Posted on 03/15/2009 5:10:58 PM PDT by arthurus
Well, you would probably have been an enthusiastic voter for Hoover in 28. His Republican ideas were widely supported, and his lack of bailing out the economy and falling market later, you might have found appealing. At first.
Seriously, we all, dems and republicans, put way too much faith into politics, when it comes to the stock market.
Stock market is 20% politics, Politics is 80% stock market.
In 1929 the typical investor had seen repeated govt intervention to save the system, but this time, Hoover never really stepped in. That is one big difference. This time too, we have the fed.
Stocks in 29 were far more leveraged than they were at recetn peak prices. Today’s retail investor is not being wiped out from margin calls. Yes, some hedge funds might be, but not the average investor.
In that crash, a bank run started, and no banks had FDIC coverage. Hence the run.... When the run started, banks called in loans from home owners. The home owners could not come up wtih the money to instantly pay off their homes, and they were foreclosed upon, even though they were never late on payments. That ain’t happening now...
As if losing all your stock money wasn’t bad enough, your house got taken away, and then all your saving vanished because none of the institutions were insured.
The 8 billion in bank deposits today, are not going to be erased from lack of fdic coverage this time.
Also, I kind of doubt we’ll have the dust bowl this summer either.
The great depression may revisit us, but not this time. I think this market is more like the Panic of 1907, and might set us up for a great depression down the road. In the future, if mom and pop investors are so bullish, they margin stock purchases collectively, then I’d suggest running for cover. As ludicruous as that sounds now, things can change with a very long bull market, supported with economic and social prosperity.
The “people” of 1929 were/are the most advance people the world has ever seen. They’d conquered flight, indoor plumbing, autos, health, industrial age, sky scrapers. If you went back in a time machine now, to August 1929, you could not have talked sense into any of them.
A vcr cost 1000 in 1979. How much a vcr cost today?
This really ticks off the vcr biz, they are indeed bitter.
Put down the crack pipe and step away from the keyboard!
hyperinflation......good news, is our stocks recover.....bad news, the cost of oil, gas,food,housing,etc becomes astronomical.....
hyperinflation......good news, is our stocks recover.....bad news, the cost of oil, gas,food,housing,etc becomes astronomical.....
Plus, you have to look at the logarithmic vesion of the chart - not the liniear version - to visually represent a compounding rate of increase (no matter how small or large).
Not to mention that we still haven’t seen the commercial real estate bust yet. Its coming, getting closer everyday. Businesses are shutting down, and all those trashy strip malls will be the next to be foreclosed on. Even the larger “malls” are in trouble.
eh? All a logarthmic scale does is flatten slope. Can’t you see a compounding rate of increase in a concave upwards curvature plotted on a linear scale?
Hope not. If you’re right, we’re in for a rougher time that I want to think about.
Don’t take them seriously. Well, they are positive for Obama all the time.
“Actually, this sounds more like the Obama Administration propaganda, trying to “string people along” thinking that things are better than they really are...”
Yea... we got the real skinny from Arlen!!
Sure. Once hyperinflation hits, no reason we can’t have a Dow 1,000,000,000...
It doesn’t actually flatten slope, it just makes percentage change anywhere in the chart have exactly the same slope. In a linear scale, a 50% change looks miniscule in 1930 (because the absolute numbers are so small) and a 50% change looks massive in 2008 (because the absolute numbers are larger). If you plot a trend with an exactly consistent 8% annually compounding rate of increase linearly the line is curved upwards, while if you plot it logarithmically the line is perfectly straight.
, while if you plot it logarithmically the line is perfectly straight.
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Ok, well to me that means I am right.
however, you got my curiosity up about the 8% thing. Don’t try to sandbag me now. I had 6 semesters of math in college AFTER CALC III. 98% of it has faded from memory, but I still got some comprehension.
The log scale is either a base 10 or a base e system. I only had 4 symesters in economics(as electives) in college so I don’t remember how this shit goes for sure. Maybe I never learned it. But either way, I don’t see how you come up with 8%.
Could you ‘splain it to me?
It also finds this one that kind of explains it in simpler terms (no insult intended): http://www.signaltrend.com/InvTips/LogarithmicVrsArithmeticScale.html.
Arithmetic scale graphs may create a false appearance of acceleration
Logarithmic scale represents market movements in percentage terms
See charts on the post to compare.
I think the middle class has been injured far too much to participate if this occurs. Middle class will get little out of a speculative rise benefitting speculators using stimulus funds.
Housing equities will fall further over the next couple of years and will far outstrip middle class potential of profiting to any compensating degree in the markets where only experts should be at even their peril. Recently it has been estimated that Goldman Sachs contributed about 48% of the NYSEs’ trading volume....giving them unbelievable control. A second stimulus will provide fodder for another bubble to 14,000. It cannot get there without it.
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