?

French astronomer Christian Pollas discovered Toutatis in 1989 as he was examining photographic plates of Jupiter's faint satellites.

Pollas named the asteroid after a Celtic god whose name is invoked in the hugely popular French comic book series Asterix. (Toutatis is the protector of Asterix and his companions, who fear nothing except that the sky may someday fall on their heads.)

Ostro and his colleagues have studied the orbit of Toutatis more closely than any other known near-Earth object its size. The scientists say with confidence that the asteroid poses no risk of impacting Earth at least through 2562, when Toutatis will pass within 250,000 miles (400,000 kilometers) of Earth.

"We can't see the future beyond that close approach, and we must know exactly how close it will be to [project] the orbit out further [in time]," Ostro said.

So is there any chance that Toutatis may hit Earth in the future?

"The answer is obviously, yes," Ostro said. "There's a good chance [of Earth impact] in the next several tens of millions of years. But you could make that statement about any one of the near-Earth asteroids."

Observing Toutatis

Despite NASA's assurances that Toutatis poses no immediate threat of impacting Earth on Wednesday, doomsday predictions spreading via chain e-mail earlier this year put the chances of impact at 63 percent.

Alan MacRobert, senior editor for Sky and Telescope magazine, noted in a recent article for the magazine that while such doomsday predictions are false, Toutatis does whiz close enough to Earth to make a "fine observing challenge for telescope users."

The best opportunity for Northern Hemisphere viewers using at least a four-inch (ten-centimeter) telescope will be a few days prior to the asteroid's closest approach, when Toutatis will cross the southern portion of the constellation Capricornus.

MacRobert writes that on the night of its closest approach, the asteroid will be visible from the Southern Hemisphere, where it will pass within one degree of the star Alpha Centauri.

Early next month Ostro and his colleagues will make additional radar observations of Toutatis using the Arecibo telescope in Puerto Rico. Their main goal is to determine the asteroid's mass using an experiment based on the Yarkovsky effect.

The Yarkovsky effect is a force produced by the manner in which an asteroid absorbs energy from the sun and reradiates it into space as heat. "If we can model the force adequ

[belgarion]

It is interesting to note that one of the causes for the 20's depression was the gap between rich and poor and the fact that much of the percieved economic 'boom' being expirienced was supplying goods to the wealthy.

Uncle Sam is hard at work for U.S. corporations (http://seattlepi.nwsource.com/opinion/192341_williams27.html)

One notes a considerable number of references (job losses, rich/poor gap, etc.) in this critique of the Bush administration's economic performance ... Maybe, given the Buffet logic that a meltdown in the derivities markets is immanent and that Fannie's is being castigated, the prospect of another slump could still happen.

In the 1920s, they had radio as the new information age driver, now we have the internet and online trading ... If it comes, it could come very fast ... watch for another big injection of money into the US economy soon to smooth the liquidations paying claims in Florida ...

[stolwyk]

An interesting view:


An Austrian Analysis of U. S. Inflation
by Krassimir Petrov, PhD


http://www.financialsense.com/editorials/petrov/2004/0926.html


Gerry

[Placebo]

Belg I think you are looking hard for connections that don't exist. Give up.

Geez ain't the weather awful today [B)]

[belgarion]

Placebo, Maybe. But then so is Buffet. ;)

[Placebo]

No-one's right all of the time, old son ;)

[wsheridan]

quote:Originally posted by Placebo

Belg I think you are looking hard for connections that don't exist. Give up.

Geez ain't the weather awful today [B)]


Well said Placebo.

[Burgerbun]

Despite NASA's assurances that Toutatis poses no immediate threat of impacting Earth on Wednesday, doomsday predictions spreading via chain e-mail earlier this year put the chances of impact at 63 percent.



...The above sums up the belgarions of the world quite nicely:D

[bongo66]

Isnt it a full moon tomorrow...:)

[belgarion]

Thanks for the link, Stowlyk.

Hidden in it a link to how absurd the US measurement of inflation has become. The CPI - Certain Percentages Imagined (http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=36238) Worth some thought if you think your 'inflation-linked pensions' arn't going to be stolen from you. In essence, you'd have needed to have made at least 5.7% this year on the US market to keep pace with 'real' inflation. Mind you, leveraging hard with i-rates at 1.5% and a few sensible picks, shouldn't have made this too hard.

WS, Thems that don't do risk analyses are generally thems most suprised when things goes pear-shaped. Taking a critical look at the markets is just good investment sense. My view only. However, being rich in cash when others aren't and i-rates are rising have served me well in the past. (Mind you, even better still is to be rich in cash when others aren't and i-rates are just about to start falling.) Leveraged to 600% back in 2001, near zero in NZ now, winding back positions in other countries. Paranoid? Probably ;)

[K9]

quote:Originally posted by belgarion

Thanks for the link, Stowlyk.

Hidden in it a link to how absurd the US measurement of inflation has become. The CPI - Certain Percentages Imagined (http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=36238) Worth some thought if you think your 'inflation-linked pensions' arn't going to be stolen from you. In essence, you'd have needed to have made at least 5.7% this year on the US market to keep pace with 'real' inflation. Mind you, leveraging hard with i-rates at 1.5% and a few sensible picks, shouldn't have made this too hard.

WS, Thems that don't do risk analyses are generally thems most suprised when things goes pear-shaped. Taking a critical look at the markets is just good investment sense. My view only. However, being rich in cash when others aren't and i-rates are rising have served me well in the past. (Mind you, even better still is to be rich in cash when others aren't and i-rates are just about to start falling.) Leveraged to 600% back in 2001, near zero in NZ now, winding back positions in other countries. Paranoid? Probably ;)





:D:D:D:D:D:D

DOW UP 45% in 2 years
NZX UP 66% in 2 years


belg...a big fat ZERO

[K9]

quote:Originally posted by belgarion

Placebo, Maybe. But then so is Buffet. ;)

That wink again

Buffett has been losing like you all this year...$300m (mentioned by CAP)

and as CAP said, $20b against the EURO and since your post the USD has broken downtrend and is UP 10% on the EURO this year.

your timing couldn`t have been much worse than late 2004 eh...

:D:D:D

F[^]O[^]O[^]L

[Capitalist]

Goldman Sachs has just revised its euro forecast downwards for the second time in two weeks, putting the euro at $1.15 in three months time...
Berkshire-Hathaway is staring down the barrel of its biggest quarterly loss in history. That should wake a few people up ;)

[belgarion]

And word on the inside says that if the Chinese revavle the yuan, Buffet will be richer than ever. Me too.

Cap, you really are a charlatan. Tell me about US banks 'out of court settlements' for abusing the trust of their clients. Once you have, I'll take these rip-off artists seriously.

Mind you ... The Eur isn'nt looking too flash ... until the Chinese unpeg from the USD ... This is what Buffet and myself are waiting for. Joy & Gleee!

[K9]

always shifting out the goalposts eh

look at the thread title clodhead!

now its the YUAN on the white horse.


you are a funny little chap[:o)]

[K9]

no comeback...:D


spooky possums spooky

[K9]

well Mr Buffett must be taking a bath going against the USD on the EURO.

I think Belgarion is in there with him somewhere looking for the soap:D



Placebo...
"Belg I think you are looking hard for connections that don't exist. Give up."

Geez ain't the weather awful today


Belgarion
Guru
"Placebo, Maybe. But then so is Buffet.";)



a wink is enough for the KOP OUT KING

[The Doctor]

I think k9 has 'belgarion' 'pigeon holed'.....'all hat,no cattle'!